I-mode cell phones could rival PCs, exec says

NTT DoCoMo's I-mode cellular service--which lets consumers receive e-mail and browse the Web--is gaining 50,000 new subscribers a day, or 1.5 million a month, said Ken-ichi Enoki, the general manager of the I-mode project at NTT DoCoMo.

"The I-mode has the potential to catch up with the PC Internet market," he told an audience Monday at the International Solid State Circuits Conference in San Francisco, a five-day conference on chip design. "The I-mode is not only useful for the consumer market but as a productivity tool."

The number of PC users, of course, dwarfs the number of I-mode subscribers.

The I-mode growth rate, however, is far more rapid. The service only started in February 1999 and since then has garnered 18 million subscribers, all in Japan. International expansion is under way, and the Japanese wireless carrier invested significantly in AT&T Wireless last month.

Mobile Internet access is expected to be a huge market, with hundreds of companies targeting the emerging sector. But with the exception of I-mode in Japan, U.S. wireless Net access has been something of a bust so far.

In related news, NTT DoCoMo is also set to make a monster offering on the Tokyo stock exchange. According to Reuters, the wireless carrier aims to raise around $6.96 billion (800 billion yen) with an offering of 400,000 new shares priced at a discounted 2.066 million yen each--the biggest offering by a listed Japanese company.

DoCoMo priced the offering 3 percent below Monday's closing price and says the funds will be used for the company's expansion drive into foreign markets. The company will allow individual investors to buy 220,000 shares. Japanese institutional investors can buy up to 40,000 shares, while investors in the United States and elsewhere are allocated 70,000 each.

Just as important as the growth in subscribers, I-mode is attracting developers, e-commerce companies and others to provide offerings for the service. Approximately 776 developers write applications for I-mode, and 408 different search engines have become I-mode friendly, he said. More than 37,000 sites now provide I-mode content and subscribers churn through an average of 10 page views per site visit.

Content services have also sprouted up around the phones. Approximately 100 Web sites a day tweak their sites so I-mode subscribers can download information. News services have launched subscription services that deliver breaking headlines to customers for $1 to $3 a month. So far, there are more than 100,000 subscribers, Enoki told the audience.

In addition, corporations have begun to adapt the phones for remote data access, a concept Palm is pushing.

"The I-mode will become the simplest remote access (device) in the bunch," he proclaimed. Nonetheless, "this is a huge market, and no one knows yet who will become a winner."

The next phase in development will occur in May when the company unveils its first third-generation, or 3G, wireless service, which will deliver data between 64kbps and 384kbps. At these rates, it will become possible to deliver songs or video over wireless networks. Restaurant location programs will also be able to deliver 3D maps of the restaurant that describe the ambiance.

"The cell phone will eventually become a key to selling products and include pictures and text," he said.

Along with increased bandwidth, the phones themselves will get brawnier. Faster processors, more memory, and screens with finer resolution will all be part of the picture.

The push on I-mode, which was conceived in late 1996, is a way to stave off slowing subscription rates. Only about 80 million Japanese citizens will own cell phones and 60 million already do. I-mode allows NTT to place less emphasis on fighting over new customers and more emphasis on selling customers more expensive services.

"Competition (in the standard cell phone market) will become much more severe," Enoki said. "Income will be saturated in the near future."

News.com's Sam Ames contributed to this report.