DoCoMo Pulls the Plug on AOL
Chalk, cheese and lost opportunities: DoCoMo has ended its mystery-laden, Internet Bubble-popped tie up with AOL after deciding that it couldn’t make any money with them, and it’s flogging its entire barrow load of stock (its 42.3%) holding back to AOL at, SURPRIZE, a good deal less than the $100 million it was reported to have paid. So are minority shareholders Mitsui & Co. and the Nihon Keizai Shimbun Inc. In fact the Nikkei put it this way, we…”were exploring new services that would link personal computers and cellular phones over the Internet, but NTT DoCoMo has concluded that the venture is unlikely to become profitable.”
AOL first came to Japan during“dawn of the Internet” here in 1996 as AOL Japan. This, is of itself an interesting factoid because DoCoMo’s former parent, fixed-line monopoly NTT did just about all it could to strangle the Internet’s promulgation here.
Those of us here then will remember how much it used to cost us on dialup charges and how, when we got 64Kbps ISDN, we thought we were in heaven. Then of course NTT did all it could to stifle xDSL here, getting the compliant bureaucrats to stop competitors for fears that xDSL would downgrade the company’s prized voice call quality. One competitor in 2000 said that his company had to go through a mountain of paperwork and months of bs just to get inside a Big N exchange when xDSL was pronounced “safe” for the Japanese consumer, and, just by coincidence of course, Big D had its own technology ready and sales battleplan fixed…(in more than one sense of the word?)…or indeed, wired.
But that’s another story. Japan has perhaps the best, fastest and cheapest xDSL in the world, thanks to open competition and a certain Son of Softbank.
Back in 2000, things might have been looking up for the DoCoMo AOL combo. But not for long. Comments in the press here indicate that pretty rapidly the U.S. side of things rapidly lost interest in Japan as AOL rode the Internet boom in the states. Then there was the, ahem, less than successful affair with Time Warner. In September 2000, the alliance deal saw NTT DoCoMo spend $143 million to buy as much as a 43 percent stake in AOL Japan, giving DoCoMo a larger share in AOL Japan than AOL itself — whose ownership will fall to 39.3 percent against a new investment of $100 million. The partners were supposed to invest a further $200 million in the future and roll out a so-called Fixed Mobile Convergence Internet service tying up cellies with fixed lines.
But the partners kissed and didn’t tell, refraining from disclosing all the fine ideas they had about about levering i-mode or partners or contents or…just about anything that suggested real action.
DoCoMo AOLchief executive Takashi Yamakawa is reported to have told Reuters, “They didn’t care about Japan operations because the US business was growing so rapidly.”
Here are excerpts from the original Sept. 27, 2000 DoCoMo Press release:
NTT DoCoMo and America Online Announce Strategic Alliance
Companies to Jointly Develop Technologies to Speed Convergence of PC-Based and Mobile Internet Services for Most Convenient Anywhere, Anytime Access NTT DoCoMo to Join AOL Japan Joint Venture
To enable mass market consumers in Japan and around the world to access convenient and easy-to-use interactive features and content anywhere, anytime and any way they choose, this alliance will:
Launch a senior level working group initiative and establish an investment committee to drive the development of next-generation technologies to seamlessly integrate fixed-line and wireless services. Make NTT DoCoMo a partner in the AOL Japan joint venture with America Online, Mitsui & Co., Ltd. and Nihon Keizai Shimbun, Inc. (Nikkei);
Feature AOL Mail and AOL Instant Messenger on NTT DoCoMo’s i-mode mobile Internet service;
and
Cross-promote the AOL and i-mode Internet services in Japan.
“We are truly excited about the great potential of this global strategic alliance with America Online. As the world’s leader in PC-based services and a pioneer in extending their convenience to new devices, America Online is the ideal partner to pursue our shared vision of seamlessly integrated Internet services — Fixed Mobile Convergence (FMC) – across both fixed-line and wireless platforms. This alliance will become a key element of our global strategy to lead the convergence of PC-based and mobile services to benefit consumers worldwide. Through this alliance, we will work together to create brand new services in the field of Fixed-Mobile Convergence -with our joint venture, AOL Japan, as the first testing ground — and to extend them around the world,” said Tachikawa.
Bob Pittman, President and Chief Operating Officer of America Online, said: “NTT DoCoMo’s success with its i-mode mobile Internet service has been nothing short of extraordinary, and we are delighted that this world-class company has chosen America Online as its partner. This strategic alliance joins two tremendous brands and marks a major step for both our Japanese joint venture and our AOL Anywhere strategy. Building on AOL Japan’s strong foundation, NTT DoCoMo will be the catalyst for taking the service to the next level of success in one of the world’s biggest and fastest-growing Internet markets. We are just as focused on developing next-generation convergence technologies that will make the Internet experience even more convenient, easy to use and central to people’s everyday lives,” said Bob Pittman, President and Chief Operating Officer of America Online.
Senior Level Working Group Initiative/Investment Committee
NTT DoCoMo and America Online said that they will launch a joint working group initiative to focus on creating an AOL-NTT DoCoMo gateway portal for wireless carriers and developing next-generation convergence technologies, applications and services worldwide.
The companies are also establishing an Investment Committee, which will invest in the cutting-edge companies that are driving the convergence of fixed-line and mobile platforms.
The companies said that both the senior level working group initiative and Investment Committee will be a complement to their already existing wireless alliances and any future partnerships worldwide.
Of course, the other side of the story was, well, who needs AOL in Japan? With KDDI already WIN-ing with its own high-speed Internet browsing platform, FOMA taking off, who needed the alliance, especially when Japan’s business apps side of the mobile internet just hasn’t taken off. And then, of course, when you already have i-mode on 40 million phones providing just about all the content that’s useful on a mobile phone, the partners had a completely grand sounding alliance that was, looking back, almost instantly redundant.
One of the more interesting lost opportunities, however, was for DoCoMo to take the mobile Internet to the United States. That of course, did not happen in anything like the way even pessimists could have imagined back in 2000. And then, of course, there was WAP, and now of course, there is Vodafone Live. Ah, how Tachikawa’s overseas spending sprees have faded, withered and died!
Here’s IDG’s Martyn William’s take on the story.
— Paul Kallender.