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Wireless Internet…The Next Generation?
Wireless Internet…The Next Generation?

The wireless Internet has become a way of life for Japanese consumers. What will it take to create a similar experience for North American users? NTT SOFT thinks they have the answer and they have set up an ambitious plan to achieve their goals.

Over the past decade, NTT's wireless division, NTT DoCoMo, has developed the mobile communications technology that has given Japanese consumers access to more than 40,000 Internet sites as well as more traditional online services. NTT DoCoMo, with their i-mode platform for wireless voice and Internet communications, has amassed over 28-million subscribers, or about 20% of the population of Japan.

As you can see in Table 1, Japan commands an impressive share of the global market for m-commerce. Projections show that Japan will retain a major share of revenue generated from m-commerce for the next one to two years.

Wireless technology is well suited to the lifestyles of Japanese consumers. Japan is a very mobile society in which time spent commuting to and from work represents a sizable portion of the working day. For this reason, mobile computing and wireless products are important tools in making travel time a productive extension of the physical office. Commuting time and business travel also create the opportunity for personal use of the Internet in the form of commercial transactions, entertainment, and information services.

There are other ways in which mobile communications and computing devices are suited to the special needs of Japanese consumers. The popularity of home computers is not nearly as widespread in Japan as it is in the U.S. Many people who do not own or do not use home computers to access the Internet will purchase a mobile phone for Internet access.

In this respect, mobile phones have three distinct advantages: (1) they are much simpler to operate, (2) they are much less expensive than wired access, and (3) they allow the user to avoid the expense of purchasing a home computer.

Unlike other countries, Japan enjoys certain advantages in the nature of its market that set it apart from other major world markets. One key advantage in Japan is the presence of universal engineering standards for telecommunications products and services. Universal standards have certainly accelerated the adoption and acceptance of mobile phones in Japan. They enable NTT DoCoMo to deliver a wider selection of content to mobile subscribers along with lighter, more attractive handsets designed for convenience and ease of use.

The North American Market
By contrast, in North America the marketplace for wireless and mobile products is subdivided into operative zones based on the prevailing types of technology that are dominant in that particular area. In North America, there are no universal standards for interoperability between devices and across networks. This absence of national standards for protocols, connectivity, infrastructure, applications, and services must be overcome in order for the U.S. to become a real powerhouse in the global wireless technology arena. This diversity of standards is due to the very competitive nature of American culture and the innovative mindset that is always seeking a cheaper, faster, and better alternative to the traditional way of doing things.

To be sure, these innovative qualities are also embedded in Japanese culture, but the considerable diversity to be found in North America certainly impedes the voluntary adoption of uniform standards and manufacturing processes. And yet, that is exactly what has to happen for m-commerce to become as pervasive and profitable as it is in Japan.

Challenges of the North American Market
Unlike the Japanese market, North American wireless subscribers' access to the Internet is somewhat limited. Although many North American wireless users have wireless Internet capabilities, only a small proportion of these subscribers actually use them.

In my opinion, the main problems with the wireless Internet in North America are briefly:

  • The lack of a robust wireless application infrastructure to enable the rapid deployment of useful wireless-specific applications
  • Wireless users do not have the wealth and diversity of content they are accustomed to from other channels
  • Users are not content with the different pricing models for wireless Internet usage

    The lack of enthusiasm for wireless Internet services in North America seems to stem from mobile users not being able to access Internet applications as easily as they can on their home and office desktops. Presently in North America, most wireless personal communications services (PCS) carriers are delivering a weak imitation of the Internet experience to their subscribers.

    PCS carriers should use more restraint in the way they market the wireless Internet. Wireless users believe the hype and expect to experience similar processing speeds and the same range of content they receive from wired access. Unfortunately, the reality of today's wireless Internet in North America is that users cannot expect graphic-rich Web content; all they see is a compressed menu of text-based information.

    Today, North American PCS carriers strive to increase access speeds and require users to equip themselves with resource-intensive PDAs and mobile laptops in order to have full access to the Internet. I don't look at this as a consumer-friendly long-term solution.

    In order to overcome the problems I just described, I believe it is necessary to focus on developing wireless-specific applications that can enable any wireless device to access any content, instead of content that can be seen only on more powerful devices. Instead of trying to duplicate the wired Internet experience, the focus should be on developing robust wireless-specific applications and offer content that is most useful and of greatest value to mobile users. In Japan, NTT DoCoMo has found that creating the most satisfying wireless Internet experience for their wireless customers is the only way to capture market share.

    Another problem in North America stems from PCS carriers trying to duplicate the wired Internet experience on wireless devices. In this respect, they fail to consider the fact that wireless Internet content is viewed differently and therefore will likely be used differently. For example, when wireless users are on the road, they are more likely to access e-mail, airline reservation schedules, and traffic information rather 3than apply for a mortgage loan or download graphic-rich Web content. Certain sites are inherently more useful to a mobile customer than others.

    Although North American PCS carriers try to approximate the wired Internet experience on wireless devices, they do not retain the wired Internet pricing structure of a monthly fee for unlimited Internet access. Per-minute user rates may not be the best pricing scheme when carriers don't offer enough wireless-specific applications, desired content, and functionality to ensure a satisfying Internet experience.

    The Japanese Experience
    NTT DoCoMo's experience in developing the i-mode service rested on their insight into customer requirements and their decision to merge wireless and Internet technology as opposed to building countless bridges between two distinct and mutually exclusive domains of technology. From the first, NTT DoCoMo recognized one important fact about wireless Internet services and m-commerce: as is true in the wired Internet arena, it was understood that when more people use the wireless Internet, the cost of access should get cheaper, along with the cost of doing business transactions.

    As a result, the products and services that wireless users buy should become cheaper and, of course, profits from products and services sold by application and content providers should be higher as sales volumes increase. This cycle is illustrated in Figure 1.

    Of course, the most important reason for implementing NTT DoCoMo's i-mode service was the potential revenue it was expected to add to the bottom line. Company executives were expecting declining prices for voice services, and wireless Internet services were simply another way to improve the bottom line. They wanted to prevent their wireless service from being reduced to a commodity along the lines of long-distance carriers.

    NTT DoCoMo had already invested substantial amounts in their wireless infrastructure and had a substantial base of existing customers; the more customers who could be persuaded to use their services, the better. NTT DoCoMo also wanted to distinguish their services from the competition and give current and prospective customers better value for their money.

    According to Ryoichi Hosoya, NTT SOFT's EVP of R&D and marketing, NTT DoCoMo's goal was to encourage their current and prospective customers to use i-mode to conduct m-commerce transactions. There was a general consensus that in order to spur m-commerce in their wireless Internet services, they would have to:

    • Reduce the cost of wireless Internet access
    • Quickly develop robust, wireless-specific applications
    • Offer content that customers want to use
    • Offer a satisfying Internet experience
    "NTT DoCoMo developed a common set of goals and carried out a focused strategy to achieve them with a high level of discipline and intensity," Mr. Hosoya explains. "The company had the foresight to create i-mode at a time when the Japanese market for mobile phones was reaching maturity and users were in need of new services. These services could not be provided unless customers were given full access to the existing network of conventional Web servers to provide a seamless connection between mobile phones and the Internet."

    With that in mind, NTT DoCoMo created a prominent wireless Internet portal similar to AOL in the wired Internet access arena.

    Yoshiki Mitani, NTT SOFT's senior manager, Internet Solution Division, explains NTT DoCoMo's approach to customer retention: "NTT DoCoMo provided so many services that the users had no conceivable reason to leave. The company wanted to own the wireless user's experience from beginning to end. They encouraged loyalty and got wireless Internet service customers deeply involved in our services by providing customers with an easy add-on optional service to personalize their wireless portal experience."

    NTT DoCoMo also targeted enterprise and corporate users by offering robust wireless applications that can access corporate systems and intranets. They designed wireless applications that allow subscribers to access corporate data from anywhere.

    Having built the foundation, NTT DoCoMo was in a unique position because they controlled the wireless gateway that linked the wireless Internet connections to the content providers and the product and service providers. A small portion of every m-commerce transaction added up to a very significant new revenue stream for NTT DoCoMo.

    Not satisfied with merely keeping pace with their competitors, senior management declared a corporate mission to surpass and lead the rest of the world in offering cutting edge wireless Internet services. To do that, NTT DoCoMo hopes to create a new "mobile culture" by integrating the Internet with the mobile phone.

    Mr. Hosoya explains that NTT DoCoMo embraced the Japanese people's desire for high-quality products and services. "NTT DoCoMo applied the inherent Japanese trait of adding innovative features and building in the quality that makes our products cheaper, faster, and better than any other products in the world."

    NTT SOFT's North American Strategy
    How will NTT SOFT reinvigorate wireless and mobile technology in North America? The answer lies in NTT SOFT's Content Solution Suite. NTT SOFT immediately sensed that consumers in North America would welcome the same advantages as the Japanese. As Dr. Seishiro Tsuruho, president and CEO of NTT SOFT, explains, "We discussed the business opportunity of bringing NTT SOFT's Content Solution Suite to North America and found the idea was well received by senior management. The first step in that process was to nominate a suitable technology partner in the U.S. market to provide localization and marketing insight into what we perceived as a dramatically different landscape with altogether different challenges to overcome."

    "We selected Vuico, Inc., a Houston-based wireless and mobile computing software development company, because the management team has the experience to adapt and market NTT SOFT's Content Solutions Suite to the target market that NTT SOFT was most comfortable with," Dr. Tsuruho says "We believe that with Vuico as our partner, we can reinvigorate the wireless and mobile computing landscape in North America by promoting the technology and standards pioneered by NTT SOFT."

    NTT SOFT expects Vuico to achieve rapid penetration into the North American market and provide optimum value for consumers. Their first step will be to customize BlueGrid products for the OEM and carrier markets and to deliver these products through licensing agreements and annual contracts (see Figure 2). BlueGrid is a client-server software foundation that facilitates the connectivity and communication of wireless devices, such as cellular phones and PDAs, to server-side applications. This enables wireless devices to perform true mobile computing.

    As Dr. Tsuruho puts it, "Right now, mobile devices can only imitate the features and functionality of a desktop. We want to close the gap and BlueGrid is a big step in that direction. It's the link between mobile devices and servers and the means to accelerate the development of mobile applications."

    For the handset and PDA OEMs, Vuico products feature preinstalled BlueGrid and complementary applications and content. For ISHVs, BlueGrid products offer a comprehensive end-to-end wireless solution involving client, server, and wireless services. In similar licensing arrangements to serve wireless subscribers, Vuico offers bundles of customized applications, tools, and games that enable carriers to drive more bandwidth usage.

    By targeting the OEMs and wireless carriers first, Vuico will be building the fundamental client-server infrastructure for their application-connectivity software in North America. This proposed infrastructure is fully compliant with the global standards set forth by NTT DoCoMo and NTT SOFT.

    Vuico's next step will be to deliver a software development kit (SDK) to content providers, including applications developers, and vendors, consultants, and system integrators. Vuico's SDK will enable all types of wireless devices and appliances to gain access to server-side applications by facilitating the rapid development and deployment of applications created by Web developers, as well as traditional programmers.

    Vuico also intends to develop key sales channels to the enterprise with system integrators, alliances, partnerships, and resellers. Vuico's approach to the enterprise will be that of traditional vertical market development in which vertical specialists will be authorized to offer Vuico products and services aimed at specific vertical industries.

    Currently Vuico is in the funding stage in which key business development efforts are designed to leverage the current leadership position of NTT SOFT. Upon completion of the funding round, Vuico will develop a world-class management team that will guide further development and delivery of wireless software, including Vuico MX (Mobile Expansion Pack), wireless application servers, and 3G- and 4G-specific applications.

    While BlueGrid will be an effective tool for Web developers and content owners to extend Web applications into a wireless environment without prohibitive development costs, MX will give hardware and software OEMs and wireless carriers the benefit of rapid mass-personalization of content.

    Together, BlueGrid and MX will give Web developers a wireless software infrastructure that paves the way for the rapid development and deployment of wireless applications. This in turn will make smart phones more appealing to consumers who want all the benefits of m-commerce. This is proven technology built to standards that have been well tested in Japan.

    Looking ahead, NTT SOFT and Vuico will remain focused on the consumer. Ultimately, NTT SOFT's North American venture will depend on the customer's perception of the value that these products add to their lives.

    Dr. Tsuruho's direct approach to marketing NTT SOFT's technology in Japan will continue to guide NTT SOFT's efforts to build a following for their wireless solutions in the U.S. and Canada. "If the value is there, then success, no matter how elusive, will follow in time."

    Powerful capabilities could finally drive
    a global standard for a wireless Internet

    by Junichi Threat

    Japan's fascination with NTT DoCoMo's mobile Internet service appears to have taken root as a cultural as well as commercial fixture. The demand among Japanese consumers for next-generation wireless Internet services is the prime reason why NTT DoCoMo, Japan's leading provider of mobile telecommunications and data services, is bypassing the interim 2.5-generation level technology in favor of true third-generation commercial broadband CDMA services.

    As a result of their wholesale embrace of the mobile Internet, NTT DoCoMo is expected to lead the wireless market at least through 2003 and possibly beyond, due to a couple of factors operating strongly in their favor. NTT's Cyber Communications Laboratory Group, the R&D muscle behind the Japanese telecom and Internet boom, is currently developing the technology that will become the foundation of 4G and 5G mobile telecommunications networks. The other asset in NTT DoCoMo's corner is the aggressively innovative mindset that drives design and development in all areas of Japanese industry.

    As many of you already know, the latest offering from the group that created i-mode is a 3G mobile communications platform called FOMA (Freedom of Mobile multimedia Access). FOMA promises users a panoply of benefits that target the shortcomings of the mobile phone/mobile computer. Built on the WCDMA system, and compliant with IMT-2000, an international standard for 3G mobile communications, FOMA promises voice transmission clarity on a par with fixed-line terminals. It supports diverse multimedia content designed to accommodate and enliven DoCoMo's i-mode package of mobile Internet access and services. FOMA also pushes the envelope by offering a videophone and music-video content via DoCoMo's i-motion and M-stage services.

    With FOMA and i-mode gaining more attention in markets outside Japan, NTT DoCoMo is focusing on the work of developing the applications that will turn their latest smart mobile device into an all-purpose accessory as indispensable and universal as an electronic wallet. One giant leap in that direction occurred with the introduction of the Java-enabled cell phone. Java extended the range of applications available to cell phone users to include the full range of the most popular entertainment and business programs. These applications require a close and reliable collaboration between the SHD (smart handheld device) and server-side applications through a network.

    That means communication becomes the key issue for improving the flexibility and interactive qualities of mobile applications on platforms that operate on a wireless network. Developing wireless-specific applications is a process that is mined with formidable technical challenges that can limit scalability and reliability and delay time to market for new applications.

    To overcome this hurdle, NTT SOFT, a sister company and key technology partner of NTT DoCoMo, created a specialized developmental tool called "BlueGrid." BlueGrid is an advanced mobile communications middleware that supports easy development and scalable execution by enabling the collaboration of J2ME CLDC (connected limited device configuration) and J2EE. To developers of applications for wireless-specific devices, that means:

    • Minimum development costs and reduced time to market
    • Scalability and high reliability of applications
    Java currently leads the pack as a preferred wireless middleware platform programming language. In a chaotic market in need of global versus regional standards, Java's growing dominance at least gives wireless markets a foot in the door toward the distant beacon of a seamless global wireless device.

    To further enhance the power of FOMA, i-mode, and all other Java-enabled wireless devices, NTT SOFT made significant enhancements to BlueGrid. The new version of BlueGrid is called "BlueGrid for Web Services" and is far more powerful than the current version and much more advanced than any similar technology on the market.

    NTT SOFT and their key technology partners in Japan and the U.S. are convinced that this new product is equally suited to the U.S. market. They are also convinced it will solve many of the problems that are keeping the North American market from adopting the kind of next-generation wireless solution that is already available in Japan.

    Although BlueGrid for Web Services has already passed all final beta tests, it will not be available until April 2002. The new product is now being localized for the North American market and will be simultaneously available in Japan and in the U.S. Detailed technical data on BlueGrid for Web Services is not yet available in English.

    NTT SOFT believes that wireless technologies will continue to evolve and compete in the next few years. In the meantime, they are concentrating on building strategic partnerships as the key to long-term survival. One of NTT SOFT's chief BlueGrid architects commented: "Wireless technologies will slowly begin to unify in years to come, but for now we are focused on choosing the most advantageous business alliances. Naturally, we would like FOMA and BlueGrid to be as popular in, say, North America and Europe as they are in Japan, and that will depend on finding the right partners to localize and position these products to appeal to a very different kind of market than what we have here."

    The FOMA/BlueGrid combination presents an attractive alternative to the patchwork technologies competing for regional market share. How the market responds will depend on the willingness of wireless executives to broaden their view beyond their own fixed horizons. For a general overview of BlueGrid, see http://www.ntts.co.jp/java/bluegrid/ en/web-services_en.html

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