iMode in die mode

Cellcoms new management just doesnt believe in the expensively-acquired platform.

With mixed feelings, but no real shock, we announce the premature passing of iMode. You wont find this announcement in the obituary columns. You probably wont hear any eulogies of the departed, either. Actually, iMode is now in a coma -- a vegetable. Its life support systems arent being completely shut off, so the announcement of its death is unofficial. To tell the truth, though, the entity that was to have given iMode life, and to have infused it with blood in the form of financial resources and management attention is no longer doing so.

iMode is the content platform of Japanese wireless giant NTT DoCoMo (TSE: 9437; NYSE: DCM; LSE: NDCM). It includes technological tools, local and international content, and special end-user devices. IModes content delivery features simplicity and a minimum of clicks by users.

Launching the iMode platform last September was supposed to be Israeli wireless operator Cellcoms most important innovation in years, and one of its most significant ever. It was designed to distinguish Cellcom from the other wireless operators, and to substantially boost the companys content revenue. Cellcoms previous management worked on it for over 18 months. Now, a few months after the launch, it is evident that iMode will not take off.

Timing is everything in life, and thats true for iMode, too. Its fate was sealed the moment that Cellcoms new owners replaced the companys management. The new team, headed by CEO Amos Shapira, doesnt believe that iMode should be Cellcoms main content platform. It expresses this lack of belief in iMode by not allocating resources to it.

I dont want to judge whether adopting iMode was correct or a fundamental error. Not even results can answer that question now, because such results do not exist, and never will. Cellcoms competitors had two main criticisms of iMode. The first was that the service was more suitable to Japan than to Western countries. The second was that the wireless industry had greatly changed since the service was launched in Japan in 1999, and iMode is no longer needed for offering diverse wireless content.

Consistency was never a Cellcom virtue

Other operators around the world joined the iMode alliance, including giant Russian and British operators. This fact indicates that many operators nevertheless found the iMode vision logical, even outside Japan, because the platform was powerful, and made it easy to use content.

iMode, however, demanded Cellcoms full attention. Benign neglect wont do the trick. Installing the iMode platform, with its technology, switching, content, and education of subscribers, is a very expensive project that takes management resources away from other areas. Cellcoms previous management, headed by former president and CEO Dr. Yitzhak Peterburg, decided on an unconventional approach to wireless content and its use. The system they chose might have proved successful in the Israeli wireless content market, which has not yet taken off. However, it also risked a loss of direction, resources, and time, thereby turning Cellcom into a loser in its competition with the other wireless operators. The companys new management has decided that the risk outweighs the reward.

Dont get me wrong. iMode currently has 70,000 subscribers, and Cellcoms target is 150,000 by the end of this year. The platform is not being abandoned completely, perhaps because the company realizes that choking it off is more expensive than letting it die on the vine. What management has decided is to turn iMode into a shelf product with minimal investment. Today, its clear to practically everybody that iMode wont survive Cellcoms transition to 3G.

The bottom line is that Cellcom wasted millions of dollars and huge personnel resources on a product that was given no chance of succeeding. Consistency was never a Cellcom virtue, and iMode has become a key part of the companys inconsistency.

Published by Globes [online] - - on January 26, 2006

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