Japan’s Handset Market Drops 20 Percent; Advanced Features Hit Saturation Point?
By Dianne See Morrison - Mon 04 Aug 2008 05:32 AM PST
Trouble in Japan’s mobile handset market. After years of heavy operator subsidies, some networks have pulled back on them, leaving mobile handset makers facing the bleak prospect of shutting down, or merging together to stick it out. Reuters reports that the world’s fourth largest handset market has seen sales fall 20 percent after operators—most notably NTT DoCoMo which has a 52 percent share of the mobile market—began lowering the price of calls and data, and increasing the price of phones. This prompted more consumers to hold onto their phones longer.
But problems, however, were already mounting in Japan’s handset market, arguably the most technologically advanced in the world. Many of the country’s domestic handset makers got locked into a a frantic “arms race” to come out with more and more features, but it seems there actually does come a point when packing a phone with more “advanced features,” becomes meaningless to consumers. As Gartner analyst Kenshi Tazaki notes, Japanese technophiles aren’t actually that excited anymore by the apps that once drove sales--such as music distribution, TV phones and camera phones. In fact it seems, it just becomes confusing with consumers tuning out. (Remember how in January Japan’s communications ministry said it would start licensing mobile phone “sommeliers” to help consumers make sense of the overwhelming array of handset features?)
The problem, meanwhile, was that many handset makers had spent heavily on R&D to bring out those new features, but never quite got the market share they needed to make their investment back. Mitsubishi, for example, shut down its loss-making phone unit earlier this year. Who else is vulnerable? Hitachi, Kyocera and Casio, all with low market shares, are looking shaky. Fujitsu (number three in sales) and NEC (number 5 in sales) are likely to continue on, as they have strong ties to DoCoMo (NYSE: DCM). Meanwhile, Apple (NSDQ: AAPL), Nokia (NYSE: NOK) and Samsung have all recently entered the market, which could put additional pressure on them.
Posted in: Companies, Operators, DoCoMo, Countries, Asia, Japan
