In the analog age Japanese mobile handset makers were among the world's leading makers, but the failure to create a Japanese standard for both 2G and 3G that would become the world standard has reduced them to also-rans - except in the Japanese market.
NTT DoCoMo has led the development in Japan of a business model that focused on the expensive development of high-end models, which bring high margins to handset makers partly as a result of operator subsidies. Because DoCoMo's FOMA W-CDMA was not really in synch with the world W-CDMA standard until recently, foreign handset makers, excluding Nokia and Motorola, had little option but to ignore Japan in the same way that the ten main Japanese makers found it difficult to invest resources both in the Japanese market and overseas markets.
The Japanese market seems on the surface to be not so large. In January 2006, for example, net new subscribers totaled a paltry 255,200. However, under the surface the rapid migration from PDC to 3G resulted in the acquisition of over 1.5 million new 3G handsets.
The cosy world of Japan's handset makers, however, is going to be shattered when the three new operators launch services starting toward the end of the year. Handset prices will become one key factor in the winning over new consumers. Softbank, for example, has indicated that it may bring in handsets from China.
The Koreans are coming
In fact, foreign competition is already arriving. KDDI launched a model made by Korea's Pantech in mid-December. Vodafone will introduce the first Samsung handset to Japan this month and LG Electronics will launch a model in NTT DoCoMo's lineup sometime in spring.
Some industry watchers predict that the business model for Japan's makers will become unsustainable and that many will be forced to merge their handset businesses, and that some may even withdraw from the market. Already NEC and Panasonic are involved in joint development projects. Fujitsu and Mitsubishi Electric are as well.
'I don't see any significant changes coming - Japanese vendors may lose market share at the low-end of the market, but they will retain their strength in developing strategic high-end handsets with cutting edge features,' said Nahoko Mitsuyama, principal analyst in charge of mobile and wireless communications at Gartner Japan.
- Motive Big Network Analytics - Infographic
- MBB viewpoint: The market situation, key challenges and strategies
- FiberHome products are serving more than 20 million subscribers in Asia Pacific with its FTTH integrated solution.
- At a glance: Global SaaS market and Huawei's CSB Cloud Marketplace
- Taming the Big Data beast