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NTT DoCoMo to focus on deals for smartphone content, apps

16 июля 2012

Looking to avoid becoming a "dumb pipe" for data and voice communication, NTT DoCoMo Inc. will shift its investment strategy from acquiring expensive minority stakes in overseas carriers to focus on deals abroad and at home for mobile content and applications to run on smartphones, its new chief executive said.

In an interview Thursday, Kaoru Kato, who took over as CEO of Japan's largest mobile carrier in June, said the company is looking to expand beyond the traditional role of a telecommunications company by expanding into delivering services and content to phones in markets where it doesn't run a mobile network.

It is a departure from DoCoMo's investment strategy for much of the last two decades. During the late 1990s and early 2000s, it spent nearly 2 trillion yen ($25 billion) acquiring minority stakes in a handful of overseas carriers to promote the use of its i-mode mobile Internet technology. But many of those investments ended in disaster, with painful write-downs.

More recently, in 2009 it invested Y250 billion in a 26% stake in Tata Teleservices Ltd. But India's sixth-largest carrier has continued losing money, and NTT DoCoMo expects it to continue to do so for several years.

"We've passed that stage (of investing in overseas carriers)," said Mr. Kato, who has worked at DoCoMo or its parent company, Nippon Telegraph and Telephone Corp.(NTT), for most of his 35-year career."It's an era of services and content on smartphones. With that as a base, we think aggregation and distribution services will be necessary."

In May, NTT DoCoMo launched a tender offer to acquire at least two-thirds of Buongiorno S.p.A, a mobile content and apps provider based in Italy, for up to 224 million euros, or $270 million. In March, it acquired a 75% stake of a Japanese home food delivery service for about Y5 billion, or $62 million.

Mr. Kato sees the investments as a way to protect against becoming a "dumb pipe"--a network that simply transfers bytes of data from mobile devices to the Internet. It is a concern that has emerged for mobile carriers in the age of the smartphone.

With feature phones, DoCoMo controlled nearly every service within its network, from offering ringtones to browsing Web sites on the Internet. But smartphones--notably Apple Inc.'s iPhone, with which users surf the open Internet on Apple's browser and buy content from Apple's iTunes store--have diminished the role of carriers while increasing the strain on networks to handle massive amounts of data.

Of Japan's three main mobile carriers, DoCoMo is the only one that doesn't carry the iPhone. The iPhone's popularity has elevated the fortunes of Softbank Corp., which carried the iPhone exclusively in Japan until 2011, while providing a recent boost to the country's number-two carrier, KDDI Corp.

In the fiscal year ended March, DoCoMo, which has 60 million subscribers, suffered a net outflow of 804,000 subscribers to other providers. The trend has continued in the April-June quarter, as 257,200 more subscribers left.

Despite the success of DoCoMo's rivals with the iPhone, Mr. Kato said the carrier made the right decision not to offer the Apple handset.

"I don't think it was a mistake. We've followed our own road," said Mr. Kato."Apple has a single eco-system and all the innovation comes from Apple. The carrier is just the dumb pipe and we don't want to live that way."

In that vein, DoCoMo started offering apps for its smartphone and tablet users under the brand "docomo cloud." The apps, developed in-house by DoCoMo, include a service that translates e-mails from Japanese to English, Chinese or Korean. Another app is an answer to Apple's Siri voice command service, which has been downloaded more than 3 million times since March.


Источник: Total Telecom

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