KPN to start small with European I-mode launch

Koninklijke KPN NV said Monday that it has ordered 50,000 I-mode handsets for its European launch of Japanese mobile Internet service I-mode, suggesting that the company doesn't expect demand for the service to be hot from day one.

The size of the order placed with an unnamed Asian manufacturer was disclosed by KPN's Chief Financial Officer (CFO) Maarten Henderson at the presentation of KPN's second quarter results. With 50,000 handsets KPN Mobile NV can only service about 1 percent of its 5.1 million customers.

KPN, despite the small number of phones ordered, repeated Monday that it expects I-mode to be the "main driver" behind its mobile data revenue. More handsets from multiple vendors will become available after the initial launch in the course of 2002, KPN said.

When asked if KPN Mobile really plans to launch I-mode with only 50,000 handsets available, a spokeswoman drew on her stock of standard answers.

"Due to the competitive nature of the information, we can't give any more information," said KPN Mobile spokeswoman Caroline Ubachs, adding that Henderson's comments "are not an indication what KPN expects of I-mode, but only show that KPN is on track with I-mode."

The initial devices have been ordered from one Asian manufacturer, KPN Mobile said two weeks ago. The company won't name the manufacturer. Users aren't eagerly waiting for I-mode, so 50,000 handsets could be just about right, according to Peter Richardson, vice president of research at technology investment bank SoundView Technology Corp.

"This (I-mode) is probably not going to generate a huge uptake in sales. The average consumer hasn't heard of I-mode and probably thinks it is something like WAP (Wireless Application Protocol). The real test will be in how KPN markets the service and how they build the model around it. The way GPRS (General Packet Radio Service) is currently priced discourages use," he said.

On the manufacturers' side, Richardson said, 50,000 handsets is "probably one of the largest GPRS handset orders to date."

"It shows confidence in (the quality of) the GPRS network. There is still concern over the stability of GPRS and most operators have only a few subscribers on their networks," he said.

The European I-mode service, to be launched later this year or early next year, will have over 20 international and over 40 local I-mode sites to start with, according to Henderson. These will include e-mail, news and travel, he said. By the end of 2002, KPN expects there to be over 700 I-mode sites for the European market. It hopes I-mode will be a mass-market product.

KPN Mobile, its affiliated carriers E-Plus Mobilfunk GmbH & Co. in Germany and KPN Orange Belgium NV/SA, together with Telecom Italia Mobile SpA (TIM), are preparing to launch a European version of the I-mode service. Work on the service is done in Düsseldorf, Germany, together with NTT DoCoMo Inc., the inventor of I-mode. KPN, its affiliates and TIM will offer the I-mode service exclusively, said KPN.

The European I-mode handset will be a dual-browser handset that will support I-mode and WAP on a GPRS (General Packet Radio Service) network. The handsets will allow access to data services based on NTT DoCoMo's proprietary I-mode protocol, delivered over European GPRS cell phone networks.

Introduction of I-mode services in Europe will be phased, with Germany or the Netherlands coming first, followed by Belgium and Italy, KPN said.

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