Does Japan's handset market need consolidation?

With the announced plans of foreign manufacturers to enter Japan's market with 3G handset terminals, the prospects of domestic handset manufacturers look gloom.

First of all, the market is overcrowded with about ten manufacturers, competing with each other and trying to court three national operators. If you look at the chart above, you will see than neither of cellphone makers has a distinctive lead over others. Not mentioned in the chart, but constituted the Other category are Casio, Kyocera, Sony Ericsson, Toshiba, Hitachi, and Mitsubishi. For the market size of 90 million subscribers (Japan's cellular subscriber base at the end of 2005), that's a lot of handset contenders. For the top five makers, who secured deals with big players such as NTT DoCoMo and KDDI, the future is not so worrisome, but the rest of the pack faces difficult choices. Actually, there are two clear choices: either to go internationally or to stop production. Well, the first option requires significant investments and the Japanese consumer electronic makers, each of whom owns a handset unit, go through some difficult times right now. They would rather to cut costs by downsizing or spinning out their unprofitable handset units. Anyway, the number of domestic handset makers will certainly decrease over the next two or three years.