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Jeffrey Funk Professor Hitotsubashi University Institute of Innovation Research

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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Jeffrey Funk Professor Hitotsubashi University Institute of Innovation Research

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  1. 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

  2. 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

  3. 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

  4. 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)

  5. 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

  6. 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

  7. Emerging Product Design and Customer Choice Hierarchies for Mobile Internet Entertainment PZ: Personalization

  8. 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

  9. Gateway Technologies for Connecting the Mobile Phone, Internet, and Products/Services in Specific Industries

  10. The Size of the Mobile Internet Markets (US$) in Japan and Europe in 2003

  11. 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

  12. Full Circle?: Evolution of Setting Standards (Gateway Technologies) and Phone Specifications

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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)

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