Internet A La I-Mode

By Tim Larimer/Tokyo

In Japan they are speaking in thumbs. Everywhere you look--in restaurants and in movie theaters, on crowded trains and in taxicabs, in baseball stadiums and in university lecture halls--the New Man and New Woman of Japan walk and sit with head down, arm extended and one thumb feverishly tapping buttons on a new kind of cell phone, one that lets you surf the Web using a technology called i-mode.

For 19 million Japanese, i-mode is the preferred mode of communication. Kids are e-mailing one another pictures of Hello Kitty, the cloyingly ubiquitous national feline. Teenagers are building networks of i-friends that they e-mail but never see. Office workers are trolling online, looking for love. During the recent Coming of Age Day holiday, which honors young people turning 20, mayors in several villages walked out of celebrations because students in the audience couldn't stop their thumbs from wagging. "Forget my phone at home?" Takumi Ebina, 16, asks incredulously. "I would never do that. I can't imagine getting through the day without i-mode."

I-mode isn't just a fancy cell-phone service. It's the vanguard of Japan's hottest company, NTT DoCoMo Inc., which is making inroads and investments all over the globe, including a 16% piece of AT&T Wireless, which it bought for $9.8 billion. DoCoMo plans to wage the next great wireless war based on the idea that you will no longer need to carry an assortment of Palm Pilots, Blackberrys, Discmen, pagers and phones to keep in touch or keep in tunes. In DoCoMo's world, you'll carry only a single broadband phone to e-mail friends, download and listen to music, read magazine articles and log on to thousands of i-mode websites for anything from menus to dating services to medical help. You might even use the phone to call somebody.

And while i-mode operates at only a poky 9.6 kbps, the company promises that when its service moves to third-generation wireless technology, 3G, it will blow away anything on your desktop PC. DoCoMo will introduce 3G in Japan this spring and then begin a global rollout in Europe, first using a somewhat slower interim technology. AT&T Wireless plans to offer a version of i-mode later this year.

To Web-surfing Americans, i-mode may seem like a step backward. Their PCs can do and see a whole lot more than the i-mode-loving Japanese can find on their little phones. But i-mode isn't designed to compete with the desk-bound Web. "With a mobile phone, people don't have much time to read through a lot of data," says DoCoMo's Keiichi Enoki, one of i-mode's creators. "We thought people would want bursts of information while they are on the move."

And what are those info bursts? There are already some 40,000 sites designed specifically for cell phones, many of them truncated versions of regular Web portals, so there isn't a shortage of content. Much of that content is about sex, sports, sex, astrology, sex, animation and sex. Some of the most popular sites offer downloadable screen savers or animated avatars to attach to e-mail. Others offer a wide selection of ringing tones, including such preselected jingles as It's a Small World.

There are plenty of practical applications too--sites that navigate train routes, make concert reservations, find restaurants and follow the stock market, all on the fly. Says Kirk Boodry, a senior analyst at Dresdner Kleinwort Wasserstein, in Tokyo: "These are different animals. The fixed-line Internet is about richness of content. The mobile Internet is about reach of content."

DoCoMo figured that out early, in part because it's a radical company for Japan. Run by a collection of castoffs and misfits from parent company Nippon Telephone & Telegraph (think of the old AT&T, only slower), DoCoMo isn't bogged down by Japan's sclerotic management style. The company's $175 billion market cap now dwarfs NTT's, and it is projected to earn $3 billion on sales of $39 billion for the fiscal year ending March 31.

DoCoMo's phenomenal success came in large part because of Enoki's shrewd strategy: make it easy to use, easy to pay for and loaded with gimmicky content to dazzle and entertain Web novices. "The Internet scared Japanese people," says Yukiko Takahashi, a manager at Bandai Networks, a subsidiary of the toy company that gave the world the Tamagotchi virtual pet and created rudimentary games that have been big hits on i-mode. "It made people think about connecting a PC, using a keyboard, modems, ISDN lines, stuff they didn't understand and stuff that cost too much. The smartest thing DoCoMo did was not to use the word Internet in any of its promotions."

Indeed, Japan and the Internet have gone together like sushi and ketchup. It's still surprising that tech-savvy, gadget-happy Japan sat on the sidelines during the boisterous dotcom boom. (Remember that?) Even today, in Japan, the world's second largest economy, only 625,000 homes have high-speed Internet access, out of a population of 126 million people. PCs never caught on, in part because the first models were ugly and bulky and used keyboards the Japanese aren't comfortable with. "We're keypad people," says DoCoMo's president, Keiji Tachikawa.

But the more important obstacle was money. Telecommunications is still a tightly regulated industry in Japan. Local phone calls are expensive and charged by the minute. Money, in fact, is one of the reasons the Japanese send e-mail on i-mode instead of simply calling their friends. DoCoMo charges i-mode users according to the amount of data they receive or send, not the amount of time they are online. One message with 50 characters costs 1 yen. A 1-min. phone call? Twenty yen.

Even so, the typical i-mode subscriber racks up about $80 a month in charges. Take Koji Hakuta, 28, a truck driver. In his pre-i-mode days, he would deliver a load of pipes from Tokyo to Nagoya and then return empty. But a year ago, his boss launched a site for i-mode that brokers deals between drivers and cargo companies. One night, Hakuta logged on and found a client needing pipes trucked the other way, back to Tokyo. That load earned Hakuta an extra $230. "It's changed the way I work," Hakuta says. The only problem is, he's so hooked on i-mode, browsing sites and e-mailing friends that his boss complains his phone is busy all the time.

The i-mode world is also heavily populated by teenagers. When Mami Kato, 17, has a hankering to see her favorite boy band in Tokyo, she pulls out an indispensable weapon: her ivory-toned mobile. She punches a key five times with her thumb and logs on to a chat room for groupies of SMAP, the 'N Sync of Japan. There she picks up a rumor that the SMAP boys will be gathering near a local subway station. She thumbs out a message to a friend, and the next day, she and some 300 other boy-obsessed teenyboppers are staking out the exits. "The mobile phone is crucial for following my heroes," the mini-skirted, frizzy-haired Kato says. "It's competitive out there." Suddenly she stops talking. Incoming e-mail to check. "I've gotta go," she says.

So does DoCoMo. To get established worldwide, the company is building alliances with foreign telecom giants and media heavyweights, everyone from AT&T and AOL Time Warner (parent company of TIME) to Telecom Italia Mobile and KPN Mobile in Europe. The stakes are enormous. What DoCoMo has to offer is experience operating a hugely successful wireless data service. What it hopes to gain is access to customers and a chance to urge companies to adopt the technical standards that it favors. DoCoMo plans to establish a mobile Internet service with European partners by the end of the year. That should be a fairly easy launch, since the clunky Web phone service currently available, which uses a technology called WAP (wireless application protocol), has been a dud.

In the U.S. the challenge is a bit stiffer, primarily because the kinds of services offered on i-mode don't seem that marketable to Web-savvy Americans. "I think generally that there's more unique to it [as a Japanese product] than there is that's common to it" as a global product, Microsoft Asia president Michael Rawding told Reuters last month. Others who have watched the i-mode craze take over Tokyo are more optimistic. "Of course there have to be cultural adaptations," analyst Boodry says. "But that's no big deal. They will figure out in the U.S. what kind of stuff to offer."

In fact, that's exactly what AT&T Wireless is doing. The company plans to introduce elements of i-mode sometime this year, possibly under a different name. The company won't be specific about content, but e-mail is a must. AT&T Wireless will probably focus on practical areas such as stocks, news and other information, rather than Japan's Hello Kitty approach.

Enoki, for one, has no doubt that i-mode will succeed in the U.S., reasoning that, in the end, utility will win out. But to some extent, i-mode's success in Japan has as much to do with the peculiarities of Japanese culture as it does with the technology. In a place where eye contact and direct speech are avoided, a heads-down, thumb signaling device is a perfect communications instrument. That may not be the case in the in-your-face U.S., where no place is too public to conduct an intimate cell-phone conversation in a loud voice. It's hard to imagine the U.S. becoming a nation of thumb talkers. But if i-mode can substitute a finger for the cell-phone chatter that is filling our theaters, restaurants and commuter-train cars, it will draw a thumbs-up from most people.

--With reporting by Sachiko Sakamaki/Tokyo

With reporting by Sachiko Sakamaki/Tokyo