NTT Docomo i-mode

1. How would you assess the profitability and attractiveness of the telecom industry in
Japan at the time of the launch of i-mode? What would you conclude from a five force industry analysis?
Regulation plays a crucial role in defining market conditions in mobile telephony, as they allocate the radio spectrum licenses that provide the conduit for transmitting data wirelessly – as such, regulators can shape the nature of competition. Competition for market share in the late 1990s was cut-throat in Japan. Deregulation continued apace in Japan and by 1998 a flood of large foreign carriers and equipment manufacturers had entered the fast-growing market as the government lifted the last remaining limitations on foreign investment . Thus the telecom industry was at its peak with a large pool of players wanting to enter the market as can be seen from Exhibit 4. By January 1999, the wireless market in Japan had experienced seven years of rapid expansion (Exhibit 1), with every third person owning a mobile phone. Although the size of the market was still small compared to that of fixed lines, its annual average growth rate of 68% was astounding compared to the an emic growth (1.5%) of the fixed line market. In Japan, the lack of global uptake of the Japanese Personal Digital Cellular (PDC) network standard had important repercussions for both the intensity of competition among operators, and set limits on the expansion of handset makers.
In summary, Japan has a very healthy competitive environment in terms of numbers and quality of players. The level of market competition will increase with the elimination of line-of-business and foreign ownership restrictions
We analyse the telecom industry using Porter’s five force model. * Intensity of Rivalry: The mobile