Israeli i-mode in Trouble?

Launching the i-mode platform last September was supposed to be Israeli wireless operator Cellcom’s most important innovation in years, and one of its most significant ever. It was designed to distinguish Cellcom from the other wireless operators and substantially boost the company’s content revenue. Timing is everything in life, and that’s true for i-mode, too. Its fate was sealed the moment that Cellcom’s new owners replaced the company’s management. The new team, headed by CEO Amos Shapira, doesn’t believe that i-mode should be Cellcom’s main content platform. (We’ll take this article with a pinch of wasabi for now — Eds.)

This story, by the Globes’ Guy Hadass, is sure to get a lot of headlines but leaves a lot to be desired in the way of credible information. It’s especially confusing on the two points below:

Cellcom’s competitors had two main criticisms of i-mode. The first was that the service was more suitable to Japan than to Western countries; the second was that the wireless industry had greatly changed since the service was launched in Japan in 1999, and i-mode is no longer needed for offering diverse wireless content. Management has decided is to turn i-mode into a shelf product with minimal investment; i-mode currently has 70,000 subscribers, and Cellcom’s target is 150,000 by the end of this year. Today, it’s clear to practically everybody that i-mode won’t survive Cellcom’s transition to 3G.

We wonder who are Cellcom’s competitors and which mobile content platform are they using? And does Cellcom usually take advice from their competition?

As for the article’s closing assertion that “i-mode won’t survive the transition to 3G;” aside from the simple fact that the platform is a business model and not a technology-specific, 2G vs. 3G decision, we also think that Japanese carrier data ARPU (across i-mode, v-live and EZweb) clearly indicates that high-speed, 3G access actually increases usage and therefore revenues (surprise!).

Carrier-controlled portals provide stable billing and revenue-share benefits for the content providers (therefore making available an improved product for the users). It would seem that 70,000 new subscribers in the four months since launch is not a bad start.

Also, the article does not say how many customers Cellcom has overall or how many i-mode-enabled handset models are available. Perhaps Cellcom’s corporate suite is lacking in understanding of what i-mode actually is? Only time will tell.

– WWJ Editors

Also see: MoCo News