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DoCoMo Is Back, Leading Japan's Cellphone Market
From: Dave Farber <dave () farber net>
Date: Wed, 07 May 2003 07:57:26 -0400
[ I am a member of NTT DoCoMo's USA Advisory Board. Djf] DoCoMo Is Back, Leading Japan's Cellphone Market May 7, 2003 By KEN BELSON TOKYO, May 6 - After enduring staggering losses on its international alliances and a halfhearted introduction of the world's first "third-generation" digital mobile phone service, NTT DoCoMo and its president, Keiji Tachikawa, can finally breath a bit easier. NTT DoCoMo, which is due to report earnings on Thursday for the fiscal year ended March 31, has now written off the bulk of its overseas losses, released a flock of new products and finished building most of its new mobile phone network, known as FOMA. After a bruising two years, Mr. Tachikawa has steered DoCoMo back to where it was at its peak: the dominant cellphone company in Japan, with the most coveted phones and plenty of cash. DoCoMo was buoyed by the warm reception consumers gave to its new line of mobile phone handsets in March, lining up in front of shops to buy them on the first day they were available. The new handsets, which can take and send 24-second video clips, are as sleek and stylish as older phones and, importantly, cost about the same. The new phones helped DoCoMo reach its scaled-back target of enrolling 320,000 users for the FOMA service by the close of the fiscal year, and they gave Mr. Tachikawa hope that he can raise the figure to a million customers by March 2004. "This year, we will return to the trajectory we expected when we first launched FOMA" in October 2001, Mr. Tachikawa said in a recent interview. Even without FOMA, DoCoMo will probably report 1 trillion yen ($8.4 billion) in operating income and 182 billion yen in net income on Thursday, analysts said, even though revenue fell about 9 percent. In the previous fiscal year, the company racked up $10 billion in losses on its stakes in KPN Mobile, AT&T Wireless and other overseas companies. Investors have been heartened by DoCoMo's apparently having found ways to expand profits even as revenues fall. They have bid the company's stock up by about 30 percent since mid-March. And with most of the FOMA network already built, analysts like Mark Berman at Credit Suisse First Boston expect DoCoMo to be able to triple its profits this year. "DoCoMo had those losses overseas that stayed with them like a cancer," Mr. Berman said. "But having written them off, DoCoMo should go forward with a clean record." DoCoMo, like its rivals, still faces a host of challenges. One is saturation: More than 60 percent of all Japanese people already have cellular phones, so new customers are harder to find, and they tend to be people who spend the least - the young and the elderly. With the economy sluggish, existing consumers tend to hang on to their old handsets longer. And DoCoMo's efforts to interest Europeans in its proprietary i-mode technology have yielded only modest results. Still, these challenges pale beside the immense write-offs the company absorbed last year. And DoCoMo seems to be recapturing some of the momentum and buzz it lost to rivals last year. For example, J-Phone was the first to offer phones with small built-in cameras, but DoCoMo has far outpaced J-Phone since June 2002, selling more than 10 million camera-equipped phones. Some 60 percent of DoCoMo's handset sales now come from the camera phones, whose users also tend to spend more on data transmission fees to swap photos with friends and relatives. The popularity of DoCoMo's phones is helping it begin to close the gap with KDDI's third-generation network. Based on a cheaper, slower technology, KDDI's system has signed up more than seven million users for its service since April 2002, but the momentum is shifting toward FOMA. "If everyone is going to be using FOMA phones eventually, it's better to change now," said Akihiko Ono, a 29-year-old businessman, who bought a new DoCoMo handset last week. "I like new things, and I like things that other people don't have." To attract more customers like Mr. Ono, DoCoMo is cutting prices. The company is also lowering fees to encourage more use. And it is investing 42 billion yen ($354 million) this year to help manufacturers like NEC, Panasonic and Sharp develop new FOMA handsets and sell them at fairly low prices. The trouble, Mr. Tachikawa said, is that Japanese people already spend an average of about 5 percent of household income, or $200 a month, on telecommunications costs. In a sour economic environment, they are unlikely to spend much more. So DoCoMo is trying to develop phones that can generate other income, including some with chips inside that can be used to make purchases at vending machines, train stations and convenience stores charged to the monthly phone bill. DoCoMo would earn a processing fee on each purchase. Mr. Tachikawa hopes the new income will offset another worrying trend: consumers who are willing to wait until prices fall before they switch handsets. After living through five years of deflation, most Japanese look for sales and markdowns before they buy. "People have become much more price sensitive in Japan," Mr. Tachikawa said. "Consumers can be divided between those who are keen on new features and those who want cheaper phones, even if the technology is a year old." http://www.nytimes.com/2003/05/07/business/worldbusiness/07WIRE.html?ex=1053 303977&ei=1&en=a0794d2d91a94590 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales () nytimes com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help () nytimes com. Copyright 2003 The New York Times Company ------ End of Forwarded Message ------------------------------------- You are subscribed as interesting-people () lists elistx com To manage your subscription, go to http://v2.listbox.com/member/?listname=ip Archives at: http://www.interesting-people.org/archives/interesting-people/
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