DoCoMo Again Sets The Pace
By Carlo Longino, Mon May 09 20:15:00 GMT 2005

The Japanese carrier hopes to maintain its position on the leading edge of the industry by setting up a US-based venture capital fund.


The failure of NTT DoCoMo's direct overseas investments was widely noted, and only after the company changed its strategy did i-mode begin to take off around the world. Getting beat up for a bit in its home market by KDDI forced a change of plans there, too, but the company's realized it's best suited to create an ecosystem that enables that elusive "killer app", rather than create the app itself.

DoCoMo's realized it needs to do what it can to bring new technologies to market, and in doing so, ensures its place at the table. FeliCa contactless payment technology offers one example: first, it worked with Sony to develop the platform, then launched a fund to help small businesses install the equipment needed to accept FeliCa payments, and now, rival KDDI has chosen to use FeliCa as well. But the real genius stroke behind FeliCa was creating a platform, not a closed application. This lets users create applications that extend FeliCa's utility beyond just buying sodas or train tickets -- and DoCoMo knows that the more flexible, and ultimately useful, the platform is, the more popular it will be.

This isn't an idea to which too many other carriers have caught on. They've let MMS wither by selling it an as application in and of itself, but when it emerges as a platform, it finds some success. Location-based services, on the other hand, continue to stutter as carriers keep them locked down, fearful that anybody apart from themselves might make some money from them.

The operator said today it plans to set up a $100 million venture capital fund with a view to "shorten development time, lower its research and development costs and expand its opportunities for developing mobile services and technologies." The fund will be based in San Jose, where its DoCoMo USA Labs are located. DoCoMo's technical leadership and strong research arm puts it at the forefront of efforts like HSDPA and "Super 3G", but today's move would appear to indicate it understands that building a viable platform which enables content providers and developers to create compelling applications -- and an ecosystem in which content and service providers can profit as well as the carrier -- requires more than just building a high-speed network, but it's no less important.

DoCoMo's investments in foreign carriers not only piled on the losses, but also signaled the company felt like it had all the answers and wanted to just export it to its partners around the globe in a pretty direct manner. But its change of heart to focus on licensing i-mode and empowering operators to cater the system to their particular market, as well as its new external investment model indicates an almost Zen-like acknowledgment that's lost on most other carriers: that it may not have all the answers. But even if it can't keep the profits from those answers all to itself -- or it has to pay to get them -- it will be better off in the long run with them.