Current works in progress include Nokia “hot spots,” which are set up in hotels and airports to allow travelers to make wireless connections to the Internet and video telephones. The company emphasizes the product’s color and design and plans to introduce new models every year, employing the same strategy car manufacturers do with new styles each year. All of these approaches target searchers.
Looking forward, Nokia is betting that their search customers (or trendsetters, as this company calls them) will focus on the handset’s visuals as they tap into the device’s data capabilities that will link them to the Internet, word processing programs, a network diary, information services, e-commerce activities, and even allow them to view moving images. In the not too distant future, the handsets will enable traveling Nokia users to get news and information from home by downloading; say, a local newscast to the nearest television set.
Five years ago, Nokia shared cellular phone dominance with Motorola, Ericsson, QUALCOMM, and Sony. As these companies evolved, Nokia and Sony concentrated on producing flashy products; QUALCOMM concentrated on research and development; and Ericsson, on infrastructure. Each manufacturer attempted to stay ahead of the curve with distinct strategies, with Nokia and Ericsson representing contrasting poles.
By emphasizing sleek contemporary design and offering phones in a rainbow of colors, Nokia pursued searchers by making the company synonymous with hip, stylish phones for savvy consumers. Ericsson, which came of age as a supplier of telecommunications equipment to the Swedish government, stuck to utilitarian designs in basic black and concentrated on infrastructure.
In February 2000, Nokia reported a 92 percent year-over-year increase in handset sales for a total of 78.5 million units sold in 1999. Profits for the fourth quarter of 1999 were up 52 percent over the same quarter for the previous year. Today, Nokia accounts for nearly 27 percent of the market worldwide and predicts net sales growth of between 30 percent and 40 percent in 2000.
In Europe and the United States, Nokia is well poised to continue its dominance of a market that is expected to double over the next two years. But in Japan, it’s a different story, which brings us to NTT DoCoMo, the company that is undoubtedly, by anyone’s standards, ahead of the curve. It is an offspring of Nippon Telegraph & Telephone Corp. (NTT), Japan’s equivalent of AT&T.When NTT took DoCoMo public in the fall of 1998, the offering was 2.5 times oversubscribed and raised a record-setting $18.3 billion. DoCoMo instantly became the third-mostvaluable company on the Nikkei index after Toyota and NTT. By mid-2000, it had become the largest market-cap company in Japan and continued to dominate the mobile phone market with a market share of 70 percent.
Its most recent innovation, a breakthrough called i-mode, allows customers to access the Internet via their cell phones, turning the wireless Internet into a reality. Japanese teenagers wear little i-mode handsets in “honey platinum” and “time gold” around their necks like pieces of jewelry. These are the devices that will provide high-quality streamed video and audio in the not too distant future. I-mode has turned mobile Internet access into Japan’s latest craze, and since DoCoMo dominates that market by an immense amount, it is currently Asia’s biggest success story. Because of DoCoMo pearly everyone in Japan is surfing the net, gossiping, swapping e-mails, listening to music, making stock trades, getting the news, and playing games on their palm-sized DoCoMo phones. According to Fortune magazine, sales are running at fifty thousand per day. Users pay less than $3 a month, in addition to charges based on the amount of data they send or receive. (To give you a general idea, it costs about twenty cents to download a weather report.)
“Cell phones here [in Japan] are fashion accessories and toys above all,” says Tim Clark, president of Internet consultants TKAI. Some DoCoMo handsets come in clamshell designs that open to reveal a screen up to three times larger than Nokia’s. Some have full-color displays and plug-in keyboards, while still others recognize spoken commands.
I-mode is most popular among users aged twenty-four to thirty-five, roughly the same constituency that dominates traditional on-line usage. The heaviest i-mode users are women in their late twenties. Japanese magazine stands are packed with publications comparable to TV Guide that are chock full of i-mode offerings. The current projections estimate that 63 percent of Japan’s population will be using mobile phones by next year.
DoCoMo sets a shining example for other market leaders intent on staying ahead of search-and-browse customers with a penchant for innovation.
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