Technology Strategy for the next decade for NTT DOCOMO. This paper is intended as an academic work only and any discrepancies or incorrect hypotheses may not be held against the author.

1. Introduction
DOCOMO was spun off from the Japanese DOCOMO operates in a highly competitive
fixed line monopoly, Nippon Telegraph and Telephone environment where competitors like DOCOMO and
(NTT) in August 1991 to take over the mobile cellular KDDI are always on the heels of the NTT, which is the
operations. DOCOMO provides 2G (mova) PDC cellular market leader. DOCOMO has always been at the
services, 3G FOMA W-CDMA services, and 4G LTE leading edge of technology innovation and adoption
services. Its businesses also included PHS (Paldio), in the field of mobile communications and devices. It
paging, and satellite. DOCOMO ceased offering a PHS was the first company in the world to provide 3G
service on January 7, 2008. i In Japan, it is the market services commercially over its WCDMA network. The
leader in cellular and internet services with 60 Million closest competitor, DOCOMO, is only half the size of
subscribers.ii Additionally, it has access to another DOCOMO and the revenues are much lesser than that
several million customers through partnerships and of DOCOMO’s. In the last 20+ years of its operation,
investments in mobile services operators abroad. DOCOMO has been able to maintain the market
leadership in a highly advanced consumer nation like
DOCOMO is very strong financially with Japan through its constant research and innovation.
revenues of $53 Billion in 2012iii. The Net Income was DOCOMO has reached a saturation level in the
healthy at $5.6 Billion and a reasonable profitability of domestic markets and since last 5 years it has
10.6% in a highly competitive industry. The company explored newer markets outside Japan.
has a market cap of $70,000 Billion and EPS of $140.iv
Fig.1 – Profitability, Revenue & Net Income of DOCOMO Fig.2 – Japanese Telecommunications Market Share
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2. Industry analysis 5-Forces of Japanese Telecommunications
DOCOMO has been performing well
Consumers in the Japanese telecom market
historically in terms of financial and operating cash
are fairly advanced and the entire market as such is
flows. However, the recent trend has been towards a
fairly saturated currently. The bargaining power of the
slight decrease in the operating cash flows as the
consumers is fairly high as they have multiple options
Japanese mobile consumer market has become
to choose from in terms of service providers.
saturated. Further, the competition is trying to eat
into the revenue pie of DOCOMO. Suppliers of equipment and content for the
telecom players are mainly based out of Japan, USA or
Europe. Most of the suppliers are focused on
providing the cutting edge technology to the end
consumers and the implementation of large scale
network upgrades put the telecom service providers
at the mercy of suppliers who can drive a hard
bargain. However, the suppliers do not drive a hard
bargain as Japan is an advanced market which also
serves as a test market for the implementation of
advanced services elsewhere in the world. This makes
the supplier bargaining power medium in Japan.
Fig.3 – Cash Flow Analysis of DOCOMO Threat of new entrants is practically nil in
Japan as domestic companies do not enter the highly
The recent trend in the Japanese mobile competitive market and foreign companies cannot
telephony and internet market is also southwards due enter the market independently.
to the stagnation of the market. So, the industry is
looking towards a challenging decade ahead. Rivalry among the top companies in the
market is quite high as each of them tries to outdo
In light of the market situation, the most the other in innovation and consumer experience.
important question for DOCOMO in coming decade is
Internet impact is quite high on this industry.
– Can DOCOMO maintain its market leadership in an
Alliances and partnerships is the name of the game.
increasingly competitive mobile services market?
The service providers have to be internet enabled and
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3. since most of the consumers are focused on the The strategic options available for a company
online environment and social media, the internet like DOCOMO in the Japanese market are –
adoption and enabling are critical success factors. - Alliances and Partnerships
- Eco-system
Overall, the telecom industry is not appealing - Innovation excellence
for new entrants, but the existing market players - Technology excellence
have a high possibility of retaining the market share.
1. Innovation Excellence
DOCOMO’s vision is shaping a smart life.
DOCOMO Strategy Analysis & Options DOCOMO aims to bring smart life into reality by
propelling the evolution of mobile services and
The DOCOMO strategy has been to provide a new value creation through convergence of
wide range of related services to its consumers. This industries/services leveraging clouds. This goal has
enables the company to lock-in the consumers within been expressed in its vision document v.
the DOCOMO eco-system. A simple example of such The Japanese consumers have a higher
lock-in can be providing a mobile phone buyer the
propensity to consume data intensive internet
handset packaged with internet data pack. The user services like anime, music, movies, shopping, etc.
can also be provided the online payment option for These can be leveraged to increase the Average
paying the mobile bills regularly. The mobile phone Revenue Per User (ARPU) over the next decade.
can be preloaded with custom apps for accessing
social media and common internet services.. 2. Technology Excellence
Overall Low Cost Broad NTT DoCoMo has the upper hand here. It is
this unique factor which probably has helped it
Provider Differentiation retain the market leadership. The increasing use
of internet to make phone and video calls from
Best Cost laptops and mobile devices has reduced the per
capita voice call consumption in Japan and
advanced markets across the world.
Focused Low Focused Naturally, new technology is the only reason
Cost Provider Differentiation any consumer will be willing to pay a premium for
the services provided by a telecom provider.
Fig.4 – DOCOMO Strategy Segment Technology excellence in the form of new device
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4. launches, new lifestyle enhancing applications, This ecosystem can be further enhanced by providing
improved connectivity, etc. can provide DOCOMO value added services, lifestyle services and next
the requisite edge to remain relevant in a razor- generation custom services which will entice the user
thin margin industry. to remain in the same provider space. The alliances
and partnerships will further contribute to this kind of
3. Alliances and Partnership an ecosystem enhancement.
DOCOMO has been actively forming new It can partner with existing government agencies,
alliances and partnerships. Most of the alliances banks, insurance providers and utility providers to
and partnerships are primarily aimed at providing help attract the senior citizen segment which will
allied services to the consumers of mobile and create a new eco-system. This kind of an eco-system
internet services. Through partnership it has the will help keep the new age customers within the
option of increasing market reach as well as ARPU reach of various DOCOMO touch-points and thus
for existing consumers in Japanese market. increases the potential of upselling and cross-selling.
Thus, the ARPU as well as the market share can be
Tie-ups with partners like Tata Teleservices in increased.
the fastest growing telecom markets like India will
provide opportunity for DOCOMO to grow its
markets which are outside the reach of the Blue Ocean Strategy for DOCOMO
current Japanese telecommunications providers.
Japan has an increasing number of senior
citizens who are from a different generation. That
generation is not used to the use of mobile
services. However, with the latest developments
in technology like touch based devices and an
increasing number of applications and services
available on the various platforms of mobile, there
is a huge untapped market for DOCOMO.
4. Eco-system
The market of DOCOMO is not limited to mobile
phone calls, texts and internet. It also operates a
wholesome ecosystem which keeps the consumer Fig.5 – DOCOMO PMS Portfolio Mapvi
engaged in its own revenue generating businesses.
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5. DOCOMO currently has a portfolio of products The new market segment that can be
and services which are currently in the settler and targeted by DOCOMO is the senior citizen segment.
migrator segments. This provides an opportunity for The customers in this segment are different from the
the company to change its portfolio mix by adding young and existing customers of DOCOMO. The needs
new products or services to move into the pioneer and wants of services are totally different from that of
segment of the PMS map. This is possible by doing the younger tech-savvy generations. The launch of 3G
strategic value innovation to achieve a blue ocean and LTE services enables DOCOMO to provide
market space. There are various critical success innovative services like banking, insurance, utility bill
factors in the Japanese telecom industry. When we payment, face-to-face conversations, etc. to the new
map the value curve of the various KSFs on a strategy markets. These services can help DOCOMO to
canvas we can see a graph as below. immediately appeal to the senior citizens in Japan as
it increases their convenience. It is aligned with their
The advancements in technology have vision of shaping a smart life for customers.
provided touch-enabled devices which increase the
ease of use. Additionally, the latest technologies are But certain criteria need to be handled well to
light and efficient in accessing internet based services. ensure the successful adoption of these services.
Since the aged persons are usually settled in the
remote areas of Japan where the network quality may
not be as good as urban areasvii, increasing network
quality and network coverage become important.
Fig.6 – Value Curve for Telecom Industry Fig.7 –Importance-Performance Analysis for DOCOMOviii
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6. By studying the Value Curve on the strategy Thus, we can see that alliances play a major
canvas as well as the Importance-Performance map, role in not only achieving technology excellence and
we can see that the Blue Ocean Strategy for DOCOMO innovation excellence, but also for creating new
is to enter the senior citizens market. The strategic market spaces via creation of functional eco-systems.
critical success factors that DOCOMO will have to Thus, the final recommendation for DOCOMO is –
leverage to make the competition irrelevant are – building a compelling & inclusive eco-system.
- Creating an inclusive eco-system
- Simplifying technology through innovation
Simplifying technology through innovation
enables the senior customers to access the
technology and the services provided by DOCOMO
with little resistance. Reducing this resistance is the
elimination of the first barrier to the entry of this
market segment. Since DOCOMO has always been at
the leading edge of innovation curve, this should not
be difficult to achieve.
Creating an inclusive eco-system allows DOCOMO
to tap unexplored market spaces outside Japan and at
the same time create new market spaces within
Japan. Outside Japan, the financial services industry is
evolving strongly in countries like India, Japan, Brazil,
etc. which makes it a lucrative market for DOCOMO to
enter with its new packaged offerings that offer a
functional eco-system that eases the lifestyle of the
consumers. The convenience factor will help
DOCOMO grow faster than its competition who will
be more focused on offering technologies and
services which are still in the red ocean market space;
like entertainment, gaming, movies, music, etc. These
kind of services are attractive but not totally essential
to the markets that DOCOMO needs to tap in Japan.
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7. REFERENCES
i
http://en.wikipedia.org/wiki/NTT_DoCoMo
ii
http://www.nttdocomo.com/binary/about/facts_factbook.pdf
iii
http://www.nttdocomo.com/binary/about/facts_factbook.pdf
iv
http://www.bloomberg.com/quote/9437:JP
v
http://www.nttdocomo.com/binary/about/facts_factbook.pdf
vi
http://designforit.blogspot.com/2009/11/about-blue-ocean-
strategy.html
vii
http://www.nttdocomo.com/about/facts/index.html
viii
http://www.bth.se/fou/cuppsats.nsf/all/b378ba60a5008ec5c12578
3b00499608/$file/thesis2010-
0610%20wang%20och%20yang.pdf
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