Japan in the late 1990s was a veritable gold rush for the mobile phone industry. At the time, every third person in Japan owned a mobile phone and the market had just experienced seven years of rapid expansion to reach 45.6 million subscribers, making the island nation one of the largest wireless markets in the world. But Kouji Ohboshi, the chairman of the Japanese telephone giant, NTT DoCoMo, was worried. He knew that fast market growth meant a faster move through the market life cycle (adoption, expansion, maturity, saturation, and decline). Instead he saw the need to redirect his companys corporate strategy to create a new market space rather than simply adapting to changes in the industry later.
In this new case, Professors W. Chan Kim, The Boston Consulting Group Bruce D. Henderson Chaired Professor of International Management, Renée Mauborgne, The INSEAD Distinguished Fellow and Affiliate Professor of Strategy and International Management, and Ben M. Bensaou, Professor of Technology Management and Asian Business, along with Yasushi Shiina, INSEAD MBA 00, look at how Ohboshis contrarian views looking ahead versus staying the course resulted in value innovation.
The case starts in 1999 with the introduction of Ohboshis new motto, From Volume to Value, which reflected his wish to refocus efforts on creating new value for customers, such as providing information, knowledge, and entertainment via mobile phones. At the time, people were using mobile phones for what they had always been used for: communication. Now Ohboshi and his company would have to convince consumers that mobile phones could do many of the same things as their desktop computers.
Supported by a ¥5 billion R&D budget, Ohboshis vision came to life in the form of i-mode, a mobile phone with a slightly larger-than-normal LCD screen in order to support computer games, Internet access, and information. To offer these services, the company needed to overcome numerous technical roadblocks, namely how to transmit larger volumes of data at much higher speeds. They also had to approach the business model in a completely new way. Instead of the traditional telecom model, theirs would reflect an Internet model, creating alliances with content providers and other potential partners.
From its launch in March 1999 to March 2001, the number of i-mode subscribers had reached 21.7 million, its market share had grown to 59.1%, and net income had risen to an all-time high of ¥355.5 million. But the path to success was not problem-free. Technical glitches arose from congestion of the network and bugs in the new G3 handsets, the company had to reduce connection fees under mounting local and international political pressure, and foreign competition was starting to encroach.
The authors conclude by asking us to consider why i-mode was such an explosive success when WAP failed in Europe. We are also asked to look at the business model and determine whether it is sustainable and replicable elsewhere, what the next steps for NTT DoCoMo should be, and finally, whether NTT DoCoMo should attack the business users segment or seek to set i-mode as an international standard.
This case is particularly appropriate in an MBA strategy course or executive education program focused on value innovation and winning business ideas.