Yeah but cost isn't so much the factor in Japan. The world's 16th highest per capita GDP and all… Well. To be fair they're overpriced marginally there (relatively speaking) but its not as bad as the rest of SEAsia....
I think that's why for Asia, Japan was Apple's first big target market. Well educated, technology and art and design savvy, high GDP, etc.. Apple just didn't figure the cultural stuff as much as it could have into the scene*. As an Asian country, Japan is very very different from the other, now, economic potentials of China + Hong Kong, Taiwan, Korea, Singapore (Singapore: in terms of earning power per capita, even though only 3.5-4.0 million people).
For Asia excluding Japan, I would imagine, the target Apple demographic is easily broken down into expatriates (usually US/European/Australian/NewZealand foreigners), the creative industry elites, then upper class, then business/ education/ enthusiast of the upper-middle class. Asia ex. Japan, for the countries I listed above, it is pretty much a ethnic-Chinese Mandarin/ Cantonese- speaking target market, with a love for (stereotype, but whatevs) prosperity through material goods and wealth, but always with a keen eye for a bargain...
Japan is definitely very different from this scenario, because of all the Japanese-speaking and cultural differences that evolved (a) since their breakaway from the mainlands to the islands like, I dunno, 500-2000 years ago or whatever, and (b) post-world war 2 ascension.
I've probably touched on it before, that sexual taboos are very much less in Japan as compared to SouthEastAsia, China + HongKong, India, Taiwan and Korea. Then there's a whole 'nother bunch of stuff that makes Japan very unique which experienced peoples like ElectricMonk and BergerM. know about from "ground-level" daily-life.
........................................
*I think that's why Stevie J. has expressed frustration with Japan - the Japanese have the wealth to drive the sales and profits he expects of Japan, but the downside is a lot of cost in consulting, research, and a lot of re-jigging of advertising to cater to the Japanese market.
Technically, an idea struck me, I wonder if Apple Japan might just continue as they are (I mean, they aren't "suffering" *that* badly) and for Asia, switch to a much more Chinese-centric focus across Singapore, China + Hong Kong, Taiwan, and Korea (adjusted a little for Koreans). This "cultural basket" is sort of a catch-all that attacks a larger target market with only little tweaks and translations for each country, and throw in a bit of icing from Thailand, Malaysia, Phillipines, Indonesia. But then of course there is India...
My idea is essentially, for the massive population and land mass Asia, Apple needs to look at a more efficient plan to gradually tap all these emerging and maturing economies. A country-by-country targeted approach is just too much a drain on resources.
Apple needs to look at, take Asia, what are the cultural similarities that speak across national boundaries? It would be things like - humility, respect for elders, close family ties, a knack for bargains, a lower emphasis on high art and culture (besides the younger generation and national elites), a burning desire to gain national respect on a global level.
Now then, market and advertise with these broad-range themes, and just on-the-ground, do two things to translate for each country: 1. language (of course)... 2. local celebrities (or in some cases, China/ HongKong/ Taiwan/ Bollywood) celebrities.
Apple,Inc: Macs were the 1st growth engine. iPods the 2nd growth engine. iPhone the 3rd growth engine.
Asia is the 4th growth engine for Apple. Designed in California, Made in China, a greater Icon in Asia to rival Sony, Samsung, etc.
The problem for China and the rest of SE Asia (with the obvious, notable, and partial exceptions of Singapore, Hong Kong, and to a lesser extent South Korea and Taiwan) is that this is bottom of the barrel pricing, pirated software galore, quantity over quality six ways to sunday and so forth.
Apple, quite clearly, does not compete with what people are buying outside of Japan in Asia. The same way they don't track all the way into Dell's territory on the low end. Quite simply, and reasonably, Apple does not care about that market. I've seen people advocating for ultra-cheap Apple hardware in Asia simply to establish market share that will (at some nebulous point down the road) be translatable to consumers buying the hardware Apple can make money off because they already know Apple. I don't see it. If Dell can't compete, Apple can't. Simple as that.
Outside of Japan the only markets that would buy Apple's fairly expensive stuff are the richer places?Singapore tops the list, followed by Hong Kong, Taiwan[1], and South Korea. Which Apple doesn't do very well in at the moment, just like Japan?the difference is that they used to do very well in Japan and are coasting on that. I'd argue that Apple really needs to sit back and think about products would work in the region and what wouldn't, and what is the potentiality of their Asian position outside Japan.
In essence I think that Apple should set up a Japan, China (ROC and PRC), and South Korea teams charged with evaluating the market. 'Cause right now? They have no clue what they're doing.
I would use Singapore as a bridge into Indochina (two reasons: everybody envies Singapore, and Singapore can afford Apple hardware) and likewise use Hong Kong/Taiwan (language/cultural issues) as bridges into China proper. Focus and set up in those markets. On the ground ad campaigns. A flagship Apple store. Celebrities like sunilraman mentioned.
If it works they can start up another one in South Korea and begin expanding the strategy into the richest (per capita) bits of Indochina and China with the classic trickle down effect. If it doesn't work they didn't lose that much money and they established brand awareness if nothing else. They either try something new and hang in or they're simply too early (per capita money wise) and they pull back and refocus on Japan and wait a couple years before trying something along those lines again.
[1] Does anyone else miss Formosa? And for that matter the (Dutch) East Indies, Ceylon, Burma, and Nippon? Though Nippon is still used, just not by people outside Japan anymore. Replacing the names with crap names bugs me. I mean Myanmar? C'mon.
Speaking of Japan's culture (also? wildly off-topic, sort-of), I've always liked Gibson's take on Japan:
The Japanese, you see, have been repeatedly drop-kicked, ever further down the timeline, by serial national traumata of quite unthinkable weirdness, by 150 years of deep, almost constant, change. The 20th century, for Japan, was like a ride on a rocket sled, with successive bundles of fuel igniting spontaneously, one after another.
They have had one strange ride, the Japanese, and we tend to forget that.
'Why Japan?' I've been asked for the past 20 years or so. Meaning: why has Japan been the setting for so much of my fiction? When I started writing about Japan, I'd answer by suggesting that Japan was about to become a very central, very important place in terms of the global economy. And it did. (Or rather, it already had, but most people hadn't noticed yet.) A little later, asked the same question, I'd say that it was Japan's turn to be the centre of the world, the place to which all roads lead; Japan was where the money was and the deal was done. Today, with the glory years of the bubble long gone, I'm still asked the same question, in exactly the same quizzical tone: 'Why Japan?'
Because Japan is the global imagination's default setting for the future.
"It's like an entire country run by Jeffrey Katzenberg," the producer had said, "under the motto 'Be happy or I'll kill you.'" We were sitting in an office a block from Rodeo Drive, on large black furniture leased with Japanese venture capital.
And, in many ways, it really does seem like 1956 in Singapore; the war (or economic struggle, in this case) has apparently been won, an expanded middle class enjoys great prosperity, enormous public works have been successfully undertaken, even more ambitious projects are under way, and a deeply paternalistic government is prepared, at any cost, to hold at bay the triple threat of communism, pornography, and drugs.
The only problem being, of course, that it isn't 1956 in the rest of world. Though that, one comes to suspect, is something that Singapore would prefer to view as our problem. (But I begin to wonder, late at night and in the privacy of my hotel room - what might the future prove to be, if this view should turn out to be right?)
1) If you were in Apple's board room tomorrow and SJ asked you "how can Apple significantly improve its market share in Japan for all of its products", what would you say?
2) How popular is the iPod in Japan?
3) When the iPhone eventually adds the Japan-specific features needed, what do you think its prospects will be in that market? Ditto for the rest of Asia?
1) Subnotebooks. Integrated TV tuners. Better advertising. Better organization.
2) Pretty popular, but so are music phones.
3) Well it needs 3G (luckily NTT and Softbank use the same UMTS bands as Europe). GPS would be nice. E-Cash via a near field contact chip. Over-The-Air iTunes store. 1-Seg TV tuner. A higher resolution screen would be good (they're using 800x480 3" panels in high end phones now).
That would bring it up to date hardware wise. Remember that for all the cool hardware features Japanese phones have, their software sucks just as much as everybody.
As iPods are popular, and music phones are popular, and the iPhone has way better UI then anybody—they should be quite popular if they match on the hardware front. This assumes Apple Japan actually gets some good people and works hard on this (a subnotebook would help them immensely).
Ife2211: Thanks for the informative response and the link to my Japan questions. On the Ipod, do you know what Apple's market share in Japan is?
54% in April 2006. That's standalone MP3 player market share and doesn't include music phones. Likewise the iTunes share of the market is something like 70%, but doesn't include Over-The-Air sales directly to music phones which would cut way way down.
Counting music phones you get a grimmer picture. I could only find international data from Wireless Watch but:
Quote:
The whole MP3 player market worldwide for the second quarter of 2006 is not 10 million units, from which Apple could claim four out of five units. In reality the MP3 player market is about 56 million units (48 million MP3 playing musicphones, 8 million iPods, and 2 million non-Apple brand stand-alone MP3 players). So Apple's quarterly market share is not 77% like it was back in 2004 before musicphones. In this quarter Apple's market share is 14%.
Now they're all doom and gloom on Apple (and some of their arguments go away if you look at the iPod sales following that quarter) but the data is useful, nonetheless. One problem is that it's hard to tell is music mobiles are actually being used to play music.
Regardless, it's pretty obvious why Apple is releasing the iPhone.
Apple does tremendously well in almost all markets. For them, it's not about being number 1. It's about seeing consistent growth year after year and there's one market where Apple continues to slip - Japan. The Japanese are obsessed with ultra-portability and miniaturization. Even the thin MacBook isn't thin enough. With subbie notebooks from Sharp, Fujitsu and a slew of others - it's a tough market to crack but Apple has a huge advantage. There's cache behind their name and excellent hardware/software synergy. Even Time Cook [Tim Cook -Electric Monk] (Apple's second in command) recently told analysts;
"The market in Japan is among the weakest in the world for us. However, having said that, we're not pleased with our performance and we've got a number of activities underway to improve them"
They can't be talking about the iPod since it does pretty well over there. All that's left is OS X adoption and that requires machines to run them. The Japanese are not about desktops. They're not about notebooks. They're all about ultra-compact sub-notebooks and Apple is not a company to segregate their hardware line up by region so rest assured, if the Japanese get a sub-notebook, so will we.
Again, from Electro Plankton who seems to have a summing up knack
Quote:
Claude's typical day starts with him checking his email on his phone. He gets all his daily tasks and calendaring events this way. He then syncs it with his computer. He pays for the subway by placing the phone on a kiosk granting him access past the gates. The commute is spent watching TV on his phone by rotating the screen. A small antenna extends up and catches the wireless digital TV signals (something we will never have here in America) [not true, actually -Electric Monk]. About 45 minutes later, he's in Tokyo and heads to a vending machine to buy fresh fruit and water. He places the phone up against a pad. The vending machine reads his bank information which is tied into his phone. He then places his thumb on the phone's tiny thumbprint reader to verify his identity. As he makes his way to the office, he waves the phone near the door handle to unlock it. During a 10 minute break, he's flips thru a magazine and sees something he wants to buy. The item has a tiny stamp size barcode pictogram [QR code -Electric Monk] next to it. He scans the pictogram with his phone. A receipt and shipping confirmation hits his email minutes later. As the day ends, he syncs with his work computer and goes grocery shopping paying for items with his phone. Before heading home, he heads to a bar his friend has invited him too. He uses the phone to give him step-by-step directions. The day is finally over and his phone's battery is nearing the end of its life. He plugs it in and goes about the rest of the evening relaxing before bed.
Okay, I think the iPhone can do 1-1/2 of the things he's mention; checking email and watching TV (by first purchasing shows on iTunes and syncing them). Everything else is alien to the iPhone and alien to US customers
Japan is a gadget-loving country that has money to burn. Interpreted: a very fertile selling ground for good products.
The iPhone will not go anywhere over here unless it is 3G and has GPS. End of story.
Apple has no future here if they don't improve their customer service and support.
Instead of testing the iPhone in the US on an antiquated system, they should have sold it here, first ( so I could have one this week ) and then pressured the US carriers to upgrade to something better.
In fact there are more cell phones in Japan than land phones:
Communications: Telephones: main lines in use: 71.149 million (2002); mobile cellular: 86,658,600 (2003).
The link you provided to Market Watch on Ipod sales in Japan proved very useful for many reasons. The author, Tomi Ahonen, also wrote an in depth 6/24/07 article on the sales prospects for the iPhone worldwide.
The author has some serious credentials as he headed up econometric modelling for Nokia as Global Head of 3G Business Consultancy up to 2001.
The article, though very long, is well worth reading especially for an American investor like myself. He provides many insights into both the European and Asian mobile phone markets. I think many Americans are totally ignorant of the dynamics and characteristics of both of those markets.
More importantly, he constructs a model whose goal is to project how Apple can sell 10 M iPhones world wide by the end 2008. In his analysis, the key to achieving this goal, will be sales in Europe. IMO, as erudite and well documented as the article is, I think he totally underestimates the population of Americans who will buy the v1 iPhone and therefore the sales in the US.
For those who have the time and inclination to read the article, feedback would be appreciated from those currently living not only in the US but Asia and Europe as well.
Yeah he's written a few articles about the iPhone. I agree he's low on Americans and I think he underestimates what Apple could do if they really worked on the iPhone like it was a phone (with fairly fast hardware updates) in the Asian market, especially?that assumes Apple cares enough to do some market research.
I tend to think he's conservative on sales, but also that Apple needs to actually make the iPhone for the European/Japanese markets rather then just release the current model. I also disagree with his call for a CDMA one, as that would add complexities Apple doesn't need for a while and they're bound by their AT&T contract so one of the largest CDMA markets would be right out.
Honestly if Apple adapts the iPhone to Japan and gets either Softbank or NTT DoCoMo to put a big push behind it this thing really does put Japanese software to shame, regardless if they also have touch screen phones. The operators would like it because they're not eating 500-600 bucks in subsidies on every phone they sale, the people would like it because (hopefully) the operators would offer cheaper plans with it since they don't have to subsidize. The iPhone could be used as a weapon by the operators to break open the telecom market's sick circle of high subsidies (12 billion in 2006, I think), expensive plans, and manufactures that make no money.
I'm a Finn whose friends all have midrange smartphones. (I don't.) Most of them as well as I have worked for Nokia as coders at some point. What I see on the ground confirms what Ahonen says. The feature set of the US iPhone is unacceptable over here to the people who are the target group.
Let's look at Nokia N73. Decent usability and an interface the whole target group is already familiar with, a 3.2mp camera with Zeiss optics, LED flash, 3G, EDGE, a mini SD slot, a functional web browser, wide range of accessories and apps available, and bugs have been quite thoroughly ironed out generations of phones ago. A tiny receiver unit using Bluetooth, some map software and N73 combined makes a GPS unit.
Whatever the iPhone's specs at European launch, I'd expect it to come out at 600-800EUR. By that time the N73, now 400EUR, will be around 300EUR with a 2GB memory card or larger if they figure out how to squeeze more into Mini SD. iPhone needs to really crush it in daily use to justify a two- or three-fold price and the uncertainty that you accept buying into a whole new mobile ecosystem. The N93, on the other hand, has total credibility. People know it actually does what the feature list says. If we move up to iPhone's price class, there's the N95 as well as the business 9500 waiting.
Apple is probably banking on its name to sell many an iPhone in the US, but here it has no name recognition. People know the iPod simply because it's so good it is sold everywhere. Macs and the connection Mac <> Apple are familiar to computer people and a good portion of graphic artists, not others. There has never been an Apple ad - Mac or iPod - on Finnish TV or on magazines.
Update: Some notes from a meeting with an Apple Rep in southern Japan
Had a nice long chat with a retail service rep from Apple today when he was at my local shop. Though serious problems still exist (the Call Center is highly unpopular and the nano issue has not been addressed though Apple is fully aware of it), he was able to restore my hope that Apple Japan will change for the better. If everyone at Apple Japan was like this guy, I don't think we'd have a problem.
The TV spots look good; they are doing the placement like they haven't before; this is good.
Maybe something is afoot at AJ!
Apple Japan got the honors of the first unpacking, too. Something is certainly in the air! Apple is certainly targeting Japan with the Air.
As far as size, I posted many hopes on AI for a smaller device, but have ordered the Air. There is something about having a full-sized keyboard; the folding one for my Palm is a little small and I make a lot of errors that I don't on a larger board. Either that or go thumb-board. Apple has the Touch and there was the rumor that a larger Touch might have been coming but wasn't ready. If it is 1/3 the size again of the Air, Apple might really be onto something.
I think the Air will sell very well in Japan; it is drop-dead gorgeous. Almost no businessman in Japan has to worry about 5-hour flights from coast to coast (well, from north to south in Japan), so the battery will be virtually a non-issue here.
It just struck me: by placing the Air on the morning wide news shows, they are hitting homemakers and women.
Comments
Yeah but cost isn't so much the factor in Japan. The world's 16th highest per capita GDP and all… Well. To be fair they're overpriced marginally there (relatively speaking) but its not as bad as the rest of SEAsia....
I think that's why for Asia, Japan was Apple's first big target market. Well educated, technology and art and design savvy, high GDP, etc.. Apple just didn't figure the cultural stuff as much as it could have into the scene*. As an Asian country, Japan is very very different from the other, now, economic potentials of China + Hong Kong, Taiwan, Korea, Singapore (Singapore: in terms of earning power per capita, even though only 3.5-4.0 million people).
For Asia excluding Japan, I would imagine, the target Apple demographic is easily broken down into expatriates (usually US/European/Australian/NewZealand foreigners), the creative industry elites, then upper class, then business/ education/ enthusiast of the upper-middle class. Asia ex. Japan, for the countries I listed above, it is pretty much a ethnic-Chinese Mandarin/ Cantonese- speaking target market, with a love for (stereotype, but whatevs) prosperity through material goods and wealth, but always with a keen eye for a bargain...
Japan is definitely very different from this scenario, because of all the Japanese-speaking and cultural differences that evolved (a) since their breakaway from the mainlands to the islands like, I dunno, 500-2000 years ago or whatever, and (b) post-world war 2 ascension.
I've probably touched on it before, that sexual taboos are very much less in Japan as compared to SouthEastAsia, China + HongKong, India, Taiwan and Korea. Then there's a whole 'nother bunch of stuff that makes Japan very unique which experienced peoples like ElectricMonk and BergerM. know about from "ground-level" daily-life.
........................................
*I think that's why Stevie J. has expressed frustration with Japan - the Japanese have the wealth to drive the sales and profits he expects of Japan, but the downside is a lot of cost in consulting, research, and a lot of re-jigging of advertising to cater to the Japanese market.
My idea is essentially, for the massive population and land mass Asia, Apple needs to look at a more efficient plan to gradually tap all these emerging and maturing economies. A country-by-country targeted approach is just too much a drain on resources.
Apple needs to look at, take Asia, what are the cultural similarities that speak across national boundaries? It would be things like - humility, respect for elders, close family ties, a knack for bargains, a lower emphasis on high art and culture (besides the younger generation and national elites), a burning desire to gain national respect on a global level.
Now then, market and advertise with these broad-range themes, and just on-the-ground, do two things to translate for each country: 1. language (of course)... 2. local celebrities (or in some cases, China/ HongKong/ Taiwan/ Bollywood) celebrities.
Apple,Inc: Macs were the 1st growth engine. iPods the 2nd growth engine. iPhone the 3rd growth engine.
Asia is the 4th growth engine for Apple. Designed in California, Made in China, a greater Icon in Asia to rival Sony, Samsung, etc.
Let the good times roll. 8)
Apple, quite clearly, does not compete with what people are buying outside of Japan in Asia. The same way they don't track all the way into Dell's territory on the low end. Quite simply, and reasonably, Apple does not care about that market. I've seen people advocating for ultra-cheap Apple hardware in Asia simply to establish market share that will (at some nebulous point down the road) be translatable to consumers buying the hardware Apple can make money off because they already know Apple. I don't see it. If Dell can't compete, Apple can't. Simple as that.
Outside of Japan the only markets that would buy Apple's fairly expensive stuff are the richer places?Singapore tops the list, followed by Hong Kong, Taiwan[1], and South Korea. Which Apple doesn't do very well in at the moment, just like Japan?the difference is that they used to do very well in Japan and are coasting on that. I'd argue that Apple really needs to sit back and think about products would work in the region and what wouldn't, and what is the potentiality of their Asian position outside Japan.
In essence I think that Apple should set up a Japan, China (ROC and PRC), and South Korea teams charged with evaluating the market. 'Cause right now? They have no clue what they're doing.
I would use Singapore as a bridge into Indochina (two reasons: everybody envies Singapore, and Singapore can afford Apple hardware) and likewise use Hong Kong/Taiwan (language/cultural issues) as bridges into China proper. Focus and set up in those markets. On the ground ad campaigns. A flagship Apple store. Celebrities like sunilraman mentioned.
If it works they can start up another one in South Korea and begin expanding the strategy into the richest (per capita) bits of Indochina and China with the classic trickle down effect. If it doesn't work they didn't lose that much money and they established brand awareness if nothing else. They either try something new and hang in or they're simply too early (per capita money wise) and they pull back and refocus on Japan and wait a couple years before trying something along those lines again.
[1] Does anyone else miss Formosa? And for that matter the (Dutch) East Indies, Ceylon, Burma, and Nippon? Though Nippon is still used, just not by people outside Japan anymore. Replacing the names with crap names bugs me. I mean Myanmar? C'mon.
Speaking of Japan's culture (also? wildly off-topic, sort-of), I've always liked Gibson's take on Japan:
My Own Private Tokyo
The Japanese, you see, have been repeatedly drop-kicked, ever further down the timeline, by serial national traumata of quite unthinkable weirdness, by 150 years of deep, almost constant, change. The 20th century, for Japan, was like a ride on a rocket sled, with successive bundles of fuel igniting spontaneously, one after another.
They have had one strange ride, the Japanese, and we tend to forget that.
Modern Boys & Mobiles Girls
'Why Japan?' I've been asked for the past 20 years or so. Meaning: why has Japan been the setting for so much of my fiction? When I started writing about Japan, I'd answer by suggesting that Japan was about to become a very central, very important place in terms of the global economy. And it did. (Or rather, it already had, but most people hadn't noticed yet.) A little later, asked the same question, I'd say that it was Japan's turn to be the centre of the world, the place to which all roads lead; Japan was where the money was and the deal was done. Today, with the glory years of the bubble long gone, I'm still asked the same question, in exactly the same quizzical tone: 'Why Japan?'
Because Japan is the global imagination's default setting for the future.
And Singapore for that matter:
Disneyland with the Death Penalty
"It's like an entire country run by Jeffrey Katzenberg," the producer had said, "under the motto 'Be happy or I'll kill you.'" We were sitting in an office a block from Rodeo Drive, on large black furniture leased with Japanese venture capital.
And, in many ways, it really does seem like 1956 in Singapore; the war (or economic struggle, in this case) has apparently been won, an expanded middle class enjoys great prosperity, enormous public works have been successfully undertaken, even more ambitious projects are under way, and a deeply paternalistic government is prepared, at any cost, to hold at bay the triple threat of communism, pornography, and drugs.
The only problem being, of course, that it isn't 1956 in the rest of world. Though that, one comes to suspect, is something that Singapore would prefer to view as our problem. (But I begin to wonder, late at night and in the privacy of my hotel room - what might the future prove to be, if this view should turn out to be right?)
From the other thread:
1) If you were in Apple's board room tomorrow and SJ asked you "how can Apple significantly improve its market share in Japan for all of its products", what would you say?
2) How popular is the iPod in Japan?
3) When the iPhone eventually adds the Japan-specific features needed, what do you think its prospects will be in that market? Ditto for the rest of Asia?
1) Subnotebooks. Integrated TV tuners. Better advertising. Better organization.
2) Pretty popular, but so are music phones.
3) Well it needs 3G (luckily NTT and Softbank use the same UMTS bands as Europe). GPS would be nice. E-Cash via a near field contact chip. Over-The-Air iTunes store. 1-Seg TV tuner. A higher resolution screen would be good (they're using 800x480 3" panels in high end phones now).
That would bring it up to date hardware wise. Remember that for all the cool hardware features Japanese phones have, their software sucks just as much as everybody.
As iPods are popular, and music phones are popular, and the iPhone has way better UI then anybody—they should be quite popular if they match on the hardware front. This assumes Apple Japan actually gets some good people and works hard on this (a subnotebook would help them immensely).
Ife2211: Thanks for the informative response and the link to my Japan questions. On the Ipod, do you know what Apple's market share in Japan is?
54% in April 2006. That's standalone MP3 player market share and doesn't include music phones. Likewise the iTunes share of the market is something like 70%, but doesn't include Over-The-Air sales directly to music phones which would cut way way down.
Counting music phones you get a grimmer picture. I could only find international data from Wireless Watch but:
The whole MP3 player market worldwide for the second quarter of 2006 is not 10 million units, from which Apple could claim four out of five units. In reality the MP3 player market is about 56 million units (48 million MP3 playing musicphones, 8 million iPods, and 2 million non-Apple brand stand-alone MP3 players). So Apple's quarterly market share is not 77% like it was back in 2004 before musicphones. In this quarter Apple's market share is 14%.
Now they're all doom and gloom on Apple (and some of their arguments go away if you look at the iPod sales following that quarter) but the data is useful, nonetheless. One problem is that it's hard to tell is music mobiles are actually being used to play music.
Regardless, it's pretty obvious why Apple is releasing the iPhone.
-----------
New Stuff
Electro Plankton
Apple does tremendously well in almost all markets. For them, it's not about being number 1. It's about seeing consistent growth year after year and there's one market where Apple continues to slip - Japan. The Japanese are obsessed with ultra-portability and miniaturization. Even the thin MacBook isn't thin enough. With subbie notebooks from Sharp, Fujitsu and a slew of others - it's a tough market to crack but Apple has a huge advantage. There's cache behind their name and excellent hardware/software synergy. Even Time Cook [Tim Cook -Electric Monk] (Apple's second in command) recently told analysts;
"The market in Japan is among the weakest in the world for us. However, having said that, we're not pleased with our performance and we've got a number of activities underway to improve them"
They can't be talking about the iPod since it does pretty well over there. All that's left is OS X adoption and that requires machines to run them. The Japanese are not about desktops. They're not about notebooks. They're all about ultra-compact sub-notebooks and Apple is not a company to segregate their hardware line up by region so rest assured, if the Japanese get a sub-notebook, so will we.
Again, from Electro Plankton who seems to have a summing up knack
Claude's typical day starts with him checking his email on his phone. He gets all his daily tasks and calendaring events this way. He then syncs it with his computer. He pays for the subway by placing the phone on a kiosk granting him access past the gates. The commute is spent watching TV on his phone by rotating the screen. A small antenna extends up and catches the wireless digital TV signals (something we will never have here in America) [not true, actually -Electric Monk]. About 45 minutes later, he's in Tokyo and heads to a vending machine to buy fresh fruit and water. He places the phone up against a pad. The vending machine reads his bank information which is tied into his phone. He then places his thumb on the phone's tiny thumbprint reader to verify his identity. As he makes his way to the office, he waves the phone near the door handle to unlock it. During a 10 minute break, he's flips thru a magazine and sees something he wants to buy. The item has a tiny stamp size barcode pictogram [QR code -Electric Monk] next to it. He scans the pictogram with his phone. A receipt and shipping confirmation hits his email minutes later. As the day ends, he syncs with his work computer and goes grocery shopping paying for items with his phone. Before heading home, he heads to a bar his friend has invited him too. He uses the phone to give him step-by-step directions. The day is finally over and his phone's battery is nearing the end of its life. He plugs it in and goes about the rest of the evening relaxing before bed.
Okay, I think the iPhone can do 1-1/2 of the things he's mention; checking email and watching TV (by first purchasing shows on iTunes and syncing them). Everything else is alien to the iPhone and alien to US customers
The iPhone will not go anywhere over here unless it is 3G and has GPS. End of story.
Apple has no future here if they don't improve their customer service and support.
Instead of testing the iPhone in the US on an antiquated system, they should have sold it here, first ( so I could have one this week
In fact there are more cell phones in Japan than land phones:
Communications: Telephones: main lines in use: 71.149 million (2002); mobile cellular: 86,658,600 (2003).
http://www.infoplease.com/ipa/A0107666.html
Communications: Telephones: main lines in use: 194 million (1997); mobile cellular: 69.209 million (1998).
(The US data is old... for an advanced country they could have more recent data...)
The link you provided to Market Watch on Ipod sales in Japan proved very useful for many reasons. The author, Tomi Ahonen, also wrote an in depth 6/24/07 article on the sales prospects for the iPhone worldwide.
http://wireless-watch.com/2007/06/24...ch-10-million/
The author has some serious credentials as he headed up econometric modelling for Nokia as Global Head of 3G Business Consultancy up to 2001.
The article, though very long, is well worth reading especially for an American investor like myself. He provides many insights into both the European and Asian mobile phone markets. I think many Americans are totally ignorant of the dynamics and characteristics of both of those markets.
More importantly, he constructs a model whose goal is to project how Apple can sell 10 M iPhones world wide by the end 2008. In his analysis, the key to achieving this goal, will be sales in Europe. IMO, as erudite and well documented as the article is, I think he totally underestimates the population of Americans who will buy the v1 iPhone and therefore the sales in the US.
For those who have the time and inclination to read the article, feedback would be appreciated from those currently living not only in the US but Asia and Europe as well.
I tend to think he's conservative on sales, but also that Apple needs to actually make the iPhone for the European/Japanese markets rather then just release the current model. I also disagree with his call for a CDMA one, as that would add complexities Apple doesn't need for a while and they're bound by their AT&T contract so one of the largest CDMA markets would be right out.
Honestly if Apple adapts the iPhone to Japan and gets either Softbank or NTT DoCoMo to put a big push behind it this thing really does put Japanese software to shame, regardless if they also have touch screen phones. The operators would like it because they're not eating 500-600 bucks in subsidies on every phone they sale, the people would like it because (hopefully) the operators would offer cheaper plans with it since they don't have to subsidize. The iPhone could be used as a weapon by the operators to break open the telecom market's sick circle of high subsidies (12 billion in 2006, I think), expensive plans, and manufactures that make no money.
I'm a Finn whose friends all have midrange smartphones. (I don't.) Most of them as well as I have worked for Nokia as coders at some point. What I see on the ground confirms what Ahonen says. The feature set of the US iPhone is unacceptable over here to the people who are the target group.
Let's look at Nokia N73. Decent usability and an interface the whole target group is already familiar with, a 3.2mp camera with Zeiss optics, LED flash, 3G, EDGE, a mini SD slot, a functional web browser, wide range of accessories and apps available, and bugs have been quite thoroughly ironed out generations of phones ago. A tiny receiver unit using Bluetooth, some map software and N73 combined makes a GPS unit.
Whatever the iPhone's specs at European launch, I'd expect it to come out at 600-800EUR. By that time the N73, now 400EUR, will be around 300EUR with a 2GB memory card or larger if they figure out how to squeeze more into Mini SD. iPhone needs to really crush it in daily use to justify a two- or three-fold price and the uncertainty that you accept buying into a whole new mobile ecosystem. The N93, on the other hand, has total credibility. People know it actually does what the feature list says. If we move up to iPhone's price class, there's the N95 as well as the business 9500 waiting.
Apple is probably banking on its name to sell many an iPhone in the US, but here it has no name recognition. People know the iPod simply because it's so good it is sold everywhere. Macs and the connection Mac <> Apple are familiar to computer people and a good portion of graphic artists, not others. There has never been an Apple ad - Mac or iPod - on Finnish TV or on magazines.
Had a nice long chat with a retail service rep from Apple today when he was at my local shop. Though serious problems still exist (the Call Center is highly unpopular and the nano issue has not been addressed though Apple is fully aware of it), he was able to restore my hope that Apple Japan will change for the better. If everyone at Apple Japan was like this guy, I don't think we'd have a problem.
I bet they wish the footprint was an 11 or 12" screen though
Thanks for the update, Bergermeister.
Maybe something is afoot at AJ!
Apple Japan got the honors of the first unpacking, too. Something is certainly in the air! Apple is certainly targeting Japan with the Air.
As far as size, I posted many hopes on AI for a smaller device, but have ordered the Air. There is something about having a full-sized keyboard; the folding one for my Palm is a little small and I make a lot of errors that I don't on a larger board. Either that or go thumb-board. Apple has the Touch and there was the rumor that a larger Touch might have been coming but wasn't ready. If it is 1/3 the size again of the Air, Apple might really be onto something.
I think the Air will sell very well in Japan; it is drop-dead gorgeous. Almost no businessman in Japan has to worry about 5-hour flights from coast to coast (well, from north to south in Japan), so the battery will be virtually a non-issue here.
It just struck me: by placing the Air on the morning wide news shows, they are hitting homemakers and women.
Next month you can send and receive .mac mail from a DoCoMo phone.
http://www.akihabaranews.com/en/news...s.php?id=15398