Handset hold-up for DoCoMo 3G launch

DoCoMo is gambling that it will be the world's first 3G mobile operator, a gamble too great to pass up

In this story: More time for 3G handsets First in the market 'Not a setback' RELATED STORIES, SITES

By Kristie Lu Stout
CNN.com Writer

TOKYO, Japan (CNN) -- Only two out of the 11 handset makers that signed contracts will be ready for NTT DoCoMo's third generation mobile service launch in May.

NTT DoCoMo president Keiji Tachikawa told the Financial Times that only Matsushita Communications Industrial and NEC are poised to have 3G-ready handsets by May 31.

The Japanese telecom giant is aiming to be the world's first 3G mobile operator, a gamble that may have rewards too great for DoCoMo to pass up, or risk being late.

But DoCoMo is apparently unfazed by the hold-up. Spokesperson Yuki Isono told CNN.com, "We don't expect all the terminals on the launch day and it's not a concern."

More time for 3G handsets

Some handset makers contracted by DoCoMo need two more years to develop 3G-enabled handsets, according to the Financial Times.

"The number of functions is increasing. Software is very big in Japanese handsets so it requires more time," a handset manufacturer executive told the Financial Times.

The new phones take 1.5 times as long to manufacture, with a price tag three to four times greater than today's Net-ready hand phones.

DoCoMo is planning to launch its 3G service on May 31 with three types of terminals including an i-mode phone, a smart phone with a built-in camera, and a PC card for wireless PC access.

All three terminals are scheduled to be available by the launch date.

First in the market

The reward of being the key player in a future of interconnected high-tech communications is too great for DoCoMo to risk being late.

Analysts say DoCoMo has invested substantially towards being first in the market with a global investment spree of $15.17 billion.

QUOTE "If you look at the introduction of any mobile technology since it was invented, terminals have always been late." - Nick Ingelbercht, Gartner Group

DoCoMo's global investments have primed the mobile operator to more effectively take on number-one Vodafone.

Vodafone, the world's largest wireless carrier, has the best chance of beating DoCoMo in the rush to launch 3G, but has been stunted by a lack of equipment.

DoCoMo has reported record profits from the explosive success of its i-mode Internet data service, whose 20 million users provide an unmatched testing ground for 3G services.

'Not a setback'

Analysts are convinced that the handset hold-up won't hold back DoCoMo's plan to meet its original 3G launch date.

"I don't see this as a particular setback," says Gartner Group mobile analyst Nick Ingelbercht.

"If you look at the introduction of any mobile technology since it was invented, terminals have always been late."

Last week, a DoCoMo spokesperson said there was no change in the company's 3G schedule after rival carrier Japan Telecom said it would push back its 3G launch date to June 2002.

The announcement followed a warning from U.S.-based Qualcomm, which developed the Code Division Multiple Access (CDMA) platform on which 3G services operate, that it would be years before 3G services became commonplace in Asia.

Industry watchers say that the company will not let the handset hold-up stall its 3G plans.

"I bet that DoCoMo is not the least surprised," says Ingelbercht.

"This will not affect their revenues and it won't stop this thing dead in its tracks."

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