iPhone Makes Japs Rethink Mobile Phone Isolationism
iPhone Makes Japs Rethink Mobile Phone Isolationism
Japan's 100 million mobile phone users make it one of the world's biggest markets. And arguably the best, as their i-mode phones crap on anything we've been abel to do from a great height. In Japan even old ladies punch out e-mail messages to friends and family via their phones.
The problem is, the country's cell phone makers have effectively shut themselves out from the rest of the world. So they're out of step with the antiquated business practices of th erest of the industry. And now, for some reason, they want to fall in.
It appears that change may be on the way, according to www.nikkei.net, which says that internal and external pressures are beginning to build up to break open this closed industry.
Ryo Shimizu, president of Ubiquitous Entertainment, said he's “fascinated by the smooth, touch-panel operation of the iPhone. It will revolutionize cell phones," he said of Apple hit gadget. Of course, he can't use it in Japan.
The iPhone employs the GSM communications protocol, the global standard for second-generation cell phones. There is no network in Japan that the iPhone can access because 2G Japanese handsets use original specifications developed by NTT DoCoMo.
Enlargement
Another barrier observers point to is the practice of telecom firms to buy phones from manufacturers and sell them with service plans. This makes it hard for Apple to run its own brand strategy.
KDDI president Tadashi Onodera is "talking with Apple" in the hope of releasing a Japanese version of the iPhone in its "au" line. DoCoMo and Softbank Mobile Corp. have similar ideas. Despite strong interest among consumers and eagerness among telecom firms, there is nothing on the horizon in terms of an official release of the iPhone in Japan.
Despite the assumed benefits of protectionism, the closed Japanese cell phone market has weakened Japanese manufacturers, because they have had to bear the high costs of developing their own GSM phones from scratch for overseas markets. Having fallen behind global leader Nokia of Finland and others for market share, Japanese firms are at a competitive disadvantage in scale and cost performance, creating a vicious cycle. They are using global standards for third-generation cell phones, but they are far behind their rivals.
Nokia sold over 300 million handsets worldwide in 2006, while Japan's industry leader Sharp Corp. (6753) sold just 14 million. The combined global share of Japan's 11 cell phone makers is about 7%, against Nokia's 35%.
Japanese consumers are forced to pay high prices for phones made by the losers of the cost-performance competition. Retail prices seem low, but that is due to the incentives that the telecom firms offer retailers, funded by subscriber fees.
The Ministry of Internal Affairs and Communications held a study meeting for the mobile communications business on June 26 to "change the status quo (of the Japanese cell phone industry), which is not globally competitive despite its high technology," said Minister Yoshihide Suga.
Several policy changes were suggested at the meeting, including measures to ease the use of products by different manufacturers. If instituted, the changes would allow foreign manufacturers to make inroads in the Japanese market.
Japanese cell phone makers withdrew in droves from China and other money-losing foreign operations last year. Now concentrating on the Japanese market, most appear to have turned operating profits for fiscal 2006.
With consumers demanding cheaper, more innovative foreign phones and the government promoting international competition, isolationism is no longer a viable survival strategy for the handset makers.
iPhone Handset
Post a Comment
You need to be logged in to post comments. Enter your login with your comment. Not registered?