Creating a true 'ecosystem' - Japan's model
The concept of a true ecosystem, in which the roles of the various members remain in collaborative balance to achieve mutual benefit by the overall health of the system, is alien to this traditional mobile value system.
But there is one example of a viable mobile ecosystem: in Japan, brought into being with the February 1999 launch of NTT DoCoMo's i-mode service. The report cites data to show that Japanese mobile subscribers are just 3 per cent of the world's total subscriber base but they account for 40 per cent of the world's total global data revenues.
In the Japanese ecosystem, the network operator plays the central role and has the main relationship with the subscriber. "New Handset sales, customer service and support, upgrades, etc. are all conducted via the shops managed by Network Operators," the report notes. "In Japan, although handset manufacturer churn rates are quite high, network churn rates remain extremely low (less than 5 per cent even after Mobile Number Portability was launched)."
As the network operator sits at the middle of this system, customers conduct all of their mobile activities in partnership with the network operator. New handset sales, customer service and support, upgrades, etc., are all conducted via the shops of managed by network operators. Recent research conducted by the Mobile Consumer Lab at IUJ supports such findings, showing that mobile consumers feel far more loyal to their network operators than to the handset manufacturers whose phones they use.
But to fully develop that relationship, the network operator oversees relationships with the other members of the ecosystem, to their mutual benefit. For example, the operators pay as much as 50 per cent of the R&D costs for new handsets by the manufacturers, and handle the costs of marketing and selling the handsets. For content makers, the operator offers a "walled garden" for platform-specific content and services by approved content providers, who benefit from a simple payment processing portal and reap over 90 per cent of the operator's subscription revenues, according to Sugai's analysis. For platform vendors, the operator dictates software standards and can enforce requirements that devices and services be able to support these standards, such as Java or Brew.
Android and the Open Handset Alliance (OHA) are Google's attempt to adapt and adopt the Japanese model, according to the study. In the OHA ecosystem, Android occupies the central role: creating a "common framework within which all industry players must function." In this model, Google in effect cedes "ownership" of the subscribers acting instead to optimize interactions among the ecosystem members.
As the ecosystem becomes more efficient and more attractive to subscribers, Google will benefit from a stream of advertising revenue tied to new and emerging mobile search services.