In a series of subtle and not so subtle remarks that made it clear all is not well at NTT DoCoMo, new president and CEO Masao Nakamura vowed to recover the company’s tarnished record of delivering huge profits. He also said the company would plunge into Asia for global revenue expansion, just like ex-CEO Keiji Tachikawa vowed to do in 2001. Beyond that, Nakamura promised that DoCoMo would put the customer first — but then said he’d put the shareholder first; later, apparently contradicting the propaganda put out by i-mode boss Takeshi Natsuno last week, he said he wasn’t sure how big the market for FeliCa was going to be. But there was plenty of new news broached by Nakamura and he’s set some hard targets in his (somewhat foggy) sights.
New CEO Nakamura has clearly not quite mastered his brief yet, and dodged several softball questions.
One of those questions was: “Is DoCoMo considering putting full browsers on future phones,” and the answer was an honest enough “Sort of, maybe…, but I don’t understand the technology enough yet to answer the question.” Full marks to Nakamura for ‘fessing up his lack of technical knowledge. On other issues, however, he was much clearer, stating that he wants to draw a line under the reign of his predecessor by:
- Slashing PHS for consumers (but boosting PHS for data): It’s the end of the line for DoCoMo’s voice-centered Personal Handyphone Service although Nakamura sees a growing data revenue model based on flat rates, so DoCoMo is going to plug that.
- Bringing more flat-rate programs for FOMA online: Nakamura stated it in a way that seemed to have plausible deniability, but it looks as if DoCoMo may be considering a series of flat-rate price plans for 3G beyond the one already announced.
- Making customers the most important thing in the universe: DoCoMo is going to pep up its anti-spam, wangiri (single ring to entice a call back — a sort of voice spam) measures and look into preempting virus attacks; Fujitsu, he said helpfully in response to a query, has encountered no viruses with Symbian (yet).
- Making — No, hold on! — shareholders a priority: Last Friday disgusted shareholders voted 600 billion yen’s worth of buyback (or 2.5 million shares) and 2,000 yen in dividends.
Actually, he probably meant that both customers and shareholders are now the priority.
Trashing ex-CEO Tachikawa:
…Nakamura made it clear that DoCoMo’s inability to grab new subs as fast as KDDI/au has been is a problem that he’s inherited and will work to resolve.
…Globally, “It was very unfortunate we took minority stakes and this lead to very big write offs,” he said. In the future, Nakamura is considering writing off US crook companies and comatose 3G rollouts in Europe and begin “looking for alliances in Asia.” Funnily enough, that’s almost exactly what Tachikawa said three years ago!
…This year, both revenues and income are due to decline: We have to “recover this as soon as possible…”
The New (Old?) Old (New?) Shibboleths:
- The corporate sector is the new battleground…
- Quality of Service and new biz models are a priority…
- DoCoMo has to complete a smooth transition to 3G…
Takeshi Natsuno says that, by 2009, (A) DoCoMo is headed for 50 to 51 million subscribers; (B) i-mode penetration will extend to over 95 percent of DoCoMo subscribers; and, (C) FeliCa will account for 97 to 99 percent of subscribers, based on growth levels of 5mn users in 2004, 10mn in 2005, 20mn in 2006, 35mn in 2007, and 40mn by 2008. Wow! Natsuno-san isn’t (at least publicly) crystal clear on how DoCoMo is going to make money from FeliCa. Some revenues will come from royalties flogging the basic chip technology to other carriers, some from skimming a percentage from transactions, and some from loyalty schemes.
For his part, CEO Nakamura says he doesn’t know how big the FeliCa market will be, but that “we are 6 months ahead of the opposition,” and that far from applying a wait-and-see attitude to FeliCa, KDDI/au and Vodafone are desperately rushing to catch up with the technology. In any event, Nakamura — like Natsuno — isn’t sure from where the Felica revenues will flow. At least they were both reading off the same page there!
Felica Quote of the Conference:
“FeliCa is independent of traffic; FeliCa is not going to introduce a lot of new traffic for us… FeliCa will bring certain profits.”
Hmmmm… there’s a stunning vote of confidence!
Having announced (again) the FOMA-WLAN combi phone for later this summer, DoComo under Nakamura appears to be seriously looking at push-to-talk (PTT) — which has become rather a booming success in the US: If Moto can do it, so can DoCoMo. But will they? … Time will tell…
And finally, the overall winner-take-all supreme Quote of the Conference:
“All-out price competition will be the death of all the carriers… we might be embarking on a price war, and that’s very scary…”
There will be more frightening observations from DoCoMo’s new president later this week with our upcoming video program.
Stay tuned, and God Bless Price Competition!
— Paul Kallender-Umezu