What is it? Wireless, Web-capable phones and other devices that enable users to access the Net while on the move. Tsutaya Online, the online arm of the Tsutaya video store chain, uses NTT DoCoMo Inc.'s i-Mode servicealways-on, wireless data transfer technologyto shrink Web pages onto mobile phones with screens the size of credit cards. I-Mode is being used almost exclusively in Japan to boost sales of everything from videos to magazines.
Why bother? The convergence of the Net and mobile phones enables new services and creates a vast new market as consumers around the world start logging on from Net-capable phones. Market researchers predict that by 2004, the number of mobile Internet users will rise to around 1 billion, from roughly 200 million today. Tsutaya has 2.15 million m-commerce subscribers, and its wireless i-Mode Web site is one of Japan's 10 most popular entertainment sites, racking up 50 million page views per month.
Business payoff: Tsutaya customers who use the Web and mobile phones spend up to 9 percent more per month than their offline counterparts. CD sales go up when customers listen to music clips e-mailed to them by TOL; people who get movie reviews and video clips e-mailed to them also tend to rent more filmsas many as five times more than nonsubscribers. TOL profits have grown by 48.1 percent despite Japan's sluggish economy.
Challenge for the CIO: Figuring out a wireless strategy amid tough market realities. I-Mode is used almost exclusively in Japan. By contrast, Wireless Access Protocol, or WAP, used sparsely in the U.S. and Europe, is slower, not fully compatible in some versions and suffers from a lack of broad content because there's currently no way for content providers to charge for it. Japan's DoCoMo has great hopes for establishing i-Mode as a global standard and has formed an alliance with companies including AT&T and AOL Time Warner in the U.S. to speed proliferation.