Presentation Presentation OnOn

DoCoMo DoCoMo

The Japanese Wireless Telecom LeaderThe Japanese Wireless Telecom Leader

Case Study OfCase Study Of

Presentation compiled by;Presentation compiled by; ITM-KHARGHAR ITM-KHARGHAR EMBA EMBA Batch-12 Batch-12thth

Group membersGroup members

Deepali Gopal krishnanDeepali Gopal krishnan KH08MARMBA14KH08MARMBA14

Manas V KhaireManas V Khaire KH08MARMBA32KH08MARMBA32

Deepak AroraDeepak Arora KH08MARMBA13KH08MARMBA13

Sukhvinder KaurSukhvinder Kaur KH08MARMBA63KH08MARMBA63

Amit SinghAmit Singh KH08MARMBA07KH08MARMBA07

Gopal krishnanGopal krishnan KH08MARMBA21KH08MARMBA21

START OF NTT-DoCoMoSTART OF NTT-DoCoMo

History of NTT DOCOMO is the history of mobile communications in Japan itself .

Telecom started in 1949 when Ministry of Communication in Japan split into MTEL & Mop .

MTEL was renamed as NTT & was a monopoly for telecommunications in Japan.

In the late 1980`s Japan finally decided to reform its telecom regulatory framework to allow foreign players into Japan.

DoCoMo began its operations in July 1992.

The Initial portfolio included Mobile phones , Car Phone , Maritime Phones , In-flight phones & Pagers.

Docomo registered drastic decline in sales between 1992-94 .Docomo registered drastic decline in sales between 1992-94 .

In Oct-93 - stops taking rental security deposits on handsets.In Oct-93 - stops taking rental security deposits on handsets.

April 1994 - launches its own handsets & reduces initial subscription fees in April 1994 - launches its own handsets & reduces initial subscription fees in Dec 1996.Dec 1996.

Emerges as market leader in 1997.Emerges as market leader in 1997.

Differentiation strategy adopted …………..Differentiation strategy adopted …………..

Launched Do Pa in March 1997.Launched Do Pa in March 1997.

Beat the competition……………Beat the competition……………

I-Mode launched in 22I-Mode launched in 22ndnd February 1999. February 1999.

Success Story Of DoCoMo: I-ModeSuccess Story Of DoCoMo: I-Mode I-mode became an instant success resulting a phenomenal growth in subscribers.

Generated 30% higher revenues per subscriber .

DoCoMo announced its global strategy to establish it self as global player.

I-Mode popularity attained a new altitude.

The subscriber base in Japan accounted for more than 60% ( 18.1 million ) of the 30 million mobile internet customers in the world.

External factors such as PC penetration was very low. (. In 1999, when i-Mode was launched, only 23% of Japanese had access to the Internet by computer)

I-mode phones are constantly connected to a wide array of web-based services .

Plans are in the works between NTT DoCoMo and Sony Computer Entertainment to allow i-mode users to play PlayStation games with each other over the phone.

I-mode’s innovation is not chiefly technological, it is also based on a sophisticated business model

Business Model DoCoMo adapted AOl’s packet billing model.

E-commerce traction on I-mode.

never even mentioning the word “Internet” in marketing i-mode. 

It was a Win-Win-WIN situation for all .

It chose not be just a gatekeeper between content companies and

customer.

Multiple point contact with customers.

External factors such as PC penetration was very low.

I-mode came at right time, in right place, with

right content.

DoCoMo - BEYOND I-MODEDoCoMo - BEYOND I-MODE

Launch of “Freedom of mobile multimedia access (FOMA), a 3G service .

Riding on the success wave of I-MODE

Hurdles in entering Global Arena

BUT DoCoMo still going Global……….

Problems A PlentyProblems A Plenty

Losses written-off . Bottom Line affected.

Postponement of Launch of FOMA

Problems with Trial package provided to customers.

But the Inevitable happened – 3 G Launched

AFTER THE LAUNCH OF FOMAAFTER THE LAUNCH OF FOMA Customers complaints continued……

FOMAs subscriber base amounted to only 89000 by the end of march 2002,much below the expected 150000.

Due to increase in competition the net subscriber base was 31.7 % lower in Dec-01 than in Dec-00.

Docomo still dominated the market with 59% market share followed by KDDI & Vodafone J-phone with 17.7%.

Docomo offered various subsidies……….

Biggest loss …………116.19 billion yen

Cut off in the salaries of top executives by 10%-20% for a year.

In April 2002,KDDI launched CDMA2002lx, its 3G service.

Problems to convince its partner wireless companies ……….

DoCoMo stake fell by 33.8%

Offered discounts ……..and free roaming services.

The performance of I-Mode launched in other countries was also far from satisfactory .

Back In BusinessBack In Business In Jun 2002 DoCoMo launched its first photo handset based on 2G network.

In Jan 2003 DoCoMo reduced its promotional expenditure on 3G network.

By Feb 2003 aggressively marketed FOMA handsets.

In march 2003 company launched new handset P2102V.

In April 2003 announced launch of new handset F661i with GPS system.

In April 2003 Company launched a ‘Wrist watch with phone’ .

Announced plans to launch six new 2G camera phones.

Signs of RevivalSigns of Revival

DoCoMo’s 3G initiative showed signs of revival. DoCoMo’s 3G initiative showed signs of revival.

Company covered 90% of Japan’s population by the end of April 2003.Company covered 90% of Japan’s population by the end of April 2003.

DoCoMo bounced back on profit on account of its successful new launches with DoCoMo bounced back on profit on account of its successful new launches with consolidated net profit of $1.83 billion for the year end.consolidated net profit of $1.83 billion for the year end.

Subscriber based amounted to over 41million.Subscriber based amounted to over 41million.

Company’s share prices increased to $2000 in April’03 from $1700 in March’03Company’s share prices increased to $2000 in April’03 from $1700 in March’03

DoCoMo was not free of all problems, Japan government passed new ‘Local DoCoMo was not free of all problems, Japan government passed new ‘Local Taxes Amendment Law’Taxes Amendment Law’

Competition in Japanese mobile market was increasing. Competitors like KDDI & Competition in Japanese mobile market was increasing. Competitors like KDDI & J-Phone was capturing market share. J-Phone was capturing market share.

Whether the strategy worked or Whether the strategy worked or was it a flash in the pan ?was it a flash in the pan ?

ConcordeConcorde

EnronEnron

WorldcomWorldcom

Premier AutomobilesPremier Automobiles

Radio Corporation of America ( Fortune 500 List 1960 )Radio Corporation of America ( Fortune 500 List 1960 )

Republic Steel ( Fortune 500 List 1960 )Republic Steel ( Fortune 500 List 1960 )

Uniroyal ( Fortune 500 List 1960 )Uniroyal ( Fortune 500 List 1960 )

BestFoods ( Fortune 500 List 1960 )BestFoods ( Fortune 500 List 1960 )

Youngtown Steel & Tube ( Fortune 500 List 1960 )Youngtown Steel & Tube ( Fortune 500 List 1960 )

Tidewater Oil ( Fortune 500 List 1960 )Tidewater Oil ( Fortune 500 List 1960 )

Current Position……Current Position…… What happened to DoCoMo ( in terms of subscriber base ) after What happened to DoCoMo ( in terms of subscriber base ) after

2002 ?2002 ?

FOMA Subscriber base increased from 41011 as on 31/03/2002 to FOMA Subscriber base increased from 41011 as on 31/03/2002 to 54601 as on 31/03/2009.54601 as on 31/03/2009.

I-Mode subscription has increased from 32156 as on 31/03/2002 to I-Mode subscription has increased from 32156 as on 31/03/2002 to 48474 as on 31/03/2009.48474 as on 31/03/2009.

Subscriber base

Subscriber growth Foma.

Subscriber growth I-Mode.

What happened to DoCoMoWhat happened to DoCoMo ( in terms of revenue ) after 2002 ? ( in terms of revenue ) after 2002 ?

Net Income increased from 4,01,755.00 Million Yen as on Mar 2001 to 4,71,873.00 Million Yen as on 31/03/2009

Revenue Growth from 2001 to 2009

Internationally where it has spread ?Internationally where it has spread ?

HTCL (Hong Kong) Dec. 1999, 24.1% HTCL (Hong Kong) Dec. 1999, 24.1%

(Taiwan) Feb. 2001, 4.7% KT Freetel (Rep. of Korea) Dec. 2005, (Taiwan) Feb. 2001, 4.7% KT Freetel (Rep. of Korea) Dec. 2005, 10.3% ownership10.3% ownership

PLDT (Philippines) Mar. 2006, 14.0% ownershipPLDT (Philippines) Mar. 2006, 14.0% ownership

DOCOMO PACIFIC (Guam & Mariana) Dec. 2006, 100% DOCOMO PACIFIC (Guam & Mariana) Dec. 2006, 100%

U-Mobile (Malaysia) Apr. 2008, 16.5% ownershipU-Mobile (Malaysia) Apr. 2008, 16.5% ownership

TM International (Bangladesh) Sep. 2008, 30% ownershipTM International (Bangladesh) Sep. 2008, 30% ownership

Tata Teleservices Limited (India) Mar. 2009, 26% ownership.Tata Teleservices Limited (India) Mar. 2009, 26% ownership.

Top 10 mobile operators in the Top 10 mobile operators in the world as of 2007world as of 2007

1. AT&T - the former SBC merged with AT&T creating the new AT&T (USA)1. AT&T - the former SBC merged with AT&T creating the new AT&T (USA)

2. China Mobile - formerly China state-owned, now still state-controlled, one of two mobile 2. China Mobile - formerly China state-owned, now still state-controlled, one of two mobile

phonephone

monopolies in the entire China.monopolies in the entire China.

3. Vodafone - Britain's largest telecom operator.3. Vodafone - Britain's largest telecom operator.

4. Verizon Communications - US-based telecom company formed after a series of mergers.4. Verizon Communications - US-based telecom company formed after a series of mergers.

5. Telefonica - Multinational company with stakes in Dpain, Latin America and Europe. 5. Telefonica - Multinational company with stakes in Dpain, Latin America and Europe.

Owns the O2Owns the O2

brand.brand.

6. Deutsche Telekom - German telecom company, also owns t-mobile.6. Deutsche Telekom - German telecom company, also owns t-mobile.

7. America Movil - Mexican operator controlled by the world's richest man - Carlos Slim.7. America Movil - Mexican operator controlled by the world's richest man - Carlos Slim.

8. NTT DoCoMo - One of Japan's telecom operators.8. NTT DoCoMo - One of Japan's telecom operators.

9. France Telecom - One of France's telecom companies.9. France Telecom - One of France's telecom companies.

10. Nippon Telegraph & Telephone - Japan's second largest telecom operator.10. Nippon Telegraph & Telephone - Japan's second largest telecom operator.

BLUE OCEAN STRATEGYBLUE OCEAN STRATEGY

Make the competition irrelevantMake the competition irrelevant

Create and capture new demandCreate and capture new demand

Reconstruct market boundariesReconstruct market boundaries

Overcome key organizational hurdlesOvercome key organizational hurdles

Indian Telecom IndustryIndian Telecom Industry 1851 1851 First operational land lines were laid by the government near Calcutta.First operational land lines were laid by the government near Calcutta.

1881 1881 Telephone service introduced in IndiaTelephone service introduced in India

1883 1883 Merger with the postal systemMerger with the postal system

1923 1923 Formation of Indian Radio Telegraph Company (IRT)Formation of Indian Radio Telegraph Company (IRT)

1932 1932 Merger of ETC and IRT into the Indian Radio and Cable Merger of ETC and IRT into the Indian Radio and Cable Communication Company (IRCC)Communication Company (IRCC)

1947 1947 Nationalization of all foreign telecommunication companies to form Nationalization of all foreign telecommunication companies to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications.government's Ministry of Communications.

1985 1985 Department of Telecommunications (DOT) established, an exclusive providerDepartment of Telecommunications (DOT) established, an exclusive providerof domestic and long-distance service that would be its own of domestic and long-distance service that would be its own

regulator. regulator.

1986 1986 Conversion of DOT into two wholly government-owned companies: Conversion of DOT into two wholly government-owned companies: the VSNL for international telecommunications and MTNL for service the VSNL for international telecommunications and MTNL for service in metropolitan areas.in metropolitan areas.

1997 1997 Telecom Regulatory Authority of India created.Telecom Regulatory Authority of India created.

1999 1999 Cellular Services are launched in India. New National Telecom Policy Cellular Services are launched in India. New National Telecom Policy is adopted.is adopted.

2000 2000 DoT becomes a corporation, BSNLDoT becomes a corporation, BSNL

Current wireless players Current wireless players

State-owned operators: BSNL, which covers 20 circles, and MTNL, State-owned operators: BSNL, which covers 20 circles, and MTNL, which offers mobile services in the remaining two (Mumbai and which offers mobile services in the remaining two (Mumbai and New Delhi), offer GSM services. New Delhi), offer GSM services.

The original private service providers with a national presence: The original private service providers with a national presence: Bharti Airtel and Vodafone Essar . Bharti Airtel and Vodafone Essar .

Those who took fourth-round licences or the opportunity provided Those who took fourth-round licences or the opportunity provided by UAS licenses to create a national presence: Reliance by UAS licenses to create a national presence: Reliance Communications, Tata Teleservices, and, more recently, IDEA Communications, Tata Teleservices, and, more recently, IDEA Cellular, Sistema Shyam, and Aircel Ltd. Cellular, Sistema Shyam, and Aircel Ltd.

Greenfield operators issued new licenses in January 2008: Datacom Greenfield operators issued new licenses in January 2008: Datacom Solutions, Loop Telecom, S Tel, Swan Telecom, and Unitech. Solutions, Loop Telecom, S Tel, Swan Telecom, and Unitech.

Current subscriber base Current subscriber base

The total number of wireless connections in India stood at The total number of wireless connections in India stood at 376.12 million at the end of February 2009. 376.12 million at the end of February 2009.

State-owned BSNL and MTNL, however, were allocated their State-owned BSNL and MTNL, however, were allocated their 3G spectrum during the second half of 2008 3G spectrum during the second half of 2008

3G auctions will not be held at all for the Rajasthan and North 3G auctions will not be held at all for the Rajasthan and North East circles as there is no spectrum yet available in the required East circles as there is no spectrum yet available in the required bands.bands.

Sources

ICMR case collection by A.Neela. Radhika.

TELECOM CARRIER ASSOCIATION-Japan

BLUE OCEAN STRATEGY BOOK by reneey & Chang

www.NTT DOCOMO.com

ITCU - International Telephone Confernces Unit.

TRPC – Telecom Research Policy Conferences

www. Cellular news.com