Why i-mode Moved Slowly in the Overseas Markets? A Perspective from Institutional Differences

Abstract

The Japanese giant operator DoCoMo successfully promoted its pioneering but proprietary i-mode mobile services in the beginning of 1999. However, her overseas diffusion since 2002 was even slowly moving by gaining only one-tenth of Japanese domestic subscribers for two years' expansion. The purpose of this paper is to study the diffusion on the case of international technology transfer of Japanese i-mode. We focused five earlier overseas i-mode licensed operators located in Taiwan, Netherland, Germany, Belgium, and France from the perspective of institutional economics to explore the possible deficiencies of internationalization. We found four strategic institutional levers that stimulated i-mode diffusion in the domestic area of Japan better than the overseas. First, the leadership of operator would enhance the bandwagon effect of i-mode marketing. Second, the higher subscribing scale would provide higher network effects and economies of scale to the allied mobile device and content providers. Third, the lower mobile penetration rate curtailed efforts to remove the switching costs which made users locked by certain mobile operators. Fourth, the more capable coordination of mobile operator over complements would not only consolidate the technological evolution sooner but also integrate vertically among the mobile complements for launching mobile services credibly. In conclusion, the authors propose some strategies to internationalize a new standard by co-branding with the local reputable vendors and by the penetration pricing as the incentive for inducing switch. Besides, we suggest a plausible policy of cannibalization to facilitate the mobile migration at the standpoint of industry policy