Bill Ray

Successful products and services may rely more on where and when, rather than how, they are launched.

It's very fashionable to talk of globalization and the world market, but the reality is that public acceptance of new products depends more on cultural factors than the use of the latest technology. No killer application is going anywhere without mass acceptance, and no society is going to accept a new way of communication unless it fits in with their cultural lifestyle.

While American culture has spread around the world, its impact is still measurable, and many cultures have mutated it into something they can call their own. An understanding of historical and sociological factors should play a major part in any deployment strategy, especially in unfamiliar territory. Getting it wrong will only prove to be an expensive fiasco.

A good example of the kind of cultural difference that can have an impact is shown by water usage. Recycling water is still very controversial in the U.S.; most people cite health concerns as a problem. In London (and the rest of the UK) it's considered normal, and water from the tap is generally acknowledged to have been drunk 10 times before you get it in your glass! The water is treated and perfectly safe, but try offering an American a glass of water after disclosing that. These differences are generally based on historical development (the UK is a small island surrounded by salt water), but can have a profound impact on demand for products and ser-vices.

GSM vs i-mode
In this article we'll look at the massive success of GSM mobile telephones in Europe and DoCoMo's i-mode service in Japan, examining not only what cultural factors were so important, but also what cultural factors have impacted their success elsewhere.

Much has been written on fixed-line telephone services, but it's worth reiterating some of the differences between the U.S. and Europe so we can see how they affect our business.

When telephones were first introduced in Europe they were organized by the government-owned postal services, and were considered government-provided services. In the U.S. private enterprise deployed telephones and customers demanded a level of service their European counterparts wouldn't expect of a government-run service.

Central to this was itemized billing, something introduced in the UK only in the last 10 years, but demanded by U.S. customers from day one. U.S. telephone companies found that it wasn't economical to itemize every phone call, and decided it would be easier to make local calls free. These free local calls had, some years later, a massive impact on Internet use in the U.S., with local ISPs providing effectively free Internet access that Europeans could only look to with envy. But paying for calls had another impact on European telephone users, as every phone call made cost money, but every call received did not. This is known as Caller Party Pays (CPP) and, as we shall see, has had a massive impact on mobile telephone development.

When mobile telephones were introduced, they were again run by the postal service, which allocated them area codes unique to mobile telephones. With the advent of competition these codes stayed in place and in the UK the system is now very formalized. Numbers starting with "07" are mobile telephones, so you can instantly see what you're calling and how much it's going to cost you (roughly). In the U.S. private companies started operating mobile networks and offering area codes that reflected where the phone was bought, or even where the customer lived.

This combination of free local calls and mobile telephones with genuine area codes left the U.S. providers with a problem. If someone dials what they believe to be a local number they expect the call to be free, but if the call is going to a mobile telephone then someone is going to have to pay for it. So mobile users have to pay to receive calls, which Europeans find completely strange.

This then leads to a reticence on the part of U.S. mobile users to give out their mobile numbers; they are rarely on business cards and don't appear on Web sites. Europeans, however, are happy to hand out their numbers; in fact I'm more likely to give someone my mobile than home number, knowing that I'm less likely to get sales calls to a number they can recognize as being expensive to call. CPP therefore offers the mobile user a relaxed attitude to mobile telephone usage, leading to the high levels of penetration we now see where not having a mobile is the exception, even among school children.

CPP also encourages the use of pay-as-you-go mobile phones, where the phone is "charged" with credit that is then deducted as calls are made. Originally intended for users with bad credit ratings, a major problem in the early days of mobile phones, pay-as-you-go is now a standard arrangement, and contracts are rapidly becoming a thing of the past. Without CPP users could watch their credit dropping as they received wrong-number or sales calls, often literally, as many handsets display the remaining credit while in use. CPP means you pay only for calls you make that were answered, while the recipient pays nothing.

This in turn is partly responsible for the massive growth of SMS messages, particularly among younger mobile users. With the cost of sending an SMS known (generally about 12¢), schoolchildren can work out in advance how many messages they can afford to spend their pocket-money on.

The introduction of CPP into the U.S. would be difficult to say the least, and would almost certainly be rejected by consumers. Agreements between the various telecom companies would have to be renegotiated, and the whole approach to using the telephone would have to change ­ more of a cultural change than a technological one. Charging systems in the U.S. and Europe have changed a great deal in the last few years. Free local calls aren't uncommon in Europe, and complex calling plans make it difficult to work out what you're charged for (and deliberately so), but the expectations remain. Changing attitudes is much more difficult than changing contracts.

Of course the very adoption of GSM by Europe sums up one cultural difference between the U.S. and Europe. GSM was mandated, as a standard, by the European Union, while the U.S. has competing technologies and allows the free market to work out what's best (though, let's be honest, it will all be GSM eventually).

Demographic Influences
Moving East (or West, depending on where you start), the Japanese phenomenon known as i-mode has been commented on just about everywhere, not least in the pages of this very magazine. With 17-million subscribers and heavy usage, particularly among the young, i-mode is often seen as the model to emulate in wireless business models. But i-mode's success has a lot more to do with Japanese culture than with the technology that allows graphics and sound to be used from a mobile telephone.

Japan is a small country and, for the most part, sparsely inhabited due to mountains and forests. There are 115-million people squeezed into a space the size of Montana, with 90% of them living in 20% of the space! This puts space at a premium, and housing reflects this. To the Japanese a house is a place you live in, but you are unlikely to entertain there, and many meals are eaten out.

At the start of 2000 only 28.1% of Japanese homes had computers, and home use of the Internet is still far from the norm. Internet use is generally a solo activity, and the lack of a separate room for the computer can make its use unsociable. The primary use for home computers in Japan is games, something most of us would at least deny in our own instances. Most of us in the West have much larger houses, and often a spare room we laughingly refer to as our "home office" that houses our computer. This subtle difference has an enormous impact on how the Internet is perceived and used, especially among the younger generation.

Mobile Telephones Offer Privacy
While Internet access is certainly available to the young Japanese in school and public cybercafes, it offers none of the privacy or personalized experience available on a mobile telephone. Ownership of the mechanism of access gives control, and confidence in usage.

It isn't rare, in Europe, for parents to limit their children's access to the Internet for cost reasons; with no free local calls the cost of Internet access can quickly mount up. By putting the means of access under the child's control, the child can be made responsible for the costs, frequently to their detriment. Stories abound of Japanese teenagers running up massive bills and having to be bailed out by parents, who will then extract payment in the form of chores or stopped allowance. But even this can be considered a useful learning experience, and in most cases children can be trusted or caught before things get out of hand. To adults who spend little time at home anyway, mobile Internet access is the obvious option.

It's not only the home that makes a difference. Most Japanese commute long distances, and again the size of the country has a massive impact on how people travel. Very few Japanese commute by car, so the early morning trains into Tokyo are the wireless application developer's dream, with passengers logged onto their mobile terminals catching up on the news or playing the latest i-mode games. With comprehensive network coverage, another advantage of being a small country, there is never a reason to be bored on the train, or not to be working! The idea of encouraging Californians to use the Internet on their way to work should be avoided ­ it's bad enough on those roads already.

Never Assume Anything
Any discussion about the success of i-mode would be incomplete without mentioning that the service is included by default in the DoCoMo mobile telephone contract. Users wishing to opt out of the service will have to read their contract in detail, and it seems likely that several million i-mode "users" actually have no idea they are subscribing to the service.

Another cultural factor is that i-mode is charged by the data transferred, something harder to accept for Americans used to unlimited Internet access at home. Per-byte charging is seen by many as inevitable on all Internet access, as more bandwidth becomes available, but it remains to be seen which cultures will be most accepting of this way of paying to use the Internet.

Of course, it's not possible to do more than touch the surface of cultural issues in an article like this, and there are many other influences and factors too numerous to mention here. However, the important lesson to learn from these examples is not to assume anything. Just because SMS is popular in Europe and i-mode is a massive success in Japan means nothing to the American market. Wireless applications will have to fit into the lifestyle and culture of the market they're sold in. It's unlikely there will ever be one killer application the world over; we're just too different.

When I told an American friend about London water he was shocked and pointed out that it must be full of chemicals, to which I could only reply: "Of course it's full of chemicals! It wouldn't be safe otherwise!" but then, I don't have a problem with that.