Japanese vendors look for overseas expansion, this time for real...

I decided to write this post in a response to a very thoughtful analysis of 2010 handset vendor trends made by Tomi Ahonen on his Communities Dominate Brands blog. Among other vendors, Tomi lays out his expectations for Japanese vendors, especially citing Fujitsu as the world's fifth biggest smartphone maker. Thanks, Tomi ;) I am not going to touch here the very tricky subject of smartphone definition, but am just going to say that in Japan the most phones sold by domestic vendors, including Fujitsu are not considered to be smartphones. However, Tomi's post made me wonder when we can expect Japanese vendors compete on a worldwide scale. After several failed attempts in the past, this and next year will be crucial for Japanese vendors to launch internationally as the window of opportunity is quickly closing.

Gloom in domestic market

The Japan mobile phone market saw sequential decline in the third quarter of 2009, becoming the worst quarter in five years in terms of total handset shipments, according to IDC Japan. Mobile phone shipments totaled 7.32 million units, down 12.8% from a year earlier. Quarter-on-quarter growth remained negative for eight quarters in a row. The major showstoppers were:

• Lack of compelling high-end handsets
• Increased handset replacement cycle
• Excess inventories on operator side

To go global or not to go?

With such a pessimistic mood in their backyard, Japanese vendors face an invitable choice - to go global or die trying. Top five domestic mobile phone vendors by 3Q2009 (see chart above) - Sharp, Fujitsu, Panasonic, NEC and Kyocera are already selling phones in some markets outside Japan or planning to do so very soon. It doesn't mean everybody will succeed and I expect some market consolidation by the end of this year or earlier into the next year. Here is a summary of who done what and what to expect next.

Sharp

Sharp is the one to watch closely after as the company is rumored to be the manufacturer of the first "Microsoft" phone - a device based on Danger Hiptop/Sidekick platform acquired by Microsoft a couple of years ago. Sharp also plans to enter markets in Europe and North America after it tasted the waters in the nearby Asian markets including Taiwan and China. Sharp sold about 1.6 million devices abroad in 2008 and aims to boost that number to 4 million units by March 2010.

Fujitsu

Fujitsu made a modest enter into the Taiwan market, partnering with FET in January 2009. Last year, the company also joined Symbian Foundation reinforcing its support for Symbian OS domestically and utilizing the membership as an opportunity to broaden the Symbian appeal elsewhere. However, Fujitsu is not only focused on Symbian - the company is also known for manufacturing Windows Mobile handsets and it created the whole market niche in Japan with its very successful Raku-Raku lineup targetd at senior end-users. Obviously, I can't say anything beyond that but expect Fujitsu to make some headlines in future.

Panasonic

Panasonic is rumored to enter neighboring markets, with the main destination being China. There are some talks of Panasonic considering South American markets, especially Brazil where the similar with Japan's mobile TV standard is being adopted.

Toshiba

Backed by NTT DoCoMo, Toshiba added its first customer win in Europe in June 2009 by partnering with Spain's Telefonica. Having attracted industry's attention with the release of the TG01 - one of the thinnest Windows Mobile smartphones produced by ODM vendor for Toshiba, the company made a decision to outsource the manufacturing of phones out of Japan from October 2009.

NEC (NEC/Hitachi/Casio)

Having retreated from overseas markets in 2006, NEC is planning a comeback. First, it joined forces with two other players - Hitachi and Casio. As the leverage, the new company can utilize Casio's existing channel in the US. As you might've known, Casio found its niche in the US with a ruggedized and water resistant phone line bound for Verizon Wireless. Hitachi also rebranded its Wooo W53H keitai into the canU S1000 and shipped it to South Korea

Kyocera

Kyocera is an old-timer in the US market and now company also sells in Soth America as well. It got into Sprint's storefronts through the acquisition of another troubled Japanese vendor Sanyo. The prospects are still not clear for Kyocera overseas and domestically the picture is even worse.

Japanese vendors overseas
Kyocera	USA/Canada/Russia/India/Thai/Vietnam/New Zealand
Sharp	Europe/North America/China/Taiwan/Hong Kong
Toshiba	Europe/Asia
NEC-Hitachi-Casio	USA/South Korea
Fujitsu	Taiwan
Source:	M-Report

NEC, Casio and Hitachi in joint mobile phone development

Consolidation of Japan's mobile phone sector continues as three domestic handset manufacturers NEC, Casio and Hitachi have decided to jointly produce mobile phones. According to Nikkei, the newly created venture will start its operations from the beginning of next financial year in April 2010. NEC would take over the leadership with the 70.4% stake in the venture, which will be named NEC Casio Mobile Communications. In 2004 Casio and Hitachi have already merged their production units together to sustain in a highly competitive market. Other examples of market consolidation include the Kyocera and Sanyo marriage and exit of Mitsubishi in prior years. I expect the squeeze to continue and more consolidation to happen in the coming years.

Stakeholders of new venture
NEC	70.4%
Casio	20%
Hitachi	9.6%

Source: Nikkei

KDDI au's top ten selling phone models

GfK, a market research company, published ranks of top selling mobile phones with each operator in Japan during the last week of November. This post will cover KDDI au. See table below for the top 10 sellers with au brand.

KDDI au Top Ten
1 (1)	Toshiba W53T
2 (2)	Casio Exilim W53CA
3 (3)	Sharp W52SH
4 (4)	Sanyo W52SA
5 (5)	Kyocera A5528K
6 (8)	Sony Ericsson W53S
7 (6)	Casio W52CA
8 (7)	Panasonic W52P
9 (9)	Toshiba W54T
10 (20)	Kyocera W53K

Source: GfK via ITMedia

Casio mimics Sony branding strategy, shows Exilim cameraphone

Consumer electronics brands are being adopted by mobile handset arms of Japanese CE manufacturers. The trend started with Sony allowing its joint venture with Ericsson to sell featured mobile phones under Sony’s well-known Walkman, Cybershot and Bravia brands. Now Casio follows suit by assigning its Exilim digital camera brand to the cameraphone destined to be offered by KDDI au in Japan in near future. The rumors of Casio Exilim cameraphone surfaced first back in May and now it looks like its debut is imminent, according to ITMedia report from Wireless Japan 2007 trade show happening in Japan this week. The phone spots 5.1MP camera supported with specially developed Exilim Engine for Mobile. Interesting part is that the phone has a clamshell form factor with swiveling screen protecting it from scratches when not used and allowing using it as a huge viewfinder (VGA 2.8inch) in a shooting mode. More specs and pricing details are coming after KDDI au’s official announcement.

Source: IT Media (Japanese)

Casio Hitachi to make inroads into US market

Credit: PhoneScoop.com

First news about Casio’s intentions to enter the US market appeared in November last year. It turns out that it was true. According to Phonescoop.com, the FCC approved the G’zOne handset model, with Verizon Wireless brand mentioned in the FCC documentation. The G’zOne is a ruggedized, water-resistant handset, first shipped to KDDI in May 2005. After more than warm reception of the G’zOne by Japanese users, the company brought it to Korea in December last year and enjoyed high-level sales. Riding on success of their G'zOne, Casio Hitachi worked with Verizon to optimize the handset for the use on Verizon’s high-speed 3G EV-DO network. It can take a couple of months before the handset hits Verizon store shelves.

Casio and Hitachi joined their forces in 2004 and they are relatively small handset vendors, being outside of top-five domestic handset manufacturers. Merging was their only option to sustain and it looks like they are doing fine by expanding their presence beyond Japan.

Casio’s WCDMA move

With the number of WCDMA users accelerating throughout the globe, Casio decided that it was time to start producing 3G phones compatible with UMTS standard as well.

Having entered the handset business in 2000, Casio initially acquired licenses from Qualcomm to make CDMA One and CDMA2000 1x/EV-DO mobile phones. The company was shipping CDMA handsets to KDDI domestically and to South Korea internationally. However, in February 2006 the company expanded the licensing deal with Qualcomm to cover handsets, supporting the rest of 3G pack -- WCDMA and TD-SCDMA technologies. With this deal, Casio will have an opportunity to target at any 3G operator in the world, not to mention NTT DoCoMo and Vodafone in Japan. The question though is how successful will it be in this endeavor?

Source: Casio press release (Japanese)