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

Japan mobile phone market contracts by 19% in 2Q09

Japanese handset vendors sold 2.3 million less mobile phones in 2Q2009 than in the same quarter last year. With 9.5 million unit sales this quarter became the seventh consecutive quarter with negative growth in Japan. On a brighter side, at least for Sharp, this is the 13th consecutive quarter for the vendor to retain top share. The hard times will likely continue in 2H09 for mobile vendors in Japan, the IDC press release states.

Source: IDC Japan

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

Top 10: Best selling mobile phone in Japan

The first week of September witnessed a big jump of iPhone 3GS from the 10th to third ranking in top 10 selling mobile phone rankings in Japan. The big jump is attributed to solving the earlier inventory problems for iPhone 3GS. Nevertheless, the undisputed leader Sharp saw two of its models swapping the top and second positions, securing its hold on Japanese market.

TOP 10
1(2) Sharp SH001	KDDI au
2(1) Sharp SH-06A	NTT DoCoMo
3(10) iPhone 3GS	Softbank
4(6) SE W64S	KDDI au
5(5) Panasonic 810P	Softbank
6(13) Sharp SH-02A	NTT DoCoMo
7(3) Sharp SH-05A	NTT DoCoMo
8(18) Sharp URBANO	KDDI au
9(7) NEC N-08A	NTT DoCoMo
10(4) iPhone 3G 8GB	Softbank

Source: IT Media Mobile

Mobile phone sales drop by 29% in Japan in 2008

According to MM Research Institute, the cellphone shipments decreased by 29.3% YoY in Japan in 2008, totaling in 35.8 million units. Sharp was leading the pack for four years consecutively, shipping over 8 million handsets last year. International players failed to make a big impact in 2008, grouped in the Other category where Apple iPhone and HTC Diamond were notoriously visible. The 2009 outlook doesn't look bright as the handset shipments are expected to drop by another 7.5% hitting the low of 33.2 million units.

Source: MM Research Institute via Keitai Watch

Top ten handset models sold by DoCoMo in second week of Oct 08

ITC Network, a retail kisok operator, released NTT DoCoMo's handset sales popularity rank in the second week of this month. Panasonic P906i in metallic and black color variations was the favourite followed by Sharp's SH906i in white. Fujitsu's senior users-oriented phone Raku-Raku 5 F884iES in Golden color closed the top-five rank letting another Panasonic's P906i in white to get in front of it. See details below.

1. Panasonic P906i (Metallic)
   
2. Panasonic P906i (Black)
   
3. Sharp SH906i (White)
   
4. Panasonic P906i (White)
   
5. Fujitsu F884iES (Golden)
   
6. NEC N706i (Pink)
   
7. NEC N906iμ (Saphire Black)
   
8. NEC N906iμ (Pink Diamond)
   
9. Panasonic P706iμ (Champagne)
   
10. NEC N706iII (Polish Black)
    

Source: ITCNetwork via K-tai.impress.co.jp

iPhone sales go flat in Japan?

Market research company GfK has just released handset sales rankings for the first week of October in Japan. Surprisingly, Apple iPhone didn't make it to the country's top ten and even ended up third in Softbank's line up. Talking about the novelty effect evaporating...Overall, October is a slow month in Japan as the industry holds its breath for carriers' winter handset lineup announcements. But will Apple have something new to offer? I doubt that. To make it worse for Softbank, an iPhone's operator in Japan, none of its models was listed in top ten list. At the same time DoCoMo's models occupied the top list taking seven out of ten positions including the first top three. Unfortunately, GfK doesn't make public the handset sales numbers but at least you can see the top ten list below:

1. Panasonic P906i (NTT DoCoMo)
2. NEC N906iμ (NTT DoCoMo)
3. Sharp SH906i (NTT DoCoMo)
4. Sharp W62SH (KDDI au)
5. Toshiba W61T (KDDI au)
6. NEC N706iμ (NTT DoCoMo)
7. Panasonic 706iμ (NTT DoCoMo)
8. Fujitsu Raku-Raku Phone V (NTT DoCoMo)
9. Sony Ericsson W62S (KDDI au)
10. NEC N706iII (NTT DoCoMo)

Source: GfK via ITMedia

DoCoMo-Google partnership: i-mode on Google steroids

In January, Google Japan and NTT DoCoMo announced their intention to work together to bring Google search, AdWords advertising platform and other Google apps to DoCoMo’s i-mode phone users. While Google already has relationships with KDDI au, the deal with DoCoMo goes beyond a simplistic inclusion of Google search box on the top page of i-mode portal. DoCoMo is about to stop playing a gatekeeper role as its users will search and browse beyond the operator’s own portal. So what are the changes that Google brings to DoCoMo i-mode?

Search results are fetched from three sources
Google search engine indexes three web domains for results: 1) i-mode sites approved by DoCoMo; 2) non-official i-mode sites; and 3) generic Internet websites. Before, users couldn’t perform searches that included non-official and Internet websites from i-mode portal.

Search results are grouped by three types
The way search results are displayed on i-mode portal is also will be changed to reflect the addition of non-official i-mode sites and Internet websites. Based on the source, Google and DoCoMo will group the search results accordingly.

Google keyword-based ads are integrated into search results
A big win for Google is the decision to integrate its AdWords advertising platform into i-mode portal. Now, keyword-relevant text ads marked with a [PR] sign will be placed in up to three locations across the page with search results with a total number of ads not exceeding four. No word about the revenue-sharing model between Google and DoCoMo though.

Display ads to compliment text ads
While details are not clear, there are some reports that Google AdWords platform will also be used to serve display ads such as banners across a bunch of DoCoMo’s services including i-mode portal, Message F (free), G-guide and others. DoCoMo’s D2Communications ad agency will work with Google on implementation of this new mobile marketing structure.

More Google apps to be preinstalled on DoCoMo handsets
Two companies agreed to preinstall a set of Google apps on DoCoMo handsets in near future. The first app to be preinstalled is Google Maps. The Fujitsu F905i and NEC N905i handset already spot Google Maps. All future handset models will be equipped with Google Maps, according to DoCoMo. Having started with the integration of Google Maps, the companies also plan to make Gmail, Picasa, YouTube and Google Calendar optimized for i-mode usage. The idea is to enable all kinds of mashups between these apps and search results like having a link from search results page to Google Maps for example.

Google to become a default page for DoCoMo Full Browser
It was decided that DoCoMo’s all future handsets with a full browser installed will have Google’s top page as a start page by default.

DoCoMo’s Android plans
It seems that DoCoMo wanted to ensure both the i-mode services and Android working seamlessly on its handsets when it joined Google’s led OHA initiative. We can expect i-mode handsets optimized for Google services rather than a complete shift to one platform – Android. Thus, DoCoMo’s handsets based on Symbian MOAP and Linux MOAP platforms will be optimized for Android experience, while some new Linux-based Android handsets will be optimized for i-mode service.

Related articles on Google's mobile strategy in Japan:

• Mobile Google localization primer: emoji and mobile Gmail
• Google Japan intros new single portal for domestic mobile operators
• Google befriends with KDDI, plans global expansion from within Japan?

NTT DoCoMo’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 NTT DoCoMo. As DoCoMo starts rolling 905 series phones, devices from the 904 series line-up occupied the top positions due to discounts and general popularity of one-seg phones. Fujitsu’s one-seg F904i model ranked first for the second week in a row followed with another one-seg model the 704i by Sharp (see table below for the rest).

NTT DoCoMo Top Ten
1 (1)	Fujitsu F904i
2 (3)	Sharp SH704i
3 (4)	Panasonic P904i
4 (2)	Sharp SH904i
5 (5)	Fujitsu Raku-Raku4 F883iES
6 (6)	Fujitsu Raku-Raku3 F882iES
7 (9)	NEC N704iμ
8 (8)	NEC N904i
9 (10)	Mitsubishi D904i
10 (7)	Sharp SH903iTV

Source: GfK via ITMedia

Sharp is still undisputed handset leader in Japan: 1Q07 data

Sharp continues to hold its dominant position in Japan’s handset market through four consecutive quarters, increasing its market share to 22.6% in 1Q07 from 21.2% in 4Q06, reports IDC. Strong sales of Raku-Raku series phones are worth mentioning among other 1Q07 highlights as they helped Fujitsu get in the top five handset vendors.

Overall, handset shipments increased by 3% from last year, reaching the five-year record of 14.39 million handsets. National carriers’ flourishing spring handset collections targeting at various segments with ultra-thin and easy-to-use models and improvements in service and pricing contributed to this rather unusual burst in handset sales.

Source: IDC Japan

Best selling phone in Tokyo area: Fujitsu F882iES

K-tai Watch routinely published a table of best-selling NTT DoCoMo's phones in Tokyo metropolitan area for the 10/5~10/11 time period. The king of the hill was the golden color FOMA Raku-Raku 3 phone also known as Fujitsu F882iES offered by NTT DoCoMo. What is interesting is that Raku-Raku series models target at older users by simplifying handset features and keeping "bells and whistles" away. For example, Raku-Raku phones spot bigger keys with easy-to-see numbers, the on-screen font size is also made larger, while menu is simplified for easy navigation. The F882iES also comes in pink and black, but the golden is this time favorite. During the last update it was third in the ranks and now it is on the top. I'll see how long it will hold to this sweet position. The F882iES was followed by two color variations of the same model by Panasonic: the P902i in silver and black. The fifth place was also occupied by the P902i - this time in white color variation. The white N701i by NEC was placed fourth.

Source: ITC Network via K-tai Watch

Gartner: 45 million handsets shipped in Japan in 2005

According to Gartner, Japanese carriers sold 11.7 million handsets in 4Q 2005, while the year 2005 total handset shipments reached 45 million terminals. The demand for music playback feature by youngsters drove the handset replacement purchases.

Among the top Japanese handset makers mentioned by Gartner were Sony Ericsson (5th place), Panasonic (8), NEC (9) and Sanyo (10). Apart from Sony Ericsson, a joint venture between Sony and Swedish Ericsson, Japan’s domestic makers did not expand their market shares, failing to address the market needs or finding niche markets. The fragmentation of the domestic market also did not help improve the situation, because standalone Japanese makers lack the economies of scale to compete with the world leaders.

Source: Gartner press release (pdf, Japanese)

Eco handset - a real differentiator for NEC

It looks like the handset maker NEC together with Unitika company successfully completed their project on developing eco-friendly bio-plastic, which is 90% bioplant-based. The newly developed renewable plastic will be used for the body of the N701iECO handset model, to be sold by NTT DoCoMo in coming weeks.

Besides its nature-friendly characteristics the newly developed bio-plastic is raved for its high heat resistance and ruggedness, as the companies integrated fibers of Deccan hemp plant into the polyactic acid base, making it perfect for handset molding.

The move to use the eco-friendly material instead of traditional petroleum-derived plastic for handset molding is going to benefit NEC in a long-term as the company will have a head-start in developing alternative nature-friendly materials for handsets, a process that, as it can be easily predicted, will accelerate in future. Before rivals copy the technology, NEC should use its advancement to differentiate its products not only domestically but on a global scale too, as the marketing of eco-friendly handset has a huge potential for mass-market appeal.

Music phone from NEC holds up to 1,000 songs

In Japan, Vodafone prepares for the spring launch of the 804N, a music phone from NEC. The 804N will be the first model manufactured by NEC for Vodafone with a dual WCDMA/ GSM 900/1800/1900 bands support. GSM support means you can take this phone abroad and use it with the Vodafone service over there.

But the main feature of this phone is its remarkable storage capacity – 450MB of internal memory plus up to 512MB of expandable memory (microSD card slot). All this memory is needed for music playback (non-secure AAC and secure MP3 file formats). The handset has dedicated buttons to play, fast-forward, and rewind music. The retail price with the carrier’s subsidies is expected to be around 15,000 yen ($127).

Here are some additional specs of this phone:

• Size: 48mm x 93mm x 23mm
• Weight: 115g
• Main display: 2.2 inch QVGA screen
• Talk time: 180 minutes (WCDMA)/ 260 minutes (GSM)
• Stand by time: over 250 hours
• Connectivity: Bluetooth, USB
• Camera: 2.0MP CMOS
• Applications: V Appli (Mega Appli)/ QR-code scanner/ Chaku Uta Full/ Vodafone Live! CAST/ TV Call/ Vodafone Live! BB

NEC chip: 50 hours of non-stop audio playback on cellphone

Credit: watch.impress.co.jp
NEC Electronics began shipping samples of its new audio processor for mobile handsets the "μPD99910" for JPY1,500 ($13).

The good thing about this chip is that it enables non-stopable song playback for 50 hours, according to the company. No doubts, the longer playback capability of the handset will be a great differentiator for cellphone manufacturers. However, at the price of $13, the "μPD99910" will significantly add to the final price of mobile phone.

NEC plans to start the mass production of the "μPD99910" in April 2006 with an output capacity of 400,000 chips per month.

Vendor's site: NEC Electronics