Two year sentence for i-mode
Les than two years after launch, O2 has confirmed it is winding down its i-mode service in the UK. The operator has said that it is giving existing users and partners two years, and then after that it is turning the key on the service that, when it launched, it described as the future of mobile internet.
Giving reasons for the wind-down, O2's official statement played up the shortage of handsets for i-mode.
"We will continue to support i-mode for the next 2 years. However, as part of a regular strategic review we will not launch any new i-mode handsets from July 2007. We will still sell existing i-mode handset models. The service has proven to be successful with rich content and high satisfaction amongst users. However, a limited range of devices has restricted its growth and we don’t see that changing."
The lack of handsets is a real issue, but sits at odds with O2's claims at launch that it was happy with the range of handsets, and had even looked at Nokia and LG handsets and decided not to go with them.
But O2 also pointed out that i-mode as a service and ecosystem has been caught up by other advances in mobile data services, not least flat rate data packages that meant i-mode's per-bit pricing policy became to look outdated.
"This environment is being supported by an increasing number of feature-rich devices and tariffs accessing richer content at faster speeds. I-mode is part of the evolution of the mobile Internet but not the end point. We will continue to manage and serve any existing UK i-mode customers until July 2009."
An O2 spokesperson said that the focus would now shift back to its Active portal. At the launch of i-mode, O2 top brass said the Active portal would remain a good tool for event driven dowloads, such as ringtones, but that i-mode would boost usage into a more transactional mode.
The i-mode launch was also backed by O2's second largest ever advertising and marketing campaign, so there's no doubt that the decision to pool the plug, allied to the lost investment in the license fee paid to NTT, and development costs, is a big hit for O2.
Ovum analyst John Delany backed the move, calling O2's decision to get out early "wise" – pointing to sluggish adoption and poor strategical fit with O2's other properties. That said, after six months of launch O2 said its i-mode service was the fastest growing outside of Japan, and had 250,00 customers, with 150 sites available.