A Proposal for a Standard With Innovation Management System

Takashi Hirao and Yusuke Hoshino
We investigated published materials in annual reports, newsletters, trade magazines, and newspapers
in order to understand several factors that have influenced the structure of business ecosystems in the
global mobile phone industry. Based on a wide variety of data, we can come to understand the
relationship between the various actors who have participated in these business ecosystems.
This study offers several contributions. First, it clarifies what the Galapagos syndrome means in the
Japanese mobile phone industry, which developed under the leadership of NTT DoCoMo, the biggest
Japanese network operator. Here, the Galapagos syndrome is used to denote a product or service that
becomes isolated from globalization despite its continued domination of a domestic market with
advanced technology (NRI, 2008). Second, this study shows that networks form differently in different
business ecosystems. Exploring the formation of the business ecosystems of GSM and NTT DoCoMo,
we discover that the different patterns of platform leaders and networking influence the structures of the
business ecosystems. Third, it shows how different types of technological trajectories have come about
as the result of competition between business ecosystems. We find that competition between business
ecosystems with different structures led the Japanese mobile phone industry to develop the Galapagos
syndrome. In particular, we have interest in exploring the mechanisms that bring about each of the
different types of technological trajectories.
2. Galapagos syndrome in the Japanese mobile phone industry
In 1996, NTT DoCoMo, a Japanese network operator and one of the biggest network operators in the
global mobile phone industry, was the first in the world to pass its examination of W-CDMA (Wideband
Code Division Multiple Access), which had been expected to be the next generation communication
standard for mobile phones. Then in 2001, NTT DoCoMo was again first in the world to launch handsets
in the domestic market that were classified as third-generation mobile phones (3G). These were
equipped with W-CDMA and were dubbed FOMA (Freedom of Mobile Multimedia Access) phones.
From a resource-based viewpoint, Japanese mobile phone manufacturers should have gotten a
first-mover advantage over foreign competitors, acquiring and applying their bundle of valuable
resources to advanced technologies supported by 3G, such as cameras, videos, and the mobile
internet, as the 3G standard diffused into the global mobile phone industry (see Table 1).
Table1. 3G technologies of the Japanese mobile phone industry
3G technologies
Mobile communication technology
Wideband Code Division Multiple Access (W-CDMA)
Mobile internet technology
Mobile internet (i-mode)
E-mail
Photocam
Videocam
Music download
E-commerce
Released
Year
2001
1999
1999
2000
2002
2002
2004
At the end of 2005, however, second-generation (2G) mobile phones used by GSM still held the
dominant share in the global market. There are several reasons why the brand image of Japanese
handset manufacturers weakened, why mobile phone users in the overseas market were not prepared
to use most of the technological features and functionalities, and why their product innovations were
imitated by foreign rivals in the late 2000s (Giachetti and Marchi, 2011). In addition, as figure 1 shows,
the market share of Japanese handset makers was very low even in the world 3G market.
In fact, as Table 2 shows, most of the Japanese mobile phone manufacturers have been compelled to
pull out of the global market since the mid-2000s.
However, as figure 2 shows, most Japanese handset makers continue to dominate the domestic
market. Motorola, which was the second largest handset maker in the world in 1998–2006 also left the
Japanese market in 2006. Even Nokia, which held a dominant 39% of the global mobile phone market in
2008, decided to leave the Japanese market.
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