Ovum’s innovative service of the month: Hanashite Hon’yaku

OVUM VIEW

Summary

As part of the Mobile and Fixed Services Innovation Radars, Ovum reviewed approximately 100 new services that were launched by telcos in October 2012. We have now tracked and reviewed over 3,000 new service launches since the reports were first published in 2009. Of all the services launched in October, members of Ovum’s Telco Strategy team have selected NTT DoCoMo’s Hanashite Hon’yaku as the most interesting new service. We believe that the conception and implementation of the service, which can translate a live call from Japanese into another language, demonstrates vision and a pragmatic appraisal of the role that telcos will play in the future.

The concept for Hanashite Hon’yaku is laudable

Hanashite Hon’yaku is an Android-based app that translates a live call from Japanese into the receiving party’s language. The app is the latest service to be launched under the “DoCoMo Cloud” brand, and can be used for calls to any mobile or landline phone, either in Japan or overseas. At launch, the service supported English, Chinese, and Korean, which are the most logical priorities among DoCoMo’s customers. The app provides translations through onscreen text and a voice readout.

In addition to translating calls, the app provides a service that will appeal to any traveler struggling to communicate in a foreign country. DoCoMo says that Hanashite Hon’yaku can also be used for face-to-face conversation in which the two speakers share one smartphone. The telco is working to add support for French, German, Indonesian, Italian, Portuguese, Spanish, and Thai, which will bring the total number of non-Japanese languages to 10.

As the app relies on DoCoMo’s cloud for processing, it is device agnostic and works as long as the user has Android 2.2 or above.

NTT DoCoMo’s go-to-market strategy is both humble and pragmatic

It would have been easy for DoCoMo to be bullish about the revenue prospects of a genuine innovation such as Hanashite Hon’yaku. Often, when telcos create genuinely innovative solutions, they get carried away by the pursuit of immediate, direct monetization. However, the reality is that most new services do not generate significant revenues for telcos. In fact, value-added service (VAS) revenues will only account for 3% of global telecoms service revenues in 2012. Ovum forecasts that this proportion will remain relatively flat until at least 2017.

This is the reality facing DoCoMo. Therefore, in opting to offer Hanashite Hon’yaku for free, the operator has acknowledged that putting a price on the service will only stifle adoption and won’t generate significant revenues. Instead, Hanashite Hon’yaku and the other apps offered under the DoCoMo Cloud brand will help to make DoCoMo indispensable to its customers while at the same time encouraging them to sign up for data packages.

Live call translation would have become pervasive with or without telcos

DoCoMo’s pragmatism is a tacit concession that call translation is coming with or without telcos. There are already a large number of online translation tools, and Google provides an easy and popular service to translate the contents of a website. It is thus not far-fetched to expect that a large OTT player such as Google or Apple will look to create a smartphone app to translate calls in the near future.

This is the key difference between the major OTT players (e.g. Google, Apple, and Microsoft), which use new services to embellish their core products, and telcos. Google makes its money from advertising, Apple from hardware sales, and Microsoft from software. Yet, many of the new services that they bring to market are not designed to be monetized directly. Instead, they are simply there to increase the stickiness of customers and support the OTT players’ core businesses.

In comparison, telcos have traditionally believed that every new service that they create must be directly monetized. However, this is the view that is most responsible for the failed Internet “walled garden” approach. The alternative view is that connectivity is the telco’s core product, and that operators have monetized connectivity by charging for voice, SMS, and, increasingly, data access. Under this view, VASs such as Hanashite Hon’yaku are nothing more than an inducement to get customers to continue paying to be connected to a telco’s network.

APPENDIX

Author

Emeka Obiodu, Principal Analyst, Telco Strategy

emeka.obiodu@ovum.com

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