NTT DoCoMo, Inc.: Mobile FeliCa

1. Is DoCoMo wise to offer its existing mobile phone rivals access to FeliCa?

DoCoMo offering FeliCa to its mobile phone rivals will create a network effect of users and encourage merchants as well as other possible e-money merchants to adopt the necessary technology to accept FeliCa. The more users there are of FeliCa the more likely merchants and others will be to adopt the necessary technology needed to accept Felica eMoney payments. Credit card processing fees are a major expense for many vendors and decreasing this percentage fee per transaction is a good incentive to adopt FeliCa eMoney payments; and the larger the network of FeliCa users the more enticing the adoption of eMoney FeliCa technology becomes.

If FeliCa can gain a first-mover advantage and have all retail, vendor and other necessary parties adopt to their framework the harder it will be for a competitor to come in and take market share. The grocery store discounts of using FeliCa is a good example of the first mover advantage because the grocery store chain will not likely offer the same deal to a FeliCa competitor. The more partnerships DoCoMo can build similar to the grocery store, the more embedded they will become and the threat of new entrants will decrease. DoCoMo phones will still have the competitive advantage as they are built and designed with the FeliCa capabilities in mind.

With the launch of FeliCa, DoCoMo must be sure to be clear regarding the security risks of using eMoney. They must educate consumers as to the risk and dissimilarities that exist between eMoney and credit cards. This will help consumers to realize the importance of reporting a lost or stolen phone immediately. Consumers can sometimes be lax about a missing credit card because they know they are protected against fraudulent transactions.

Lastly, DoCoMo/Sony may want to consider hiring or building a team of credit analysts as they are entering a market of unknown territory. DoCoMo/Sony must create a supporting back-end to their technologically savvy eMoney application.