I-mode services a hit with Europeans

The Japanese mobile Internet service appears to be succeeding in making money from data services, but it still faces challenges conquering Europe

I-mode's foray into Europe appears to be meeting with early success, with the mobile information and entertainment service raking in 80 percent of its revenues from data income, according to a source close to the company.

A typical mobile phone network operator currently sees about 5 percent of its revenues from data services such as text messaging, with the remainder coming from voice calls. But with standard mobile phones reaching high penetration levels in Europe and elsewhere, network operators and handset manufacturers have been searching for ways to continue increasing their revenues -- and paying for expensive next-generation wireless spectrum licences.

The i-mode model has proven a massive success in Japan over the past few years, with 32 million subscribers to NTT DoCoMo's version of the service. However, deep differences between the Japanese and European mobile phone industries have led industry observers to question whether i-mode can be a success on foreign shores.

The European version is offered in Holland through KPN Mobile, and in Germany through E-Plus, which is majority owned by KPN. After an official launch in March at the CeBIT trade show, it has been available since April.

Unlike other mobile data services in Europe, which are typically free, i-mode offers a list of more than 60 "certified" sites accessed for a monthly fee of about 4 euros or less (about £3). The network operator passes most of the subscription fee along to content providers, taking a small percentage to cover billing expenses. The network operators' revenues come from a flat-rate i-mode subscription of a few euros per month as well as a nominal charge per kilobyte of data.

I-mode services are delivered via always-on GPRS (general packet radio service), which eliminates the need to create a dial-up connection.

The i-mode business model appears to have succeeded in increasing data revenues, said the source. Its most popular services are applications like email, as well as information services like sports news and downloading ring tones.

However, it remains to be seen whether the i-mode strategy will prove more successful than plans backed by other European industry giants, which tend to focus on highly personalised, feature-laden handsets, rather than on content services.

The i-mode service relies on uniform handsets built to rigid specifications, and the European handsets are all made by Japanese companies used to working to such specifications. European handset makers like Ericsson, Siemens and Nokia place great emphasis on making their handsets distinct from the competition, resulting in differing screen sizes, keypad layouts and software features.

"The idea of a common user interface is anathema to phone manufacturers," said Nick Hunn, research and development director with TDK Systems.

The wide variety of specifications in European phones has led to gridlock in rolling out data services via WAP (wireless application protocol), with most services relying on a text-based interface and sometimes failing to work properly with particular handsets.

However, European vendors have begun building many of the features found in i-mode phones, such as colour screens, polyphonic ringtones and downloadable games, into their handsets.

A new generation of phones arriving later this year from Nokia, Sony Ericsson and others will use open operating systems such as Symbian OS and Windows Powered Smartphone 2002 to offer even more flashy features. Nokia's 7650 and Sony Ericsson's P800 will both include built-in cameras and multimedia messaging capabilities.

And unlike the Japanese-manufactured i-mode phones, the European handsets offer a wide variety of options for personalisation, from coloured faceplates to flashy industrial design. Some of the most important factors driving European mobile phone sales are not high-tech features, but stylish designs, convenience and ease of use, according to industry analysts.

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