Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9
Addressing practitioners as well as academics, this paper explicates the success factors behind the “Asia’s Mobile Miracles” in Japan, China, South
Korea, and India. The paper provides factual descriptions of the specific, practical actions taken in these regions to attain mobile success, and also lays a theoretical groundwork.
Through the use of historic descriptions, the first part of the paper succinctly describes the key features of each of the four Asian nations. Concurrent to these narratives, citations from a variety of applicable strategy literature are made in order to identify possible directions for more detailed theoretical research.
Through this expository process, the major contributory factors to the “Asian
Mobile Miracle” are identified. From this a matrix is created showing the relative rankings of importance of each of these factors by region. By deploying this matrix, prognostications are derived on the future challenges and opportunities in the four Asian nations that are being examined. Finally, conclusions are drawn about how this matrix may be suitable in the analysis of the development of mobile telecommunications in other regions of the globe.
By mid-2006, the center of gravity of the mobile telecommunications universe has shifted from Europe and North America to Asia. The number of mobile telephone subscribers in Asia has zoomed to well over 1 billion, compared to less than 300 million in the United States and the European Union. In the 1994-2005 period, Asia exhibited stunning successes in terms of mobile communications adoption and diffusion. Table 1 summarizes these achievements in Japan, China, South Korea, and
India.
___________________
Dr. Mark M. Lennon, The Pennsylvania State University, United States, Email: Mml22@psu.edu
Dr. Han Ye, Washington and Jefferson College, United States.
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9
Table 1: Regional mobile telephony achievements
Major Mobile Telecom Achievements Nation
Japan
China
South Korea
India
NTT DoCoMo – the agile mobile subsidiary of NTT, the world‟s largest telecommunications service company – converted a keyboard-averse and Internet-shunning nation into a land of intense
Internet users by means of the i-Mode service, an early version of simple mobile Internet.
With over 420 million users by mid-2006, China became the largest telecommunications market in the world, twice the size of United
States; and started driving standards in all aspects of mobile communications – networks, equipment, and services.
By creative blending of broadband Internet access and various mobile services and technologies, South Korea became the world‟s leading test pad for some of the most advanced mobile commerce offerings and mobile payment systems.
Through determined deregulation by the government and aggressive marketing by mobile operators, India emerged as the nation with the most competitively priced mobile communications markets and the fastest growing mobile user base in the world.
Source: Authors’ Research
In what follows, we present the key features of the “mobile miracles” in these four
Asian nations
– Japan, China, South Korea, and India – and draw strategic and policy insights from the experiences of these Asian nations.
In each of the Asian countries that we have profiled – Japan, China, South Korea, and
India – a variety of forces led to the “mobile miracles” in the form of rapid development, acceptance, and proliferation of mobile technologies and services. Market, technological and governmental forces converged in a nexus that boosted the availability and usage of mobile telecommunications.
In the late 1980s and early 1990s, the mobile telecommunications market was in its nascent form in Japan. Nippon Telephone & Telegraph (NTT), the quasi-national telephone company, had built out 1 st
Generation (1G) mobile technologies in the form of an analog cell phone system and a pager network, in Tokyo and other major cities.
These early efforts at mobile communications had very limited impact due to high costs, bulkiness of handsets, and the limited coverage in the rest of Japan (Steinbock,
2003).
NTT DoCoMo, the mobile division of NTT – the term DoCoMo was a short version of
“Do Communications the Mobile way” and also cleverly meant “anywhere” in Japanese
– was seen as a losing subsidiary, for which top management of NTT was quite
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9 pessimistic. To turn NTT DoCoMo around, Mr. K. Ohboshi, a senior and somewhat brash executive, was appointed to head this mobile subsidiary. His initial act was to survey both the mobile communications and the Internet markets as they were evolving in Europe, the rest of Asia, and most importantly the United States (Kodama,
2001; Ratliff, 2002).
Realizing the potential of the Internet very early on, his vision was to make the Internet accessible to mobile phone users. To realize his ambitions, Mr. Ohboshi assembled a team of US trained MBA graduates, and teamed them up with restless engineers from the NTT parent corporation. In an effort to be first to market and limit capital expenditures, he sought to deploy existing NTT resources to realize his goal.
Specifically, he made use of the existing pager network, which had been ignored by
NTT. This was largely due to the pager network‟s paltry14.4 kbps bandwidth, which would never be sufficient for graphically rich Internet access (Steinbock, 2003).
Instead of being thwarted by this obstacle, Mr. O hboshi embraced it. Following Agle‟s
(1999) findings that a firm‟s growth and performance is reflective of the beliefs of top management, Mr. Ohboshi directed his engineering staff to create a mobile system that would accommodate this bandwidth limitation, by developing relatively uncomplicated technology that would allow the consumer to access Internet content through a simple, text based “menu-ing” system on their handsets from NTT DoCoMo compatible websites.
To promote rapid creation of mobile website content by third parties, NTT DoCoMo chose the programming language cHTML (compact Hypertext Markup Language), an easy-to-use subset of the Hypertext Markup Language (HTML), the prevailing popular language for creating web content. Compared with the far more complex WAP
(Wireless Application Protocol), a widely accepted but difficult-to-program standard for mobile Internet content, webmasters in Japan could readily convert their sites from
HTML into cHTML and make them available to consumers. In addition to these technical decisions, NTT DoCoMo further supported third party developers by taking over the payment and billing systems of these sites, creating a simple, unified bill for the end consumers (Anwar, 2002; Kodama, 2002; Lennon, 2006).
In a classic Schumpeterian (1936) example of the manufacturers first creating a product, then educating the public to its need for it, the 2.5G i-Mode service was launched in the Spring of 1999. From the outset i-Mode was outrageously successful and surpassed all expectations. This combination of simple technology and streamlined billing system proved to be a hit with the Japanese market. Within the first two months of operations, there were over 10 million i-Mode users, with over 20,000 i-
Mode accessible sites (Kodama, 2001; Ratliff, 2002). By 2005, the number of users had risen to over 65 million, in a country with a population of 120 million
1
Part of the success of i-Mode was driven by the ready acceptance by Japanese youth, who adopted the technology for several reasons. First and foremost was the opportunity to access the Internet, for many for the first time. At the time of iMode‟s inception, Internet use was not very common in Japan. Even as late as 2003, 70% of
1
Source: NTT DoCoMo 2005 Annual Report
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9
Internet access in Japan was through mobile phones (Kodama, 2003; Steinbock,
2003).
For a highly advanced nation, desktop Internet reached less than 20% of the population in the era prior to i-Mode. This was due largely to the high Internet Service
Provider (ISP) costs – about US $75 monthly – as well as the high cost of a secondary phone line (US $750), plus the space constraints in the compact Japanese homes that made a bulky computer and monitor impractical. By comparison, NTT DoCoMo charged a mere US $3.50 monthly fee and charged for content by the “data packets” transmitted, not by the minutes used. This encouraged people to download Internet content, and allowed economical “offline” viewing of content on their tiny mobile handsets (Bradley, 2002; Steinbock, 2003).
Mobile ph ones also helped increase the independence of Japan‟s restless youth by enabling them to form group identities (Kodama, 2003). Japan is a group-dominated society, in which one‟s identity is tied to one‟s group affiliations, be it corporate, social, or familial. Given that corporate ties were becoming less prevalent due to the high unemployment rate, mobile phones and SMS offered an alternate way of communing.
Through mobile technologies, Japanese youth were able to reach out to other individuals and form social networks. So prevalent are these power users that a new word has entered the Japanese lexicon
– „oyayubi zoku‟ or „thumb tribe‟ (Lennon,
2006). The term refers to young people who are constantly pressing buttons on their mobile phones, sending messages to other „tribe‟ members.
From this 2.5 Generation (2.5G) start, both NTT DoCoMo and its competitors, especially KDDI, have sought to develop and build 3 rd
Generation (3G) networks.
These systems allow graphic rich, multimedia content, enabling a myriad of applications and an Internet experience more akin to the desktop. Japanese consumers can now use their mobile phones for video conferencing, playing games, listening to music, watching television, using the handset as a payment system for
Point-of-Purchase (POP) sales such as train tickets, and a host of other applications.
The Japanese have readily accepted these as it is a society that prizes both innovation and convenience, both of which are found in mobile telephony (Lennon, 2006).
By mid-2006, with over 420 million users and growing at a rate of 5 million users per month, the People‟s Republic of China (PRC) has numerically the largest user base of mobile technologies in the world.
2
The major driving factor for the proliferation of mobile phones is the lack of landline infrastructure. Past attempts by the central government to extended telephone services to the countryside have been thwarted by such acts as the digging up of copper cable to sell for scrap by villagers!
Rather than make the enormous investments necessary for infrastructure, the Chinese government has instead decided to leap the 1 st
Generation (1G) analog cellular service, and instead install 2 nd
(2G) and 3 rd
Generation (3G) digital mobile
2
Source: The National China Television News Service, as broadcasted on July 1 st
, 2006
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9 technologies. This is in congruence with Foster‟s (1986) S-curve wherein a new entrant to a market often enters on a technological level higher than the existing competitor.
Critical to the success of the mobile phones in China has been the large amounts of foreign direct investment (FDI), including substantial chunks by Nordic and American telecommunication firms. By the inception of the Japanese i-Mode system in 2001, over US $50 billion FDI flowed into China annually and China‟s stock of FDI zoomed to over 30 percent of its gross domestic product (GDP), with a plethora of foreign mobile communication firms creating joint-ventures or subsidiaries in China. So prevalent were Motorola phones in northern China that the Chinese pronunciation of the name
„Motorola‟ became the Chinese slang term for mobile telephone. (Steinbock, 2003)
The Chinese government has been extremely adept at trading access to their markets for foreign technology, which has enabled China to become a major manufacturer of handsets and mobile telecommunications equipment. So advanced has China become that it is developing its own mobile technologies, as illustrated by the battle over the adoption of mobile network standards.
The two major PRC mobile telecommunications companies use differing standards.
China Netcom in the north deploys US based Qualcomm‟s CDMA (Code Division
Multiple Access) standard for mobile telecommunications. China Unicom, dominant in the southern regions of China, uses the European standard GSM (Group Special
Mobile). The major drawback the Chinese government sees in both these standards is the reliance on and the need for licensing payments to foreign corporations. In response to this, China has created a new homegrown standard, TD-SCDMA, which it hopes will serve as a 3 rd Generation (3G) platform. In accordance with Hill‟s (1997) findings that the creation of standards by Intel and Microsoft greatly aided advances in
PC technology, Chi na‟s argument is that the establishment of a dominant standard, controlled by Chinese themselves, is the best way to foster innovation in what has become the world‟s largest mobile telecom market. China‟s goal is to feature this new standard at the 2008 Beijing Summer Olympics.
While still under development and far from perfected, China‟s belief is that the demand in the domestic market for this new TD-SCDMA technology will be strong enough to support this third standard. China is being aided in this endeavor by firms such as
Siemens and Analog Devices. Given that it is a command driven economy, not subject to monopolistic or collusion regulations or legal restrictions, China can practice what
Brandenburger and Nalebuff (1996) called “co-opetition” wherein all parties in an industry, even competitors, can work together to establish a standard.
It remains to be seen whether China will be able to continue to play one firm‟s technology off the other, or to impose its homegrown standard in other parts of the world. It is amply clear, however, that all global mobile technology players will have to adjust their standards and strategies in response to the developments in the mobile sector in China.
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9
With over 40 million subscribers in a population of 49 million, by 2005 South Korea had the highest density of mobile phone users anywhere in the world.
used was state-of-the-art 3 rd
3
The technology
Generation (3G) mobile communications technology.
Users were able to access the Internet with rich graphical interface, mirroring the
Internet experience from a desktop computer. A myriad of multimedia applications were available, from MMS (multimedia messaging), digital picture phones, streaming video feeds for both video conferencing and television, to usage of the handset as an electronic wallet for the purchase of goods ranging from cans of Coca-Cola at a vending machine to airplane tickets. Like the Japanese, the Korean consumer has readily adopted the mobile phone for its ease of use, cost effectiveness, and convenience (Lennon, 2006; Steinbock, 2003).
South Korea was one of the few countries in the world where mobile phone users could watch long television programs on their mobile handsets. The technology of streaming the video content had been perfected by means of “time-slicing” and buffering of content, but the cost was quite high – watching a 45-minute TV show on the mobile device screen could cost the user as much as US $50.
A major driving force in the development and proliferation of mobile telecommunications in South Korea was the adoption of a single network standard.
Through the tireless lobbying efforts of USbased Qualcomm‟s founder and CEO Irwin
Jacobs, Qualcomm was able to sign a deal with South Korea to establish CDMA as the only mobile telecommunications standard to be deployed in Korea (Steinbock, 2003).
This act has had major implications. As envisioned by Teece (1987), through the adoption and licensing of an extant technology advantages can be gained. South
Korea has been able to leverage off Qualcomm‟s established technologies in several ways.
By enacting a single standard a nd by using this platform‟s core capability (Meyer,
1993), developers have been able to concentrate their efforts on creating new applications without the necessity of expending resources in creating a multi-platform products. Qualcomm now has a test bed in which to try out and perfect its latest iterations of CDMA. South Korean manufacturers have also benefited, as companies such as Samsung and LG have become the dominant manufacturers for CDMA-ready handsets for both the domestic and international markets. Therefore many strategic advantages have been attained through the use of this licensing (Gallini, 1984).
Because of these reasons, a relatively small country has become a leading global player in the field of mobile telecommunications.
With a population of over 1 billion, and an installed mobile user base of 50 million users as of December 2005, the Indian mobile market is growing at the rate of 10% a month
(Banerjee and Lennon, 2006). India is poised to explode onto the international scene as a major mobile telecommunications player. For similar economic and logistical reasons as China, as a large developing nation mobile communication is seen as the
3
Source: 2005 Samsung Annual Report
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9 best way to spread telephone access throughout the countryside. This was a wise course of action, for adoption of obsolescing landline technologies and the resultant establishment of ancillary supporting infrastructures would cause difficulties when a superior product or technology begins to gain market share (David, 1985). While similar to the PRC in that both standards of GSM and CDMA are currently in use, the
Indian government has no intentions of developing their own standard.
India‟s move into the high gear of mobile telecommunications was characterized by fits and starts. The 1994 telecom reforms divided the country into over 20 circles and private landline and mobile licenses were offered in each circle via auctions. Initial mobile licensees charges and fees were exorbitant: nearly US 40 cents per minute for local calls, and more for national long distance and international calls. Given India‟s low income levels, the uptake of such services was poor and usage was even poorer
(Banerjee and Lennon, 2006).
By the end of 2005, India had six major national-level mobile telecommunications players. The GSM standard was introduced earlier and was offered by Bharti‟s Airtel,
Hutch (a venture of Hutchison Telecom), Idea (an entity jointly owned by Birla, Tata, and AT&T), and the state-owned BSNL.
4
Until the end of 1990s, mobile license holders were required by the regulators to use GSM standard only. Later, Reliance and Tata
Telecom entered the market by finding a regulatory loophole that allowed these firms to offer mobile phones based on the CDMA standard.
India‟s mobile firms offered text based 2 nd
Generation (2G) services similar to Japan
‟s
NTT DoCoMo i-Mode service, as well as some multimedia applications such as
Reliance‟s R-World. In the latter, a limited number of websites could be accessed for downloads of games, ringtones, astrology, etc.
5
Other carriers such as Hutch were allowing a limited amount of downloadable television programs cached on their servers.
6
There are two major contributors to the successful proliferation of mobile telephony in
India: fierce price cutting combined with the widespread use of India‟s “Killer App” –
SMS instant messaging. Due to severe undercutting of prices, by 2005 three major carriers
– Reliance India Mobile (RIM), Bharti Telecom‟s Airtel, and Hutchison
Telecom‟s Hutch brand – dominated the mobile markets in India.
The unexpected „Killer App‟ for Indian mobile users turned out to be SMS. Low-priced
SMS greatly accelerated the adoption of mobile telephony. Due to a variety of cultural issues, Indians are somewhat reluctant to use voicemail – talking to an electronic system is just not comforting. This results in a desire to contact a person right away, but without the necessity of engaging in conversation. SMS is the perfect solution
(Banerjee and Lennon, 2006).
4
Source: 2006 Gartner Group White Paper on Indian Telecom
5
Source: Reliance R-World website, http://rworld.relianceinfo.com/ accessed July 27 th
, 2006
6
Source: 2004 Hutchinson Telecom Annual Report
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9
Because of the service‟s overwhelming popularity, the three major Indian carriers started using SMS as a loss leader in order to gain greater market share. Prices plummeted so much that many basic SMS messages were either free or no more than
1 Rupee (US 2.5 cents). Even SMS based mobile services were very reasonably priced – most ringtones, for example, could be downloaded for Rs. 3 (US 6 cents) to
Rs. 7 (US 15 cents).
Recognizing this opportunity, businesses developed a variety of ingenious uses for
SMS. An example is Jet Airways‟ “Jet Mobile” SMS based service wherein travel updates are available through mobile phones.
7
As winter fog is a common cause of delay in major airports including Delhi and Kolkata, Jet Airways has established a four digit number to dial on one‟s mobile to receive an SMS text message updating the traveler to weather conditions and their corresponding impact on potential plane delays. While this is quite clever, such a service provides little to no direct fiscal revenue for the carriers – but it does boost customer satisfaction that may lead to repeat customers.
As for the mobile providers, however, since SMS is a loss leader, Indian mobile carriers must seek other sources of revenue. This is in accordance with Hamel‟s
(1998) findings that the strategy of innovation is the key to the creation of wealth.
Indian providers will have to, in the pithy words of Nault (1996)
, “eat their own lunch”, and provide non-SMS services and features to enhance revenue streams.
Based on the factual and theoretical aspects presented so far, we now turn to five key factors that helped engender the four Asian mobile miracles examined in this paper.
Table 2 outlines the relative impact and importance of each of these five factors on the four respective regions.
7
Source: Website for Jet Airways ‘s travel advisory service, http://www.jetairways.com/Cultures/en-
US/Products+and+Services/Jet+Mobile/ , accessed July 27 th
, 2006
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9
Table 2: Key Contributory Factors in Asian Mobile Miracles
Contributory
Factors
Proactive
Government
Policy
Technological
Leapfrogging
Popular Wedge
Applications
Consumer
Openness to
Innovation
Favorable
Network
Economics
Low
High
Medium
High
High
Source: Authors’ Research
High
High
Low
High
High
Low
High
Medium
High
High
High
Low
High
High
High
South Korea and China exemplify the benefits of a partnership between government and private industries to promote the creation and explosive expansion of a new technology. Similar to India, China is a developing nation of huge potential growth. The command economy has allowed the PRC‟s government will to prevail upon the market, to accelerate its goal, like India‟s, of universal telephony. The question here is whether in the long run the command economy can override market forces, and establish its own technological standards.
From the Japanese and Korean experiences, one can see that highly developed nations can benefit from the creation and adoption of newer technologies. Led by NTT
DoCoMo‟s revolutionary i-Mode service, an alternative to US and European PC-based
Internet access was created. This demonstrates that there can be a paradigm shift when technologies are so revolutionary that they instantly succeed in creating high demand and a burgeoning market.
In lesser-developed nations too leapfrogging is the logical choice. As has been shown,
China and India have both benefited greatly by foregoing both landline and analog mobile telephony, and have instead made the leap directly into 2G and 3G digital mobile technologies.
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9
The case of India illustrates how a “Killer App‟, SMS, can serve as the spearhead to lead market penetration of a new technology. Similarly, during 1999-2000 the very large number of simple menu-driven i-Mode applications in Japan created not just a huge market for 2.5G mobile telecommunications but laid the groundwork for the mobile Internet and for later sophisticated 3G and the future 4G data services. In these cases, without government interference or fiat, rapid consumer acceptance of mobile telecommunications occurred because the services were simple, appealing, and affordable.
As in the Indian example of SMS, consumers in all the four nations, particularly the more affluent Koreans and Japanese, are ready, willing, and able to adopt newer technologies. Mobile operators and handset manufacturers find a ready audience for their innovative features and functions. An extremely common and immensely popular feature is the built-in digital camera, enabling the sharing of still and video photos amongst users.
Another more nascent, but rapidly proliferating, technology is the use of mobile handsets as MP3 music file players. In response to the overwhelming success of the iPod and iTunes services offered in the US, KDDI has begun a similar music download service. Advancing beyond the iPod capabilities, using their combination radio and
MP3 player handsets, Japanese KDDI customers can listen to a song broadcasted over the radio, then with the touch of a button instantly purchase and download the
MP3 file for offline listening.
8
The success of the mobile proliferation in the four Asian nations is in no small way due to both macro and micro economic reasons. On the macro side, the building of a mobile infrastructure (e.g. cellular towers, etc.) to give universal telephone coverage was much more cost effective for developing nations like China and India. On the micro side, the pricing schemes in Japan and Korea made the adoption of the mobile
Internet much more financially attractive than land based options.
With the continued advances in mobile technologies, particularly the advent of 4G standards, further changes will be engendered in the four regions. In the context of the schema presented in Table 2, we turn to the emergent challenges and opportunities in the race to sustain the Asian mobile miracles.
Consumer demand for convenience and utility are the major drivers for the continued adoption of 3rd and ultimately 4th generation technologies. NTT DoCoMo‟s main rival,
KDDI has sought to avoid competition with the popular 2.5 Generation i-Mode service.
Si milar to China and India‟s actions, KDDI has also followed Foster‟s (1986)
8
Source: Website for TelecomAsia.Net http://www.telecomasia.net/telecomasia/article/articleDetail.jsp?id=340463 , accessed July 27 th
, 2006
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9 recommendation for the attacker to develop higher levels of technology than the incumbent leader. KDDI has therefore jumped a generation of technology by developing and competing with 3rd Generation handsets and applications, foregoing the 2.5G market all together.
9
Given its situation in a hyper competitive market, NTT DoCoMo and its challengers must constantly innovate to preserve market share (Craig, 1996). NTT DoCoMo should be cautious, however, in not bringing to market too early its innovations. When the company first released their 3G handsets in 2001, they were fraught with problems and had to be recalled at great expense (Drucker, 2001). Currently NTT DoCoMo and its competitors are developing 4th Generation technology, with download speeds up to 10
Mbps. While still very much in the development stage (the current 4G „handset‟ requires a minivan for transporting) as in previous technologies Japan will continue to be a leader in product innovation and technical advancement.
Via central mandates from the government, the PRC has set itself extremely ambitious goals in the development of mobile technologies. The TD-SCDMA standard is on target to be debuted at the 2008 Beijing Olympics. In an even more aggressive goal, the government has decreed that 4G technologies would be operational by the year
2010, five years ahead of predictions made by competing Japanese and European mobile telecommunication firms.
While these predictions may be overly optimistic, continued FDI and manufacturing for the domestic consumption will further strengthen China‟s position in the world market.
Whether their intended homegrown TD-SCDMA standard will be robust enough to replace the existing world standards remains to be seen. As described by Ghemawat
(1991), this selection of strategy is manifested by a firm (or in this case, a corporatist nation) making investment decisions that are hard to reverse, and which tend to define choices in other areas. In this case, there is the need for the development of a whole host of ancillary services, such as the manufacturing of TD-SCDMA compliant handsets. Even with these uncertainties however, if past history of the success of the
Chinese in developing its economy is any indication, this choice of a new standard may be auspicious and set the stage for further Chinese dominance in the mobile telecom markets.
By having adopted the CDMA standard, Korea does run the risk of suffering technological lockout (Schilling, 1998) should CDMA not continue to be embraced as a dominant design. This risk is mitigated though by the benefits it has accrued by serving as Qualcomm‟s test bed. A priori knowledge of the chosen technology will continue to give advantages in developing new products (Cohen, 1990). Future CDMA refinements will maintain Korea‟s ability to be the first to market for 3 rd
and ultimately 4 th
Generation handsets.
9
Source: 2004 KDDI Factbook
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9
Consumers will further benefit by being at the cutting edge of available software and hardware, with the latter eagerly developed and marketed both domestically and abroad by Korea‟s robust electronics manufacturing firms. Performance excellence will continue to be achieved through this practice of radical innovation (Terziovski, 2002), resulting in a wide variety of services offerings, and superior manufacturing. This would enable Korea to remain at the forefront of worldwide mobile telecommunications.
With continued discounting of services exacerbating the price war amongst the three large mobile carriers, consolidation within the industry will continue at a rapid pace.
Following Nelson and Winter‟s (1982) quintessential strategy of “search and seek”,
Indian providers will no doubt develop new revenue streams. Adoption of handsets and multimedia services beyond the text-based SMS will be both inevitable and imperative.
Without these happenings, Indian service providers will not be able to differentiate themselves to gain market share, in order to earn fiscal profits necessary for innovation and market expansion. Due to demographic drivers such as India‟s growing and affluent middle class, however, the desire for more sophisticated mobile services is expanding. This pent-up demand is truly a powder keg of opportunity, waiting to explode. Global and Indian telecom product and service providers just need to provide the right sparks to light the fuse.
Asia will continue to remain the leader in mobile telecommunications. The great advantage it has over USA and Europe is the vast population of consumers and their eager desire for Internet connectivity from means other than the desktop computer
(Weintraub, 2003). While creative uses of 3 rd
Generation technologies, such as vending machine payments, were first initiated in the Nordic countries (Steinbock,
2003), Scandinavia simply does not have the consumer base to create economies of scale necessary to promote these technologies. Therefore, Asia will remain the leader in the wide scale acceptance of these advances.
The five key contributory factors we outlined in Table 2, however, may well be applicable to other regions, particularly large sections of the developing world.
In the area of government intervention, there may be unintended consequences. With nationwide, reliable, and cost-effective communication networks, it may become increasingly difficult for totalitarian regimes to operate in isolation. In the case of China, it is expected that this proliferation of communication would continue to encourage free speech, and help to promote the liberalization and democratization of the nation.
In regards to technological leapfrogging, the Chinese and Indian practices could serve as a model for nations in Africa, the Middle East, Eastern Europe, and the states that emerged from the former Soviet Union. As the advanced nations of Asia continue to upgrade their services from 2.5G to 3G and ultimately 4G levels, used equipment and manufacturing capacity for these older technologies will not be needed. It may be possible that extra profits can be had from these sunk costs by supplying these nascent mobile markets with the 2G and 3G materials.
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Proceedings of 10th Global Business and Social Science Research Conference
23 -24 June 2014, Radisson Blu Hotel, Beijing, China, ISBN: 978-1-922069-55-9
As for “wedge” applications and “consumer openness to innovation”, certainly SMS,
Internet access, and multimedia applications are at the core of the successful mobile offerings in these four Asian nations. The most fundamental “wedge” and the most basic “Killer App”, however, should not be overlooked: specifically the power of mobile voice communications in markets where telephony has been mostly unavailable in the past. It is this capability that will be the impetus for mobile proliferation in developing regions that have never even had basic, landline telecommunication service. As consumers in these states grow accustomed to using mobile phones, demand for other services, particularly internet access, will follow.
From an “economics of networks” perspective, the propagation of connectivity caused by universal coverage via inexpensive mobile telephony may well increase the efficiency of manufacturing and distribution. This in turn could lower the costs of goods and services, thereby promoting economic growth. Outsourcing of manufacturing and service operations to newer global locations would continue to proliferate.
From all these various aspects, it is clear that there are valuable lessons to be learned from the Asian mobile miracles. This paper is only the first step in an ongoing research project dedicated to examining and understanding these issues. We have presented just some of the steps for practitioners and policymakers on how to achieve mobile success, and theoretical constructs for the academicians to examine. It is hoped that our conclusions will aid in various strategic and research efforts.
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