Apple finding it difficult to crack Japanese cell phone market

[AppleInsider]

Apple's iPhone, a runaway success in the US and parts of Europe, is struggling to see similar success in Japan, where consumers who've long been privy to some of the world's most advance cell phones are passing over the touchscreen handset for cheaper and more familiar offerings.

After selling about 200,000 units during the first two months, sales of the iPhone 3G have fallen to a third of what they were immediately following launch, according to the Wall Street Journal. Analysts now believe Apple will be hard pressed to sell 500,000 units, a far cry from their 1 million unit predictions earlier in the year.

Part of the problem is that Apple and its exclusive Japanese carrier Softbank are marketing the handset at high prices and touting features such as 3G internet access. While 3G access is relatively new for US customers, the technology has been a staple on Japanese cell phones for years.

The 16GB model is priced at approximately $320 for new customers who sign up for a two-year contract, slightly above the $299 asking price from US carrier AT&T. Softbanks existing 19.5 million subscribers aren't offered the same subsidy, however, and must pay $540 for the same model on top of Internet service fees that scale as high as $60 per month.

Although the carrier has lowered data fees since the launch of the iPhone 3G in July, the vast majority of consumers are still opting for one of the many handsets that are consistently on sale for lower prices, the Journal said.

Another barrier to adoption is that the iPhone lacks features that are familiar to Japanese consumers, such "emoji," a form of clip art that can be inserted in sentences to spruce up email messages. The iPhone also lacks other capabilities found on most Japanese cell phones such as digital television, satellite navigation service, and chips that let owners use their phones as debit cards or train passes.

Apple's App Store, one of the iPhones standout features, has also been largely passed over by Japanese users who are both unfamiliar with its advantages and cautious of making purchases online.

"Japanese users don't know what to do with an iPhone," said Takuro Hiraoka, an analyst for GfK Marketing Services Japan Ltd. "Sales could grow if Apple provides specific examples of how it can be used."

Apple isn't alone in its struggles. The Journal notes that "more than 10 domestic handset manufacturers compete for a slice of Japan's cellphone market," but even the global leader, Nokia, hasn't found a way to garner a 1 percent share. Sharp, based out of Tokyo, is the market leader with a 25 percent share.

[ View this article at AppleInsider.com ]

[L255J]

Man, I'd love the Japanese market to force Apple to give the iPhone more features and lower pricing.

[Booga]

Originally Posted by L255J

Man, I'd love the Japanese market to force Apple to give the iPhone more features and lower pricing.

Actually it sounds like Apple needs a team of iPhone developers whose sole job is to make features that Japanese buyers care about but no one else does. Emoji, DoCoMo payments, some sort of dock-port add-on that receives HiDef TV, etc. I suspect the fees aren't actually what's driving the slow adoption so much as the fact that the iPhone can't replace the average "near-free" phone for typical Japanese usage, while it can for most areas of the world.

[ckipel]

How quick people were to judge from this report:

http://forums.appleinsider.com/showthread.php?t=89972

[L255J]

Originally Posted by ckipel

How quick people were to judge from this report:

http://forums.appleinsider.com/showthread.php?t=89972

LOL

What is it? Is it doing good or what?

[Joel Breckinridge]

Some Japanese analysts are saying it could be as small as 160,000 units. WSJ gets most of it right but there are some missing pieces. In addition to the emoji (which are glyphs that use the Unicode free use area), iPhone does not have the one-seg digital TV reception most handsets have now or the digital wallet function. These are not the biggest drawback however, it is the poor reputation and lousy execution of Softbank.

The Softbank store experience compared to Docomo and AU is poor, the iPhone 3G phone plan is complex and Softbank has lowered the initial tier price for packet data but if you use 3G data much at all, the price has not changed. Softbank should have come out the door with lower prices but all they are doing is reacting to Docomo price cuts which does not look good in the eyes of most people here.

Despite all this there is still interest in the device and hope but only if Docomo signs on. I talked with one journalist who said that Docomo has already agreed to sell iPhone but was waiting for the green light from Apple. There is also reports from analysts that if Softbank does not hit their iPhone sales targets, Docomo will be brought online. There are a lot of Docomo users who have said they are interested in iPhone and Apple would easily hit the 1 million mark in Japan if Docomo comes into play. Will be interesting to see how it develops

JB in Tokyo

[dyp]

I know this is about iPhone and Japan but here's my recent experience after showing off my iPhone to my niece in Korea.

First of all, there's no GSM so I couldn't use the phone but they did have Wifi in the apartment so was able to show e-mail and other features.

She then pulled out her Samsung and showed off the interface. iPhone definitely had better resolution and probably a slicker interface. Samsung had similar size, touch interface and a few more buttons.

She showed off her pic album which you can reverse/forward pics by flicking the phone. Lot more low res games on the phone. Seems like they incorporated the accelerometer into the phone's basic features which I wish Apple would do with the iPhone.

I showed how I can play videos with iPhone's iPod feature. She then pulled out an antenna and showed how she can get live satellite broadcasts. In fact, we were watching the same show on her phone that we were watching on TV.

I said "Oh, wow"

Originally Posted by AppleInsider

Apple's iPhone, a runaway success in the US and parts of Europe, is struggling to see similar success in Japan, where consumers who've long been privy to some of the world's most advance cell phones are passing over the touchscreen handset for cheaper and more familiar offerings.

After selling about 200,000 units during the first two months, sales of the iPhone 3G have fallen to a third of what they were immediately following launch, according to the Wall Street Journal. Analysts now believe Apple will be hard pressed to sell 500,000 units, a far cry from their 1 million unit predictions earlier in the year.

Part of the problem is that Apple and its exclusive Japanese carrier Softbank are marketing the handset at high prices and touting features such as 3G internet access. While 3G access is relatively new for US customers, the technology has been a staple on Japanese cell phones for years.

The 16GB model is priced at approximately $320 for new customers who sign up for a two-year contract, slightly above the $299 asking price from US carrier AT&T. Softbanks existing 19.5 million subscribers aren't offered the same subsidy, however, and must pay $540 for the same model on top of Internet service fees that scale as high as $60 per month.

Although the carrier has lowered data fees since the launch of the iPhone 3G in July, the vast majority of consumers are still opting for one of the many handsets that are consistently on sale for lower prices, the Journal said.

Another barrier to adoption is that the iPhone lacks features that are familiar to Japanese consumers, such "emoji," a form of clip art that can be inserted in sentences to spruce up email messages. The iPhone also lacks other capabilities found on most Japanese cell phones such as digital television and satellite navigation service.

Apple's App Store, one of the iPhones standout features, has also been largely passed over by Japanese users who are both unfamiliar with its advantages and cautious of making purchases online.

"Japanese users don't know what to do with an iPhone," said Takuro Hiraoka, an analyst for GfK Marketing Services Japan Ltd. "Sales could grow if Apple provides specific examples of how it can be used."

Apple isn't alone in its struggles. The Journal notes that "more than 10 domestic handset manufacturers compete for a slice of Japan's cellphone market," but even the global leader, Nokia, hasn't found a way to garner a 1 percent share. Sharp, based out of Tokyo, is the market leader with a 25 percent share.

[ View this article at AppleInsider.com ]

[slapppy]

"I showed how I can play videos with iPhone's iPod feature. She then pulled out an antenna and showed how she can get live satellite broadcasts. In fact, we were watching the same show on her phone that we were watching on TV.

I said "Oh, wow"

Well thats why the Japanese aren't too impressed with the iPhone. Can't even copy and paste on it.

[solipsism]

Originally Posted by L255J

Man, I'd love the Japanese market to force Apple to give the iPhone more features and lower pricing.

How many features can Apple add via software to make it work better in Japan and also help trump the competition elsewhere.

Originally Posted by ckipel

How quick people were to judge from this report:

http://forums.appleinsider.com/showthread.php?t=89972

Apple has only been in the cell phone for one year, they are fighting some well entrenched players with a very loyal fan base, and they can't offer HW features that many Japanese are used to. I think a half million in that market is quite good. It seems to be a lot better sales that some of the EU countries, like Finland. If Their ~20M user base included 1M iPhnes that would be 5% for a new cell phone in 2 months in an already entrenched smartphone market.

Originally Posted by slapppy

"I showed how I can play videos with iPhone's iPod feature. She then pulled out an antenna and showed how she can get live satellite broadcasts. In fact, we were watching the same show on her phone that we were watching on TV.

I said "Oh, wow"

Well thats why the Japanese aren't too impressed with the iPhone.

TV is one of those things that Apple will never join in if the solution is pulling out a terrestrial antenna that I have to position to get a good signal It's all a bit lame; I haven't had to do that since 1981 when my neighbor had cable put in. I'd rather have it sent over 3G or have my videos on the device.

[nutts]

Originally Posted by AppleInsider

Softbanks existing 19.5 million subscribers aren't offered the same subsidy, however, and must pay $540 for the same model on top of Internet service fees that scale as high as $60 per month.

Strange they say that, as my friend was an existing Softbank customer using a Sharp handset, and he successfully upgraded to the iPhone paying the same monthly subsidised cost for the handset as I do as a new customer to Softbank (moved from AU).

So far I've met two Japanese people using iPhones where I live - one man, one woman - and both are also using their old phones just so they can send and receive messages with emoji. If only Apple could release an emoji plug-in or something...

As for me, I love my iPhone And I don't miss the 1-seg I never really used. Sometimes I do miss the emoji though, and good battery life.

[Brian]

"Sharp, based out of Tokyo, is the market leader with a 25 percent share."

I am sure Sharp is based in Tokyo and that is why it has 25% market share. Apple is based out of Tokyo.

[zunx]

THIS IS HOW TO BOOST IPHONE SALES:

Free, free, free iPhones! Free from any carrier or contract plan.

That easy!

[TenoBell]

From studies about the Japanese market show that most people don't actually make common use of the features most bragged about.

From articles I've been reading the iPhone has high approval among users in Japan. The biggest problem is the cost of the phone and the contrac plan are all far more expensive than normal. The same mistake was made last year in Europe where carriers charged an extreme premium on the iPhone and sales were not very good. Once prices were lowered iPhone sales immidiately increased.

[wheelhot]

Sharp? I dont even know they make phones :amazed:

Personally, if Apple wants to penetrate into the Japanese market they need to know what Asians do and how they communicate. We love those emos.

[TenoBell]

Originally Posted by dyp

She then pulled out her Samsung and showed off the interface. iPhone definitely had better resolution and probably a slicker interface. Samsung had similar size, touch interface and a few more buttons.

What OS is the phone using?

She showed off her pic album which you can reverse/forward pics by flicking the phone. Lot more low res games on the phone. Seems like they incorporated the accelerometer into the phone's basic features which I wish Apple would do with the iPhone.

How does incorporating more of the accelorameter help with the actual usefulness of the phone?

Game developers on the iPhone have said they don't need to use low rez mobile games. They are able to use console level graphics.

I showed how I can play videos with iPhone's iPod feature. She then pulled out an antenna and showed how she can get live satellite broadcasts. In fact, we were watching the same show on her phone that we were watching on TV.

I said "Oh, wow"

Pulling out an antenna to watch live broadcast does not sound like a desirable feature to me. Downloading and streaming video when you want it is the future. Antennas and broadcast schedules are the past.

[CREB]

Anyone who has dealt with Japan, and who has been to Japan understands why this is the case. I'm sorry, but the Japanese have come to expect quite a bit more from their electronics. The US has always been behind the whiz-bang compared to Japan. Hell, in the nineties I was laughed at when I showed them my then mobilephone—they were so much further than the US back then, and now.

[nagromme]

As an international phone not specifically designed for Japan, maintaining 1/3 of the big initial rush, and selling half a million phones, is kind of a nice problem to have. Even if outsiders predicted even better, making it a "problem."

Apple's clearly had to prioritize on features, with all their attention going (for much of this year) into the SDK. That has turned out to be amazingly useful, but other features, from copy-and-paste to fill GPS to more Japan-oriented abilities, will follow in time.

The payment-card chip may have to happen (for now anyway) via 3rd-party case, if it's important. Sounds doable (and useful). Everything else sounds like software to me.

[JeffDM]

Originally Posted by Joel Breckinridge

Some Japanese analysts are saying it could be as small as 160,000 units.

What methodology do these analysts use to determine the number of sales?

If SoftBank says they got 215,000 iPhone activations the first month, how is 160k going to be credible?

[Cbswe]

I actually think it servers Apple right to get low sales there.

iPhone might be high tech with US standards. But US ≠ the whole world..

The iPhone market and the gaming market are the only areas I think Apples is doing something wrong in.
Other then that, Apple is the future =)

[JeffDM]

Originally Posted by TenoBell

Downloading and streaming video when you want it is the future.

That would be nice, but Apple as far as I can tell, is not allowing any actual cell bandwidth using media apps except for their own token video app.

[MacTel]

Originally Posted by Booga

Actually it sounds like Apple needs a team of iPhone developers whose sole job is to make features that Japanese buyers care about but no one else does. Emoji, DoCoMo payments, some sort of dock-port add-on that receives HiDef TV, etc. I suspect the fees aren't actually what's driving the slow adoption so much as the fact that the iPhone can't replace the average "near-free" phone for typical Japanese usage, while it can for most areas of the world.

Yep, you nailed it. I believe a smaller form factor (maybe a flip) is also ideal and desired for the Japanese market.

[dyp]

Apple needs to get MMS and Video working on the iPhone immediately to attract Asian users. They need to open some of their default apps like SMS and E-mail to access by third parties. Definitely behind entrenched players when comparing features.

Originally Posted by slapppy

"I showed how I can play videos with iPhone's iPod feature. She then pulled out an antenna and showed how she can get live satellite broadcasts. In fact, we were watching the same show on her phone that we were watching on TV.

I said "Oh, wow"

Well thats why the Japanese aren't too impressed with the iPhone. Can't even copy and paste on it.

[osxlynx]

i think one of the things important to "iphone life" that was never given importance by carriers when Apple decided to make it available to more countries was How to get more of iphone. the carriers are so naive, getting the iphone contract done (with apple) was their only goal. They never thought much about how to sell the iphone to their subscribers,and to keep selling it.Hype they thought would make them keep the iphone sales stable. they should have known better that it could help them give a good start, but it would not stand in the long run.
they should have thought of ways on how to market the iphone given they would know more about the customers they have.

[Cubert]

Apple won't get into the Japanese market until they release a pink iPhone with bling and a Hello Kitty on it.

[anantksundaram]

I hate to say this, but Japan is an increasingly unattractive, even uninteresting, market for Apple (as it will arguably become for most non-Japanese electronics manufacturers; look at what the article says about Nokia's share in Japan). Mac's shares are declining too.

It has become a chicken-and-egg issue: The potential size of the Japanese market for non-Japanese electronics manufacturers simply does not justify the $$ that would need to be spent given the extent of customization that would be required.

[jcollin3k]

Originally Posted by CREB

Anyone who has dealt with Japan, and who has been to Japan understands why this is the case. I'm sorry, but the Japanese have come to expect quite a bit more from their electronics. The US has always been behind the whiz-bang compared to Japan. Hell, in the nineties I was laughed at when I showed them my then mobilephone—they were so much further than the US back then, and now.

Well, I've lived in Tokyo now since 2003, and I always try to destroy the myth that Japan has more advanced tech than the U.S. Japan does not. It is quite archaic in fact. Yes, there are a lot of "whiz-bang" things around, but making payments with your phone (when you already have a card in your wallet that does the same thing) is just redundant, and you risk scratching your phone when you have to slap it onto the scanners.

There is NO wi-fi in Japan, paid or otherwise (imagine going to Starbucks with no wi-fi, that's Tokyo for you)
There were no smartphones until like 1.5 years ago, and the ones now are still bricks

I'm looking forward to returning to the future when I move back to the U.S. next year and having wi-fi again like I did in 1999.

[TenoBell]

Originally Posted by JeffDM

That would be nice, but Apple as far as I can tell, is not allowing any actual cell bandwidth using media apps except for their own token video app.

This is exactly what Pandora and AOL Radio do.

Web App through Safari is also an option.

[RobertSwier]

I'm an American who got an iPhone from Softbank on day three after the launch. It's my first cell phone in Japan, but I have a fair bit of experience with Japanese phones, and in particular with the 905i and 906i phones from DoCoMo. My experience is that I often cannot pull the phone out of my pocket without someone making a comment about how I have an iPhone and about how great it is. I usually feel obliged to let strangers play a few games and have fun flicking the icon screens back and forth.

Then again, all the email I get has strange characters because the Mail app doesn't know what to do with the emoji.

[success]

You knew I had to come on this thread and say "I told you so".

BS reports about the amazing success and debut of the iphone. People lining up. Yeah people lining up. That was it. Lining up, NOT purchasing!!

If you want quick Asian input the iPhone is not for you. I have tried it many times and continue to try it (to convince myself to buy it ) and it just doesn't cut it. I'm not even a native Japanese and the input is too slow for me. I type Japanese quite fast. Like many Japanese I use both thumbs to type even faster.

I can buy a smaller / waterproof / 1SEG TV / efficient input / 4MP camera (which records VIDEO) / SD card / rotating & flip LCD / mp3 capable / full email capable mobile phone for $30-$40 USD on a one year contract.

As I mentioned before my girlfriend works at Soft Bank. She ain't the big cheese but she's pretty high up there as Soft Bank has an empowering environment for women. NONE of her co-workers own an iPhone. Most of them have models from 2007. As they say in her office, 'the iPhone also has poor reception compared with other phones and carriers'. Still better than the current North American nightmare of course. It depends on the phone though. For Soft Bank the Sharp phones are quite reliable.

When you are on a moving train or walking which is what we are doing in Japan when we actually have time to communicate, touch input is not your friend. For the most part, you either have to stop walking or wait until the train stops.

Sorry to say but the iPhone in Japan will always be the phone that's popular for 'westerners' or Japanese who 'just have to have the Apple iPhone'.

As they say on YouTube, 'FAIL'.

*disclaimer* in Japan only.

Originally Posted by RobertSwier

I'm an American who got an iPhone from Softbank on day three after the launch....SNIP....

emoji? Are you one of those foreigners/westerners that has been here for years and still types mainly in English? Anywho...As you said people stop you because yes it is a 'novelty' and the games are 'neat'. They certainly aren't running to the stores after they see your toy to buy it.

Originally Posted by jcollin3k

There is NO wi-fi in Japan, paid or otherwise (imagine going to Starbucks with no wi-fi, that's Tokyo for you)

Wi-Fi is certainly not easy to find in Japan however cafes are slowly starting to carry it.
Emphasis on slowly.

Originally Posted by jcollin3k

I'm looking forward to returning to the future when I move back to the U.S. next year and having wi-fi again like I did in 1999.

Michael J. Fox.

[samab]

Originally Posted by JeffDM

What methodology do these analysts use to determine the number of sales?

If SoftBank says they got 215,000 iPhone activations the first month, how is 160k going to be credible?

Softbank had 215,000 net subscribers additions in that month --- that's nothing to do with iphone activations.

http://www.palluxo.com/2008/08/07/so...ne-3g-pricing/

[jodyfanning]

Originally Posted by dyp

I know this is about iPhone and Japan but here's my recent experience after showing off my iPhone to my niece in Korea.

First of all, there's no GSM so I couldn't use the phone but they did have Wifi in the apartment so was able to show e-mail and other features.

Obviously you have an iPhone 2G. It seems the 3G when used in Korea or Japan runs out of battery in just a few hours and that the Japanese have to carry a second phone.

http://www.christianlindholm.com/chr...one-3g-is.html

And if anyone should know about mobile phones it is Christian Lindholm.

[TenoBell]

Originally Posted by RobertSwier

I'm an American who got an iPhone from Softbank on day three after the launch. It's my first cell phone in Japan, but I have a fair bit of experience with Japanese phones, and in particular with the 905i and 906i phones from DoCoMo. My experience is that I often cannot pull the phone out of my pocket without someone making a comment about how I have an iPhone and about how great it is. I usually feel obliged to let strangers play a few games and have fun flicking the icon screens back and forth.

I recently read an article that stated WiFi isn't widely deployed in Japan. Also that Japanese aren't as sure what to do with the App store. Japanese don't purchase from the internet.

Then again, all the email I get has strange characters because the Mail app doesn't know what to do with the emoji.

I doubt emoji is an officailly supported language for email.

[TenoBell]

As they say on YouTube, 'FAIL'

Calm down. The report does not say the iPhone is a failure in Japan. That it isn't doing as well in Japan as in other parts of the world. Much of the reason for that is price. The iPhone is more expensive in Japan than most everywhere else.

[success]

Originally Posted by TenoBell

Calm down.

LOL you know what I mean.

Originally Posted by TenoBell

I recently read an article that stated WiFi isn't widely deployed in Japan.

True

Originally Posted by TenoBell

Also that Japanese aren't as sure what to do with the App store.

Maybe they're waiting to buy the Hello Kitty app.

Originally Posted by TenoBell

Japanese don't purchase from the internet.

Not true. Amazon JP is hugely successful. Main reason for successful Blu-Ray sales in Japan.

Btw, OT but Amazon JP rocks the house. I can print out my barcode/order at home in the evening, walk across the street to Seven Eleven, they scan my bar code and I pay cash and receive my Blu-Rays the next day for free. Wicked service. Or I can transfer my funds at the ATM or bank online. Either way I get it next day free.

[TenoBell]

Originally Posted by jodyfanning

Obviously you have an iPhone 2G. It seems the 3G when used in Korea or Japan runs out of battery in just a few hours and that the Japanese have to carry a second phone.

http://www.christianlindholm.com/chr...one-3g-is.html

And if anyone should know about mobile phones it is Christian Lindholm.

This isn't specific to the iPhone. Battery is quickly drained for all phones that use HSDPA 3G.

[CREB]

Originally Posted by jcollin3k

Well, I've lived in Tokyo now since 2003, and I always try to destroy the myth that Japan has more advanced tech than the U.S. Japan does not. It is quite archaic in fact. Yes, there are a lot of "whiz-bang" things around, but making payments with your phone (when you already have a card in your wallet that does the same thing) is just redundant, and you risk scratching your phone when you have to slap it onto the scanners.

There is NO wi-fi in Japan, paid or otherwise (imagine going to Starbucks with no wi-fi, that's Tokyo for you)
There were no smartphones until like 1.5 years ago, and the ones now are still bricks

I'm looking forward to returning to the future when I move back to the U.S. next year and having wi-fi again like I did in 1999.

Good luck destroying that myth as obviously you are still an outsider. There are many avenues Japan is pursuing with their Asian counterparts that go unannounced...that's how the Japanese do it.

[JeffDM]

Originally Posted by TenoBell

Also that Japanese aren't as sure what to do with the App store. Japanese don't purchase from the internet.

I thought one of the reasons iTS was soft there was because people there were already routinely buying their music using their phones, a few years ahead of Apple's music store. Why apps are such a leap beyond that, I wouldn't know.

[TenoBell]

Originally Posted by success

Not true. Amazon JP is hugely successful. Main reason for successful Blu-Ray sales in Japan.

Btw, OT but Amazon JP rocks the house. I can print out my barcode/order at home in the evening, walk across the street to Seven Eleven, they scan my bar code and I pay cash and receive my Blu-Rays the next day for free. Wicked service. Or I can transfer my funds at the ATM or bank online. Either way I get it next day free.

I don't understand the need to scan a barcode or go to an ATM when it's still being mailed to you. The whole point is in being able to purchase online without going anywhere.

[NasserAE]

Originally Posted by success

I can buy a smaller / waterproof / 1SEG TV / efficient input / 4MP camera (which records VIDEO) / SD card / rotating & flip LCD / mp3 capable / full email capable mobile phone for $30-$40 USD on a one year contract.

Last time I checked we can get these type of phones for free in the US!!! By full email do you mean desktop quality email? push email and Exchange support?

and who need a waterproof phone?!

Originally Posted by success

When you are on a moving train or walking which is what we are doing in Japan when we actually have time to communicate, touch input is not your friend. For the most part, you either have to stop walking or wait until the train stops.

I use the bus, more shaking and short stops, every day and never had a problem typing using the touch screen and both thumps!!

[success]

Originally Posted by TenoBell

I don't understand the need to scan a barcode or go to an ATM when it's still being mailed to you. The whole point is in being able to purchase online without going anywhere.

I don't use credit cards and Japan is pretty much a cash society. I could use my CC if I wanted to / had them but I don't / don't need. Gotta go out anyway next door to buy groceries so it's all the same.