Sunday, July 9, 2006

Mike Gauba: i-mode was an accidental success

http://www.imodestrategy.com/2005/09/mike_gauba_q2_i.html

Mike Gauba, recently returned from Korea as a Professor and from working throughout Asia as a consultant, caught my attention with his assertion that the success of i-mode was an accident.

Last week he explained his definition of i-mode, as a prelude to explaining why he believes that its success was an accident (and therefore implying that its accidental success is the reason that success has not been forthcoming elesewhere).

iCF: Why do you say that i-mode was an accidental success?

Mike Gauba: A superficial success analysis of i-mode may conclude that it was the right thing at the right time and at the right place, hence the success. i-mode was an initiative to develop new revenue streams in a saturating voice market. Mobile Internet was a good solution for a market that lacked fixed Internet infrastructure. Japan has high adoptability for technology so much so that even the toilet seats are digital, rapid adoption of technology was not an issue. Japan is also a thickly populated collectivist society, where the "must have" "mass" phenomenon could be very strong.

It will be na├»ve to accept the above simplistic explanation for i-mode’s phenomenal success.

It in fact requires an analysis that provides an insight into the dynamics of invisible factors that played vital role in driving 50,000 Japanese day after day to subscribe to this service. But the key question is, were these factors factored into the marketing strategies that drove i-mode to success or the success was a sheer "accident"?

NTT DoCoMo made some very good technical decisions and relentlessly worked to improve the user experience. These "virtues" manifested themselves through the handsets, improving their attractiveness. I will be cautious not to attribute the phenomenal success to these "virtues" alone.

We also must recognize that high technology adoptability of Japanese considerably lowered the migration threshold and it was not the pull alone of the attractive handsets but also the push factor generated by the environment, which drove tens of thousands of Japanese every day to subscribe to this service.

The push came from technology disruption and network effect, the former also helped to quickly build up the critical mass causing the positive feedback effect to become significant. The effects of technology disruption and network effect are not directly visible but could be phenomenal. The mobile operators may consider designing their programs to generate these effects.

It is a known fact that the NTT DoCoMo’s initiatives in Western Europe are struggling and also needless to say that the company is missing a point somewhere.

From the media reports, I gather there is a great emphasis on enhancing the quality of the handset through rigorous compliance to build up high service value, which I consider an important value component but a very simplistic approach for complex markets like European countries.

This value of this component was more noticeable in Japan because the users migrated from generic applications to i-mode and not from a technology platform to i-mode. Had the latter been the case, the effect of this value component would have been minimal.

In fact, this is a typical 2G mindset, where the handset value is considered critical for the service take up, for the lack of other differentiators, voice being a virtual commodity.

In European markets, Internet was well entrenched when i-mode was first introduced and thus the challenge at that time was to migrate users from applications on Internet or other technology platforms to i-mode.

After discussing with a couple of i-mode service providers and also from the media reports, I gather the factors like low notional thresholds, technology disruption and network effect had not been considered for designing the value proposition of the service. If these factors came into play by themselves in Japan that does not mean that this will also happen in other markets too.

This is in fact my basis for calling it an accidental success.

I will be discussing in my reply to the next question, how the value provided by the current i-mode strategies has saturated at 1.1 million i-mode user base in France - a country of sixty million people.

I would like to close this reply, encouraging mobile operators to adopt the use of high technology management principles for designing the success of their mobile commerce initiatives. Mike Gauba (mikegauba@gmail.com) see profile.

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