Analysis of price war declaration by Softbank

Just hours before the introduction of the number portability in Japan, Softbank declared a price-cutting that can potentially trigger a price competition in the mobile phone market. Financial Times did some analysis of this move by Softbank and outlined the following reasons why this strategy might not work in Softbank’s case:

• Softbank has the least resources to sustain in a declared price-war if other operators participate in it
• When Softbank entered the mobile market by buying Vodafone this year, Vodafone was already the cheapest carrier in the market. However, it did not help Vodafone to gain a lot of customers.
• While Softbank introduced 13 new phone models in 53 different colors in order to resolve the problem of poor handset portfolio that Vodafone notoriously had before, another infamous problem may require more time to resolve. And that problem is the network coverage, which is much worse than its rivals.

To summarize – the price-cutting is not the only weapon in the mobile price war and Softbank should have prepared better for it.