"Will i-mode be a hit outside Japan too?"

The fact that Japanís NTT DoCoMo wireless web service called i-mode ñ the ìiî stands for interactive, internet and independence ñ  is a runaway success is indisputable. Since its launch less than two years ago, i-mode has won over 12 million customers in Japan. And an astonishing 50,000 new recruits every day are signing up for the cellular service ñ combining voice and Internet surfing all from the sleek i-mode phone. But thatís Japan.

What remains to be seen is whether DoCoMoís wireless Web phones can gain similar triumphs in the United States or Europe. DoCoMo announced in September it will offer third-generation (3G) mobile services in the UK and other European countries in partnership with Dutch partner KPN Mobile, in which it has acquired a 15% stake for $4.5 billion. The two are planning to launch a mobile phone Internet portal in Europe employing DoCoMoís i-mode technology by the middle of next year. DoCoMo also signed a broad agreement with American Online (AOL) that includes a $100 million investment by DoCoMo into AOLís Japanese unit. Down the road, AOL and DoCoMo will likely expand their partnership to target other countries.

The new linkups for DoCoMo with KPN and AOL are likely just the precursors to mega deals for Europe and North America in what promises to be a huge market. In a recent study, management consultants McKinsey & Company predicted that 25-45% of the total e-commerce market will move onto mobile devices by 2002. In Europe alone, that mobile or m-commerce market could swell to a staggering $16 billion by 2002.

But will i-mode fly in Europe or North America?

ìIf I were a betting man, I wouldnít want to place my bets just yet,î said Jeremy Depow, a Canadian-based analyst with the Yankee Group Inc., of Boston, Massachussetts. He said carriers and manufacturers promoting the rival WAP (wireless application protocol) standard will fight vigorously to impede any i-mode invasion.

As well,  the Japanese i-mode sensation is the result of some unique circumstances that wonít be as easily duplicated elsewhere. About 85% of the people in Japan who use i-mode have no other access to the Internet and theyíve been starving for Web access.

In the U.S. and Europe, broadband and ISP access through computers is much more prevalent. As a result, American and European consumers must downgrade their expectations for wireless surfing while the Japanese are getting their first taste of the Internet via i-mode.

Nonetheless, thereís no denying that i-mode has some compelling technological advantages for wireless adoption. I-mode users donít need to dial up to log on the Web. Whenever the phone is turned on, theyíre connected. Content is carried via packet switching rather than the circuit-switched technology on which WAP is based. Packet networks can move data faster and i-mode is chargeable by the packet not by the minute, meaning users only pay for the amount of data they download rather than how long they stay connected to a network. From a content viewpoint, i-mode allows site designers to write programs in a stripped-down version of HTML ñ the language used for creating personal-computer Websites. It means itís easier for content providers to convert Internet content to a mobile phone format.

DoCoMo has about 600 official content providers in Japan but thousands of unofficial ones. All told, customers can log onto 16,000 sites on their phones and that number is rising daily. I-mode charges a paltry 300 yen (less than $2) for a monthly subscription for its wireless service. For that, subscribers get an e-mail address and access to basic content. For more content, they pay an additional 100 to 200 yen a month. The revenue split? About 9% to the carrier NTT DoCoMo and 91% to the content provider.

North American or European content providers would drool at the prospects of getting 91 cents on the dollar. Such a cost sharing formula is unlikely to be replicated overseas given that NTT has a monopoly stranglehold with i-mode ñ it doesnít work with other Japanese service providers ñ and can cross-subsidize the service. DoCoMoís wireless offering accounts for only 3% of total sales but the carrier has captured more than 80% of the $1 billion-plus Japanese market in mobile-phone Internet use.

These days, virtually every phone provided by DoCoMo has Internet capability. ìThe entry level phone is a monochrome unit and dirt cheap. DoCoMo is selling it for 1 Yen,î said David Neale, vice-president of product deployment for Rogers AT&T Wireless. Rogers is Canadaís largest wireless provider with more than 2.7 million customers. One third of the carrier is owned by AT&T in the States and BT in the U.K.

Japan happens to be the cell phone beta testing center of the world. If a phone works there, itíll work anywhere.ìCurrently i-mode is testing some remarkable phones. They have high-resolution, luminescent-backlit screens with electric purple LEDs. Iíve seen nothing like that here,î said Neale. DoCoMo has worked aggressively with content partners to offer a vast array of services to entice users. Japanese teenagers, housewives and executives are using their cell phones to surf the Web, get daily horoscopes, book airline tickets, transmit photos, send e-mail and play with the trendy cyberfeline Hello Kitty. The programming environment is flexible enough to accommodate multi-byte Kanji characters and other graphical elements.

Whatís Mickey Mouse in North America and Europe should also be good business in Japan. This summer DoCoMo signed a deal with Disney.

The carrier is charging customers $1 a month to view Disney cartoon characters and listen to Disney songs on the i-mode phones. Already some 100,000 Japanese subscribers have opted for the service.

DoCoMo has also struck a deal with Sony to power the new portable PlayStation 2 with i-mode, which will make it possible for wireless games-on-demand and connectivity to multiplayer games while-on-the-go.

Fairly extensive use of banking is done through i-mode given the Japanese penchant for avoiding handwritten cheques. DAT Japan Ltd., a major courier, is using the service to automate its dispatch and tracing of parcels.

At present, fun and games account for about 40% of i-mode traffic. Information services such as news and weather account for another 20%, with financial services coming in at around 10 to 15%. Only 15% of traffic comes from services outside DoCoMoís portal.

ìThe biggest lesson we can learn from i-mode is the element of Internet creativity,î said Neale. ìDoCoMo has facilitated bringing wireless applications to the market and thatís the proper role for a carrier. It would have been a big mistake if it insisted which applications should be made available.î