Key Technological Trajectories and the Expansion of Mobile Internet Applications

by

Jeffrey L. Funk

Professor, Hitotsubashi University

Institute of Innovation Research

2-1 Naka, Kunitachi, Tokyo 186-8603 Japan

FAX: 81-42-580-8430

TEL: 81-42-580-4830

To Appear in a Special Issue of INFO

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Key Technological Trajectories and the Expansion of Mobile Internet Applications

Abstract

This paper describes the key technological trajectories and their potential effect on

the expansion of mobile Internet applications. The initial success of entertainment

contents in Japan 1999 caused manufacturers to introduce phones with color displays,

polyphonic tones, cameras, Java programs and these functions are supported by other

technological improvements like faster microprocessors, larger memory, and faster

network speeds. Coupled with an evolution in user behavior, these technologies are

making the phone a portable entertainment player, a new marketing tool for retailers and

manufacturers, a multi-channel shopping device, a navigation tool, a new type of ticket

and money, and a new mobile Intranet device. These trends will have a large impact on

competition in the global mobile phone market as dominant designs emerge at the

global level.

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1. Introduction

Growth in mobile Internet services and contents expanded from Japan and Korea in

2000 to Europe in 2003 and it is expected that this growth will become a global

phenomenon by the end of 2004. Growth first occurred in the Japanese market (See

Table 1) through the creation of a critical mass of young users and entertainment

applications where micro-payment systems played a key role in the availability of these

entertainment contents. This growth led to improved mobile-Internet compatible phones

with color displays, polyphonic tones, cameras, and Java programs. Korean service

providers quickly copied the Japanese services and European service providers like

Vodafone and Bouygues Telecom have subsequently done the same following the

growth in SMS (short message services). As of late 2003 there were more than three

million subscribers to European mobile Internet services like Vodafone Live! and

i-mode both of which are based on Japanese technology.

Understanding how these mobile Internet services, technologies, and applications

will evolve is a critical issue for managers and policy makers. The mistaken initial

emphasis on business users and applications by most Western service providers (e.g.,

see J.P. Morgan, 2000) underscores the difficulties with doing this. Even Western

academics and analysts have placed far more emphasis on business than other

applications in the mobile Internet (Bergeron, 2001; Burkhardt, et al, 2002; Kalakota

and Robinson, 2002; Sharma, 2001).

This paper uses a model of industry formation to explore how these mobile Internet

services, technologies, and applications will evolve. A key part of this model is the

interaction between technological trajectories and the expansion of applications. The

application of the model to the mobile Internet is based on published information from

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both Japanese and English sources and interviews with more than 150 managers

involved in the mobile Internet in Japan and to a lesser extent elsewhere. I asked these

managers about the current and future impact of the mobile Internet on their businesses

with a focus on so-called “lead users” (von Hippel, 1986). I use this information to

describe a few paths by which the mobile Internet may evolve in six

contents/applications; additional paths are described in (Funk, 2004). The paper first

summarizes the origins of the mobile Internet using the model of industry formation

followed by a summary of the technological trajectories and their effect on these

applications.

2. The Origins of the Mobile Internet

Figure 1 summarizes a model of industry formation (Funk, 2003, 2004). The model

represents the origins of new industries as the interaction between multiple

technological trajectories, where progress in a single trajectory occurs through

improvements in the trade-offs between relevant technological variables (Dosi, 1982).

The speed with which these multiple trajectories cause industry formation depends on

finding a set of initial users for whom the new technology is economically attractive.

The latter process occurs through the interaction between product designs and user

needs (Clark, 1985; Bijker et al, 1987) and results in the emergence of a dominant

design, which will define the interfaces for complementary products and many of the

incremental improvements that are subsequently implemented (Anderson and Tushman,

1990). Growth in these initial applications causes sub-trajectories to emerge from the

main trajectories and drive an expansion in applications.

The technological trajectories that led to the formation of the mobile Internet are

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improved displays, packet technology, digital content, and microprocessors, which were

being driven by other industries like laptop computers, the Internet, and personal

computers. The key interaction between products and users in the Japanese mobile

Internet that led to industry formation was between entertainment contents and young

people. The early success of NTT DoCoMo’s i-mode entertainment contents led to

positive feedback between content providers, users, and phone manufacturers (Funk,

2001, 2004), which can be interpreted as both a bandwagon (Rohlfs, 2001) and

agglomeration (Marshall, 1920) effect.

KDDI and Vodafone began to become part of this phenomenon in early 2000. The

success of i-mode caused NTT DoCoMo’s competitors, KDDI and Vodafone to

introduce micro-payment and packet services as part of their mobile Internet services,

which they both had introduced in 1999 (KDDI uses the WAP protocol). Micro-payment

services facilitated the entry of entertainment content providers and packet services

reduced user costs and waiting times. The reason why KDDI and Vodafone quickly

introduced these services and the US and European service providers did not is because

the success of i-mode provided evidence that investments in mobile Internet technology

could pay off and it was relatively easy for Japanese content providers and

manufacturers to modify their contents and phones for the services offered by KDDI

and Vodafone. The success of entertainment contents and the positive feedback that

these successful contents created between contents, users, and phones provided this

evidence.

Evidence that a mobile Internet service (e.g., WAP) could succeed in the European

and US markets did not quickly emerge because the service providers did not introduce

micro-payment systems, which were a prerequisite for entertainment contents like

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screen savers, horoscopes, and ringing tones and instead focused on business contents

like financial, travel, and shopping services that do not require micro-payment services.

On the other hand, the success of SMS with young people including their use in

downloading ringing tones and screen savers in 2000 caused European and

subsequently U.S. service providers to recognize the importance of young users and

entertainment contents. This encouraged a number of European and subsequently U.S.

service providers to introduce mobile Internet services that emphasize young people and

entertainment contents; the most successful services as of late 2003 are i-mode services

and Vodafone Live!

3. Key Technological Trajectories

Growth in the initial applications in the Japanese mobile Internet has caused

sub-trajectories, where competition in the mobile Internet currently takes place (as of

late 2003), to emerge. Some of these technological trajectories will quickly fizzle out as

customer needs are quickly satisfied. For example, increases in the number of

polyphonic tones appear to have stopped at about forty and color displays appears to

have reached their limit at 250,000 different colors. Although some camera phones now

contain more than one million pixels, two million pixels will provide quality that is

equivalent to what is found in traditional photographs and probably enable camera

phones to read and process finely printed URLs, mail addresses, and bar codes. On the

other hand, other technological trajectories will likely continue for many years.

For example, increases in display size are likely to remain a key technological

trajectory for many years to come since small displays are one of the largest problems

with mobile Internet compatible phones. Displays based on EL (Electro Luminescence)

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are expected to be widely used by early 2004. These displays are thinner and thus

20-30% lighter than TFT-based displays because they produce their own light and thus

do not require a separate light source. Displays that are based on light emitting polymers

(LEP) also create their own light; more importantly, by applying a thin polymer film to

a plastic substrate, firms can make displays that are thinner than one-tenth of an inch

and can be rolled and folded. Thus it may be possible to double, triple, or even

quadruple the size of existing phone displays over the next five years thus dramatically

improving the user interface.

3.1 Processing and Network Speeds

More immediate effects on the user interface are expected from increases in

processing power, memory, and network speeds since they can improve the user

interface without increases in the size of the display. Increased processing and memory

capabilities reflect Moore’s Law. Decreasing semiconductor line widths have caused

computing speed and memory size to roughly double every 18 months for the last 40

years and similar trends are already seen in the mobile Internet where the need for lower

power consumption requires different circuit designs. Phones released in late 2002 and

early 2003 had speeds in the 100 MHz to 200 MHz range and speeds greater than 500

MHz are expected by 2005. Phones with more than 5 megabytes of internal memory

also were released; some could save 2000 photos (taken with a 300,000 pixel camera),

2000 ringing tones (with 40 polyphonic tones), or 100 Java programs.

Network speeds will also increase primarily through the diffusion of third

generation services and according to Qualcomm (2000), these services may cause

packet charges to fall as low as $0.022 per megabyte or 1/500 of current i-mode charges.

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If data charges were to fall as low as $0.022 per megabyte, a three-minute MP3 file

could be delivered for as little as $0.07 and a two-minute, medium resolution video clip

could be delivered for a cost of about $0.13.

We can also expect other forms of networks to play an important role in the mobile

Internet. For example, phones with infrared functions that use the IrMC standard are

already being used in Japan to connect phones with cash registers, concert ticket

machines and each other (e.g., play games and exchange name cards), and control

televisions and karaoke machines. New infrared standards like IrFM enable credit card

information to be securely transferred between phones and cash registers. Non-contact

smart cards that rely on short-range radio transmission are being used as transportation,

concert tickets, and pre-paid cards (<$50US); phones that contain these smart card

functions are expected in 2004 (Harui, 2003).

It is possible to download data from WLANs and exchange data between devices

with Bluetooth, infrared, and short-range radio transmission. NTT DoCoMo and other

Japanese service providers are planning to make their phones compatible with WLANs

and Bluetooth. These technologies and faster processors could enable the use of

so-called personal mobile servers that allow short-range communication between

various “wearable” devices (Bylund and Segall, forthcoming).

3.2 Client side processing and improved user interfaces

Increased processing power, memory, and network speeds can improve the mobile

phone’s user interface through more client side processing of pre-loaded or downloaded

programs. Java is currently the most popular program for doing this although other

programs exist and the competition between these programs is not over. Users can

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download a Java program once and then either utilize the program independently of the

network or in conjunction with data that is subsequently downloaded from the network.

Alternatively, the Java program could be pre-loaded in the phone thus eliminating the

need for downloading the program at all. Although games were initially the most

popular content for Java programs, many news and other text-based sites now offer their

contents as part of a Java program since the use of Java programs can reduce the data

downloading requirements of text and the user waiting time by as much as 80%.

Faster processors, ones with lower power consumption, and larger memory will

facilitate the use of Java and other client-side programs. Faster processing times reduce

the time to activate a program and thus enables the use of larger programs. Lower power

consumption enables the longer use of these programs. Larger memories increase the

size and number of programs that can be saved. Although some phones can now save

more than 100 Java programs, if all content providers offered their own Java programs

from which users were expected to download information, users would still only be able

to save a small fraction of these programs.

Another alternative is for content providers to format their contents for standard

Java programs. Phones released in the spring of 2003 facilitate the use of such standard

programs since they can access data for a Java program from different servers. Added

advantages of defining standard programs (or “objects” for making these programs)

would be less development costs for content providers and better control of viruses for

service providers. Of course determining the appropriate standard Java programs and

making your program one of these standard programs is a more complex issue.

Increased processing power, memory, and network speeds may also improve the

user interface in more radical ways. Increased processing power will improve the

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performance of voice recognition systems and 3D rendering techniques. Single word

voice recognition systems have been available for several years in Japanese phones and

it appears that user resistance to making voice commands is a bigger bottleneck than

actual technical problems. As for 3D rendering techniques, phones with 50 MHz

processors can display 10,000 “polygons” a second while phones with 500 MHz

processors can display 640,000 polygons a second; the latter will probably be available

in phones in 2005 and is currently available in the newest versions of the Playstation2.

While most 3D contents are screen savers and games, 3D images of products might

facilitate mobile shopping, 3D maps might facilitate navigation services, and 3D

representations of data (which could provide the data on six faces of a cube) might

facilitate business applications.

4. Expansion of Applications

This section discusses how the technological trajectories are expanding the

applications for mobile phones in six contents/applications. Several of these trajectories

including Java and 3D rendering techniques will have an impact on all of the

applications while other trajectories will have a much larger impact on some

applications more than others.

4.1 Entertainment

Games, ringing tones, screen savers, and other entertainment contents are already

making the mobile phone a portable entertainment player and faster network speeds,

increased processing power, Java, and 3D rendering techniques will reinforce this trend.

The success of KDDI’s vocal ringing tone service (almost than seven million 15-second

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songs were downloaded in September 2003) suggests that lower packet charges will

probably make the downloading of music and video on phones a common activity.

However, it is the unexpected changes that are of greater interest and the mobile Internet

will likely create its own form of entertainment just as the radio, TV, video recorder, and

the Internet have done.

Java-based and 3D screen savers became possible with the phones released in 2002.

These screen savers have menus that enable users to manipulate the 3D images on the

screen and raise pets like fish on other screen savers, an activity that was popularized in

Bandai’s Tamoguchi toys. Phones released in 2003 can activate these Java programs

with an incoming call or mail message and the Java program can be customized for the

caller. Further, it is possible to add music to these programs suggesting that the

distinction between ringing tones, screen savers, and games are beginning to disappear.

Even better processors that have lower power consumption may enable screen

savers to be used as browsers where Java programs or contents are downloaded from a

Java-based screen saver. The use of screen savers as an entry point for games is an

obvious candidate with game providers offering a screen saver as part of the Java game.

If the PC browser wars in the mid-1990s are any guide, a wide variety of content

providers along with retail outlets and manufacturers may give away such screen savers

as a way to guide consumers to their sites.

4.2 Mobile Marketing

Phones have already become a new marketing tool for retailers and manufacturers

due to the lower cost of sending mail to mobile phone users than traditional methods.

More than 100 retailers and manufacturers are using the mobile Internet to send

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discount coupons, conduct surveys, and offer free samples to registered users via mobile

mail. For example, more than 100,000 Japanese redeem coupons with their mobile

phones each month in Japan’s leading video retailer, Tsutaya Online, and the total

redeemed in Japan could easily exceed several million a month.

New technologies like in-store bar code readers, short-range infrared, and Java

offer additional ways for retailers to develop stronger relationships with these young

people. For example, Jeansmate uses in-store scanners to read the bar codes displayed

on the phone’s screen in order to identify the customer and thus integrate its mobile and

POS databases. Furthermore, when a customer purchases a product with or without a

discount coupon, their name is displayed on the cash register screen including the status

of their mail address. Jeansmate can register or update the customer’s mobile mail

addresses by inserting a special device into one of the customer’s phone ports; this

activates the mail function and automatically sends mail to the Jeansmate server. The

acquisition of mail addresses enables Jeansmate to move more of its marketing

activities from postal to Internet mail.

It is also possible to use the phone as a point card for loyalty programs in place of

magnetic or paper point cards. One method is to use a bar code as user ID and provide

point information to customers when purchases are made. A second method is to use the

phones infrared function to validate the user ID. Users download a Java program,

which is activated with the infrared connection. One advantage of this method is that it

facilitates two-way information transfers at the time of purchase or in mail messages.

4.3 Multi-Channel Shopping

While it is possible to use the mobile phone by itself to purchase products

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(US$ 270 million-market in 2002), the small screens and keyboards make it difficult to

search for products, which is the largest advantage of finding books or travel services on

the PC Internet. This is why most of the products purchased with a mobile phone are

selected from personalized mail services that provide information on recent releases for

a specific artist, genre, or authors. This severely limits the range of products that can be

sold over the mobile Internet.

The fastest growing segment of mobile shopping combines sites with magazine

advertisements or worn by celebrities on television programs. More than 50

fashion-related magazines offer mobile shopping services and many of them believe

that higher resolution cameras, bar code readers and faster processing speeds will drive

growth in this market. As opposed to users scrolling through several menu screens or

inputting a URL, they can use camera phone to photograph a URL or a bar code reader

to read a bar code that is printed in a magazine and the phone’s processor uses a pattern

recognition algorithm to identify the URL.

Television broadcasters are also attempting to integrate mobile Internet sites with

their programs in order to provide paid information services or sell products that are

used in the programs. Television broadcasters hope that some young women will be

interested in purchasing the clothing and cosmetics that are used by actresses or in

accessing information about the program or the program locations. Japanese firms have

already begun linking these programs and sites to support the phones containing

television and radio reception capabilities that appeared in late 2003. However, the

bigger market is linking these sites with conventional radios and televisions and infrared

techniques appear to have the best chance of success.

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4.4 Navigation

Lower packet charges, larger displays, and 3D rendering techniques may enable

mobile phones to finally become an important portable navigation guide. The basic

problem with current GPS devices is they use too much power for their inclusion in

mobile phones. One alternative is to use network-assisted GPS, which requires less

power, has less effect on phone weight and in some cases can be combined with

base-station triangulation techniques that are useful when the phone is inside or very

near a building. KDDI currently uses this approach with its cdma2000 services. The

disadvantage of network-assisted GPS is that it requires a connection to the network,

which increases the time it takes to acquire position data (typically 45 seconds) and cost

more than $0.07 per connection at current packet charges. Monitoring an employee’s

location every 5 minutes for ten hours would cost almost $80 a day as compared to

almost zero for a conventional GPS device. Of course, lower packet charges will

eventually solve the cost problem.

Larger displays and/or 3D rendering techniques are also needed. Current displays

are too small for users to understand their location on the map. Although GPS and a

compass function help somewhat, currently they are insufficient for effective map usage.

This is why map services have less than 10% the number of subscribers and less than

1% the traffic as do train and bus information services. Restaurant search services,

which charge restaurants to be on the site, also have far more traffic and income than the

map services.

4.5 Tickets and Money

Improvements in infrared and non-contact smart card technologies and increases in

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processing speeds can enable phones to be used as tickets and money thus continuing

the move from physical to electronic money that was started with credit cards 50 years

ago. Credit card information is already being exchanged between phones and cash

registers using the IrFM standard in Korea and such phones are expected to appear in

Japan in 2004. More than 50 million non-contact smart cards are currently in use in Asia,

primarily in transportation ticket applications. They are also used as money in

convenience stores, principally in Hong Kong, and are now being used as concert

tickets in Japan.

Placing these smart card functions in phones will likely expand the existing

applications for these cards. Phones will reinforce a single standard, which will reduce

technological uncertainty and the cost of readers and may enable supporters of such

smart cards to create a network of stores and users that can challenge credit card

networks. Furthermore, faster processors in phones enable the use of biometrics (Wilson,

2002) and thus the verification of user identification, which will facilitate the purchase

of more expensive items without the need for signatures or other identification.

4.6 Mobile Intranets

The rapid diffusion of Internet-compatible phones and several technological

trajectories have finally led to strong growth in business users. There are more than

500,000 subscribers to various mobile mail services that facilitate access to PC mail and

several times more business people probably do this on their own or rely on their firm to

provide the service. Furthermore, there were probably more than 150,000 business

people accessing information in corporate databases from their mobile phones as of

April 2003 and this number may reach one million by the end of 2005.

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The largest applications in the accessing of corporate databases are delivery,

maintenance, construction, and sales. Some delivery companies have replaced their

proprietary handsets with mobile phones and enable customers to request delivery times

on both their PC and mobile phone. Maintenance departments send information about

the next customer to workers via mobile mail that often includes URLs for access of

more detailed information. Construction companies send mail to their construction

workers asking them to update their work status; the project management people use

this data to set better schedules for materials and specialists like plumbers and

electricians. Manufacturing companies allow their sales personal to access sales, price,

and inventory information and input orders on their mobile phones.

An improved user interface and standard software packages will drive further

growth in the market. Larger displays, Java programs, 3D rendering techniques, and

voice recognition, which are being driven by entertainment applications and other

technologies like faster processing speeds, will enable business people to more easily

access data. A key question is to the extent to which the standard software programs

drive the emergence of a dominant design (discussed in Section 2) or are driven by

some other dominant design for the mobile Internet like Java programs, 3D rendering

techniques, or compatibility with popular desktop PC functions like Power Point.

5. Discussion

This paper describes the key technological trajectories and their potential effect on

the expansion of mobile Internet applications. These trajectories include the number of

polyphonic tones, color display and camera resolution, Java program size,

microprocessor speeds, memory size, and network speeds. While some of these

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trajectories will fizzle out as user needs are satisfied, it appears that increases in Java

program size, microprocessor speeds, memory size, and network speeds will continue

for many years to come. Services with faster network speeds are expected to have lower

packet charges and this may drive usage in a manner similar to what occurred in the PC

Internet. Faster network speeds and to a lesser extent faster processor speeds enable the

use of larger Java programs and better 3D rendering techniques, both of which can

improve the user interface.

These technologies are making the phone a portable entertainment player, a new

marketing tool for retailers and manufacturers, a multi-channel shopping device, a

navigation tool, a new type of ticket and money, and a new mobile Intranet device.

Larger Java programs and 3D rendering techniques will have a large impact on all

contents and applications and their first effect has been on entertainment. Bar code

readers and infrared connections will enable retailers to strengthen their relationships

with customers. Better camera resolution and faster processors will probably improve

the integration of magazines and mobile shopping services. Cheaper GPS functions will

improve the navigation capability of phones.

These technologies will also change competition in the mobile phone market as

dominant designs emerge for the mobile Internet. New industries like the mobile

Internet are one big experiment where firms try various technologies, users learn how to

use the products and services, and firms learn about what works and what doesn’t work.

This offers tremendous opportunities to those firms that participate in this experiment.

The dominant designs that emerge from the initial domestic competition often become

global dominant designs as other countries adopt them as opposed to re-inventing the

wheel.

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Table 2 summarizes types of emerging dominant designs in the Japanese mobile

Internet. Some of them are or will impact on all of the applications discussed in this

paper while others will only impact on specific applications. In some cases winners

have started to emerge while in others it will take many years for the winners to be

decided. In some cases this competition will impact on server software while in others

the competition will also impact on competition between phone manufacturers.

For example, the importance of display size and thus folding phones increased with

the start of i-mode services in 1999. NEC had been making folding phones for many

years while Matsushita was slow to recognize the change to folding phone. This led to a

change in mobile phone market leadership from Matsushita to NEC in 2000, 2001, and

2002. Similarly, Sharp’s faster introduction of camera phones led to increased market

share for it in 2002 and further increases are expected in 2003.

A larger battle may occur in the move from markup languages like c-HTML to

programming languages like Java in Japan. For example, if standard Java programs

emerge that facilitate an overall move by all content providers towards Java, the owners

of these Java programs will probably increase their power in the market. The emergence

of standard application processors, 3D rendering techniques, or even improved GPS

functions or infrared techniques may also impact on the dominant design for phones and

thus the shares of hardware and software manufacturers.

The Japanese market is already impacting the European and U.S. markets via the

success of i-mode and Vodafone Live! in Europe, both of which are based on Japanese

technology. As these and similar services diffuse, many of the technologies that are

being developed in Japan and that are discussed in this paper will be introduced in

Europe initially via these services. The early start of the Internet in the US has led to

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far greater success by US technology than US Internet service and content providers in

foreign countries and similar things are likely to occur in the mobile Internet. As the

winning dominant designs in the Japanese market are introduced in Europe and the

U.S., this will provide large global opportunities for Japanese technology suppliers.

6. References

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Designs: A Cyclical Model of Technological Change," Administrative Science

Quarterly, 35: 604-633.

Bergeron, B. (2001). The Wireless Web: How to Develop and Execute a Winning

Wireless Strategy, NY: McGraw Hill.

Bijker, W., T. Hughes, and T. Pinch (Ed) (1987): The Social Construction of

Technological Systems, MIT Press.

Burkhardt, J., H. Henn, S. Hepper, K. Rintdorff, and T. Schack (2002). Pervasive

Computing: Technology and Architecture of Mobile Internet Applications, NY:

Addison Wesley.

Bylund, M. and Z. Segall, “Seamless Mobility with Personal Servers,” forthcoming,

Special Issue of INFO.

Clark, K. (1985), “The Interaction of Design Hierarchies and market Concepts in

Technological Evolution,” Research Policy (14), 235-251.

Dosi, G., (1982). “A suggested interpretation of the determinants and directions of

technical change,” Research Policy 11, pp. 147-162.

Funk, J. (2004. Mobile Disruption: The Technologies and Applications that are Driving

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the Mobile Internet, NY: John Wiley & Sons.

Funk, J. (2003). “The Origins of New Industries: The Case of the Mobile Internet,” the

2003 Best Paper Proceeding of the Portland International Conference on the

Management of Technology (PICMET): Technology Management for Reshaping the

World, July 20-24, 2003.

Harui, R. (2003). “NTT DoCoMo, Sony to Develop Smart Cards in Mobile Phones,”

Wall Street Journal, Online edition, October 22, 2003

Kalakota, R. and M. Robinson (2002). M Business: The Race to Mobility, NY: McGraw

Hill.

JP Morgan (2000). Wireless Data: The World in Your Hand, October 2, 2000, London.

Marshall, A. (1920), Principles of Economics, 8th edition, London: Macmillan.

Natsuno, T. (2003), The i-mode Wireless Ecosystem, NY: John Wiley & Sons.

Qualcomm (2000), “The Economics of Mobile Wireless Data,”

http://www.qualcomm.com/about/downloads.html

Rohlfs, J. (2001), Bandwagon Effects in High-Technology Industries, Cambridge: MIT

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Sharma, C. (2001). Wireless Internet Enterprise Applications, NY: John Wiley.

Tushman, M. & P. Anderson (1986), “Technological Discontinuities and Organizational

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Table 1. Size of Japanese Mobile Internet in 2002 (Billions of Yen)

Type of Market Firm or Market Size of Market Services NTT DoCoMo 697.7 KDDI 138.7 Vodafone 185.7 Contents Total 150 Ringing tones 80 Screen savers 25-30 Games 15-20 Other entertainment 10-15 Other contents 10-15 Shopping 30-40 Source: Firm home pages, author’s analysis

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Table 2. Emerging Types of Dominant Designs in the Mobile Internet

Application Examples of Emerging Platforms

Brand i-mode, Vodafone Live!

General Browsers, micro-payment systems, Java virtual machines,

application processors, external memory cards, Inter-phone and

device communication protocols (e.g., Bluetooth, infrared)

Entertainment Ringing tone delivery systems, music delivery systems, image

processing systems, multi-player game platforms, client-side

Java/Brew programs, location-based game platforms

Mobile marketing Discount coupon delivery systems, integration of mobile mail

and POS systems, point-card systems

Mobile shopping Mobile commerce solutions, payment systems, bar code readers

for phones, integration of site access with bar code readers,

integration of radio listening and site access, integration of

television watching and site access,

Navigation GPS platforms, intelligent schedulers, global navigation services

Mobile Intranet Security systems, business card management and exchange

systems, mobile Intranet software for applications like sales

force automation, maintenance, construction, home health care,

or delivery

Phones as tickets and

money

Smart cards and systems, electronic credit cards, electronic

ticket systems

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Technological　Trajectories(from outside the industry)

Industry Growth in a Specific Region

Interaction between product designs and user needs

Emergence of technologicalsub-trajectories (driven by new industry)

Figure 2. A Model of Industry Formation

Effect of sub-trajectories on main trajectories

Expansion ofapplications

Source: Funk 2003a