Tuesday, June 21, 2005

Smart move by a giant

An interesting story in the Nikkei points to a strategy on NTT DoCoMo's part that has huge implications for number two and three operators au and Vodafone: They are apparently considering opening their networks, outside of the major metropolitan areas, to newcomers.  In my post of last week I cast aspersions on Softbank's ability to roll out their network nationwide by next year. With this development, the main stumbling block is removed.  Softbank will still need to work on customer service, big time, if they are to win many customers, but the ability to compete on price, partially as the result of a reduced need for network development, could well lead to a price war. 
This is an incredibly astute strategy on the part of DoCoMo to pursue a divide and conquer strategy: By enabling the early entry of Softbank and eAccess, prior to mobile number portability being introduced, they create a market situation of five smaller rivals rather than three. This will allow them to paint the value proposition as 'there are the rest, and then there is DoCoMo.'  This will play well to Japanese consumers, who tend to go with the strongest brands in a croweded market.  The behavious is something like, 'when in doubt, choose the leader.'  The introduction of the two or three new entrants could create that doubt.  Further, this strategy allows them to focus on the customer segments that are not particularly price sensitive, including the business segment.
Though it is a small story, and doesn't mean the sky is falling, to those in the mobile telecoms sector, this changes everything.

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