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Collisions Between Industries and the Evolution of the Mobile Internet Customer Focused Mobile Services WWW2005 Conference. Jeffrey Funk Professor Hitotsubashi University Institute of Innovation Research funk@iir.hit-u.ac.jp. Outline. The Mobile Internet as a Collision between Industries
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Collisions Between Industries and the Evolution of the Mobile InternetCustomer Focused Mobile ServicesWWW2005 Conference Jeffrey Funk Professor Hitotsubashi University Institute of Innovation Research funk@iir.hit-u.ac.jp
Outline • The Mobile Internet as a Collision between Industries • Gateway technologies connect industries and • Product design and customer choice hierarchies for those industries • Standard setting methods for gateway technologies • Competition in the Japanese market
The Mobile Internet is the Result of a Collision Between the Mobile Phone, Internet and other Industries Internet Entertainment Publishing Mobile Internet Enterprise Software Advertising Broadcasting Mobile Phone Retail
Key Concept 1: Gateway Technologies • Enable the connection of different or incompatible networks (David and Bunn, 1988) • Simple examples • Plug adapters enable electrical devices to be used in different countries • Hardware connections enabled calls to be connected between different fixed-telephone systems in early 1900s • More complex example: Internet provided gateway between PCs and many industries • Gateway technologies drive competition in mobile Internet • Competition to provide gateway technologies • Competition to respond to gateway technologies (content providers and other firms) • Competition to assemble gateway technologies (service providers)
Key Concept 2: Product Design and Customer Choice Hierarchies: Example of the Voice-Centric Mobile Phone Customer Choice Hierarchy Product Design Hierarchy Voice User Weight Size Quality Interface Standby Talk Personalization Time Time User BB RF Battery Display Interface Design Design Enclosure Software/ Menus Keyboard Display
The Hierarchies in the New Industry are the Result of the Collision Between Hierarchies in the Mobile Phone and the other Industries Internet: Product Design and Customer Choice Hierarchies Entertainment: Product Design and Customer Choice Hierarchies Publishing: Product Design and Customer Choice Hierarchies Mobile Internet: Product Design and Customer Choice Hierarchies Enterprise Software: Product Design and Customer Choice Hierarchies Advertising: Product Design and Customer Choice Hierarchies Broadcasting: Product Design and Customer Choice Hierarchies Mobile Phone: Product Design and Customer Choice Hierarchies Retail: Product Design and Customer Choice Hierarchies
Emerging Product Design and Customer Choice Hierarchies for Mobile Internet Entertainment PZ: Personalization
Gateway Technologies Depend on the Resulting Product Design and Customer Choice Hierarchies in the New Industry Internet Entertainment Publishing Mobile Internet: Product Design and Customer Choice Hierarchies Enterprise Software Advertising Broadcasting Mobile Phone Retail
Gateway Technologies for Connecting the Mobile Phone, Internet, and Products/Services in Specific Industries
The Size of the Mobile Internet Markets (US$) in Japan and Europe in 2003
Outline • The Mobile Internet as a Collision between Industries • Gateway technologies connect industries and • Product design and customer choice hierarchies for those industries • Standard setting methods for gateway technologies • Competition in the Japanese market
Full Circle?: Evolution of Setting Standards (Gateway Technologies) and Phone Specifications
Percent of Phones Customized for Service Providers 100% 50% Verizon Get it Now Percent of Phones Customized for Service Provider * Sprint PCS Vision NTT DoCoMo i-mode Vodafone Live! J-Phone J-Sky SK Telecom KDDI EZ Web LG KT Freetel 1999 2000 2001 2002 2003 2004 2005 2006 * Including micro-payment system, service configuration, entertainment specifications
Outline • The Mobile Internet as a Collision between Industries • Gateway technologies connect industries and • Product design and customer choice hierarchies for those industries • Standard setting methods for gateway technologies • Competition in the Japanese market
The Rise of KDDI through early Move to 3G • Faster expansion in coverage through easier upgrades of base stations with cdma technology (2001x and WIN) than W-CDMA. KDDI introduced • cdma 2001x in April 2002 • WIN in November 2003 • Cheaper phones with cdma than with W-CDMA technology • 3G enables new services. KDDI introduced • Chaku Uta (15-30 second song as a ringing tone) in December 2002 • WIN and flat rate (4200 Yen) plan in November 2003 • Second flat rate plan (2000 Yen) in August 2004 • Chaku Uta Full (full songs) in November 2004
Introduction of WIN has Led to an • Increase in ARPUs • Average: 1,780 (data) + 5,180 (voice) = 6,960 • WIN: 3,520 (data) + 6,640 (voice) = 10,160 • Increase in subscribers • Upgrades: 47% of WIN subscribers • New subscriptions: 53% of WIN subscribers • Increase in content revenues • 2001x: 310 Yen • WIN flat rate: 1070 Yen
Summary and Future • We can understand the future of the mobile Internet by looking at it as a collision between product design and customer choice industries • Mobile entertainment reflects collision between entertainment (music, pictures, games) and mobile phone (personalization of phones) industries • Future: phones, Internet and • Publishing (cameras, recognition software, 2D bar codes) • Broadcasting (infrared, internal tuners) • POS and tickets (non-contact smart cards)