CELL PHONES IN JAPAN: SERVICE PROVIDERS, DOCOMO, KDDI, HANDSET MAKERS AND SMART PHONES

CELL PHONES IN JAPAN

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cell phone vending machine
Cell phones are called keitai in Japan. They are cheap, sophisticated and have been connected to the Internet for more than a decade. Cell phone culture adapts itself well to Japan because Japanese spend a lot of time on trains which lends itself to fiddling around on a cell phone as opposed to sitting in car where theoretically you need two hands to drive.

Web-connected cell phones became available in Japan about a decade earlier than they did in the United States . And yet, for all their innovations, Japanese-made handsets have had little impact overseas. They account for just a sliver of a global mobile phone market dominated by the likes of Apple, Research In Motion and Samsung.

Japanese was arguably way ahead of the rest of the world in their absorption into the cell phone world and their reliance on and use of the devices. A generation has now grow up using cell phones to communicate, shop, play games, watch television, surf the Internet and using cell phones in ways that Americans have only begun to investigate.

CEATEC (Combined Exhibition of Advanced Technologies) in October is Japan’s largest electronics and communications show.Among the showstoppers at the 2009 CEATEC were cell phones that gave users advise on their gold swing, handsets that allowed users to send e-mail to people nearby by moving their arm in a throwing motion and devices that transmit data through the human body.

Links in this Website: MEDIA, RADIO, NEWSPAPERS AND TELEVISION IN JAPAN Factsanddetails.com/Japan ; TELEVISION PROGRAMS IN JAPAN Factsanddetails.com/Japan ; CHILDREN’s TELEVISION SHOWS IN JAPAN Factsanddetails.com/Japan ; INTERNET IN JAPAN Factsanddetails.com/Japan ; COMMUNICATIONS IN JAPAN Factsanddetails.com/Japan ; CELL PHONES IN JAPAN Factsanddetails.com/Japan ; USES OF CELL PHONES IN JAPAN Factsanddetails.com/Japan ;

Good Websites and Sources: Wikipedia article on Japan’s Cell Phone Culture Wikipedia ; Good Photos at Japan-Photo Archive japan-photo.de ; Academic article on Cell Phones and Japan’s Youth itofisher.com ; Japan Times article on Cell Phone Culture japantimes.co.jp ; Personal, Portable, Pedestrian /mitpress.mit.edu ; 2009 New York Times article on Why Japan’s Smart Phones Have Not Gone Global nytimes.com ;Cool Japanese Cell Phones crunchgear.com/ ; Ministry of Iternal Affairs and Telecommunications soumu.go.jp ; Statistical Handbook of Japan Informatin and Communications Section stat.go.jp/english/data/handbook ; 2010 Edition stat.go.jp/english/data/nenkan ; News stat.go.jp

Cell Phone Companies: Docomo nttdocomo.com ; Softbank mb.softbank.jp/en ; AU by KDDI au.kddi.com/english ; Cell Phone Novels: Mobile Phone Novel handyroman.net ; More on Cell Phone Novels futureofthebook.org ; New York Times article on Cell Phone Novels nytimes.com

History of Cell Phone Technology in Japan

Portable phones were introduced in 1985 to Japan with an automobile telephone called a “shoulder phone” by NTT. It weighed 3 kilograms but was detachable from the car. The cell phone market took off in 1995 when the number of users increased 135 percent following the introduction of a system for selling handsets in which cell phone companies were allowed to sell handsets to consumers rather than using the previous leasing and deposit arrangement put in place in 1994.

In the early 1990s, Japanese mobile phone companies backed the wrong standards effectively shutting them out of the global cell-phone boom.

The Japanese cell phone market has been helped by the fact that the country has a couple of phone standards, which has made easier to establish a unified system that everyone can use. By contrast, cell phones in the United States use different standards that often vary from state to state and phone to phone. Another peculiarity about the American system is the person who receives calls pays for the calls rather the person who makes the calls.

One of the best things that United States ever did for Japan was force it open its market to cell phones. Japan didn't want to because it was worried about competition from American companies like Motorola. But in the end the competition pushed Japanese companies into creating some of world most advanced cell phone technology.

Japan quickly began producing better quality products and services than those found in the United States and has surpassed Europe the real pacesetters. There is still a lot of competition, not only from the United States and Europe but also from China and South Korea.

In Japan, electronics makers supply hand sets to cell phone operators who install their own integrated circuit cards, or Subscriber Identity Module Cards, making it impossible for the handsets to be used by different cell phone carriers. The same handset can not be used when a user changes his operator

That system has also changed. Softbank already uses the same system as NTT DoCoMo. For next generation phones the major cell phone companies in Japan---NTT DoCoMo, Softbank and KDDI--- all plan to adopt the Long-Term Evolution (LTE) system, in which operators plan to start using in 2010. LTE and allows high speed transmissions equivalent to that of fiber optic cables and is likely to become the international standard. Integration of the communication system will provide users with a wider range of choices in terms of handsets and service plans.

As of November 2008, 83 percent of cell phone users in Japan had 3G connection, far more than any other country in the world. In the United only 27 percent of cell phones have 3G capability. The number of users jumped from 13 percent in 2004 to 32 percent in 2005 to 53 percent in 2006 to 83 percent in 2007.

Japanese Cell Phone Market

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Cell phones found a ready market in Japan. It is densely populated. Communications are important and the laying of wire and optical fibers is expensive. There are more cell phones than fixed phones in Japan. There are so many cell phones that the health and ecological risks posed by the disposal of them is an environmental issue.

Between 1994 and 2000 cell phone use jumped from 1 percent to 10 percent of population. In the late 1990s Japan boast the world's highest per capita rate of cell phone ownership. About 37 percent of the population has a cell phone in 1999, compared to 25 percent in the United States.

By 2002, 50 percent of the population had a cell phone. Sales reached 50 million a year in 2003 when cell phones with cameras became widely available. Cell phone sales remained robust after that as parents bought their children phones to keep in touch and cell phone owners upgraded their phones with new technology such as cell phone cameras.

Cell phone subscriptions topped the 100 million mark, about 75 percent of the population, in December 2007. By that time most new subscribers were children or the elderly. Everybody else had one. In 2007, cell phones that picked up territorial television broadcasts were introduced and spur demand.

Cell phones shipments in 2008 were 40.8 million, an 18.9 percent decline from the previous year. The decline was attributed to the bad state of the economy, a leveling off in demand for cell phones and an inability to come up with anything really new and exciting to simulate demand.

Cell phone sales have been hurt and cell phone makers have seen their profits evaporate as a result of the strategy employed by cell phone services to offer cheap subscription fees and are try to make up for lost revenues with higher handset prices

Lack of Japanese Cell Phones Overseas

Japan's "Galapagos syndrome" is a phrase first coined to characterize the nation's highly evolved but globally incompatible cell phones. The term is now applied to other isolated industries, even to its people. In 2009, the global market share of Japanese cell phone makers combined was only three percent.

Hiroko Tabuchi wrote in the New York Times, “Because Japan’s phone industry remains highly fragmented, no company so far has been large or savvy enough to make a strong overseas push. Instead, handset makers have long been content to serve as suppliers to Japan’s three largest mobile networks, which command a market of more than 100 million users, most of them on advanced 3G networks.” [Source: Hiroko Tabuchi, New York Times, March 1, 2011]

“And in their hardware fixation, Japanese manufacturers have tended to bog down their handsets with clunky software platforms and fenced-in Web services that do not emphasize downloads of third-party applications. That has put them at odds with the trend in much of the rest of the world, where attention has swung to devices like the iPhone, which runs software much as an ordinary computer does and lets users download apps from independent developers.” [Ibid]

“Japanese companies have been so pioneering in many fields, but they have failed to build a global business of handsets, Gerhard Fasol told the New York Times. He is chief executive of Eurotechnology, a Tokyo firm that advises companies on global mobile and telecommunications strategy. “What you need is a global infrastructure,” Mr. Fasol said, “and Japanese handset makers have nothing.” The handset makers “need to stop worrying about the carriers and start thinking more globally,” said Shuichi Iizuka, a telecommunications analyst at the ISB Institute, based just south of Tokyo.

With the domestic market shrinking Japanese cell phone manufacturers are beginning to gear up for more for markets abroad with smartphones with several firms including Panasonic , NEC, Casio and Sharp offering products in early 2011. Many of the Japanese producers will use the Google Android system and thus not handicapped by system that using a system that only works in Japan.

Tokyo Smartphone Charges Highest among Major Cities

In September 2012, the Yomiuri Shimbun reported: “Smartphone users in Tokyo pay the highest monthly charges among seven major world cities, according to a survey by the Internal Affairs and Communications Ministry. According to the ministry's survey of telecommunication service charges in fiscal 2011, using a smartphone cost 7,357 yen a month in Tokyo. Germany's Dusseldorf ranked second at 7,012 yen, followed by New York at 6,493 yen. Users in Seoul paid only 2,702 yen, less than half that in Tokyo. [Source: Yomiuri Shimbun, September 4, 2012]

The survey compared smartphone usage charges as of December 2011 for an average smartphone user with the telecom company having the highest market share in each city. Tokyo's high price was believed to result from relatively high data communication charges and the strong yen. [Ibid]

Tokyo also had the highest monthly charges for conventional cell phones. Tokyo users paid 6,687 yen for a conventional cell phone, while those in New York paid 6,493 yen and in Dusseldorf 4,502 yen. However, Tokyo was the third most expensive city in terms of charges for home-use landlines at 3,468 yen, following London at 4,114 yen and New York at 3,838 yen. [Ibid]

Smartphones and Japanese Electronic Companies

I-Phones are very popular in Japan. Despite this Japan electronic companies have been largely absent from the smartphone phenomena. Hiroko Tabuchi wrote in the New York Times, “In fact, the success of the iPhone in Japan---together with Apple’s popular App Store, with hundreds of thousands of applications for download---has opened eyes.” [Source: Hiroko Tabuchi, New York Times, March 1, 2011]

Now they are hoping to make up for lost time. Tabuchi wrote in March 2011: “NEC introduced what it said was the world’s thinnest smartphone. At 8 millimeters thick, equivalent to about four stacked nickels, its Medias N-04C runs on Android and also comes with an electronic wallet function, digital terrestrial television and a five-megapixel camera. Although the phone is for sale only in Japan for now, NEC is planning an overseas push, focusing first on Mexico and Australia. Another Japanese manufacturer, Kyocera, is planning soon for the United States release of an Android-based smartphone that comes with two screens, capable of running separate apps at once.” [Ibid]

Most global operators are preparing to use advanced LTE networks, which could make it easier for the Japanese phones to work on networks anywhere. Shigeru Kobayashi, an executives working on Sharp’s new smartphones, told the New York Times. “We don’t plan to keep on building the same kind of phones that we used to. Sharp’s latest smartphones, like its IS03 model, a sleek device with a high-resolution touch screen, have caught the attention of overseas gadget bloggers. Hoping to get a piece of the iPad market, Sharp has introduced a lineup of tablet computers running a version of Android. For now, with Smartphones, Sharp is focusing its attention on the fast-growing Chinese market, although officials say they also intend to bring phones to North America. [Ibid]

Smartphone shipments in Japan in fiscal year 2010-2011 (market share) : 1) Apple (37.8 percent); 2) Sharp (24.3 percent); 3) Sony-Ericcson (9.8 percent); 4) Samsung (9 percent); 5) Fujitsu (8.8 percent); 6) NEC Casio (3.2) percent ); and Others (7.1 percent). [Source: MM Research Institute).

In the fall of 2010 NTT Docomo, KDDI and SoftBank all began aggressive drives to push their smartphones. They all had new models of phones and new services and aps and promised plans to introduce super-fast service. Docomo began pushing waterpoof phones with e-money functions. Their Galaxy S smartphones were made by Samsung. As of May 2011, KDDI had launched six Android smartphones, including Sharp-produced Inforbar A01 and the Sony-Ericsson-produced Xperia. Softbank’s profits have surged on the popularity of its exclusive deal marketing Apple’s iPhones.

In May 2011. Docomo released a new line-up of smartphones, including new versions of the popular Samsung Galaxy, Harp introduced the Aquos phone, which allows users to see 3-D images without glasses, and NEC-Casio launched the super-slim, waterproof Medias smartphone. In September 2011, Docomo introduced the prototype for a smartphone cover capable of measuring radiation levels, bad breath and body fat using sensors that measure ultraviolet and rays and gamma radiation.

Japanese Smartphones and Android

Japanese electronics companies are hoping by adopting Google’s Android mobile operating system they can make up for lost time. “We have the technology to compete in the United States,” said Naoki Shiraishi told the New York Times. He had led software development for a new line of Android smartphones from Sharp, the largest Japanese cellphone maker. “It’s finally time for Sharp phones to go play in the Major Leagues,” he said. Sony Ericsson, NEC and Kyocera are among the other Japanese handset makers also hoping to Android will open up international markets for them. [Source: Hiroko Tabuchi, New York Times, March 1, 2011]

Hiroko Tabuchi wrote in the New York Times, “While Android was initially overshadowed by the popular iPhone from Apple, its user numbers are now soaring. In 2010, global sales of Android phones reached 67.2 million units, ahead of iPhones, which sold 46 million units, according to the research company Gartner. Certainly the price is right: Google offers Android free to manufacturers. And Android has caught on since its introduction in 2007, as a growing community of software developers has written apps, sold via Google’s Android Market... Although Google earns no commission from any Android handsets sold, it takes a substantial cut---30 percent---of the apps sold in the Android Store.” [Ibid]

“It took a while, but Japanese handset makers are now rushing to introduce Android devices, each married with cutting-edge technology,: Tabuchi wrote. “That includes Sony Ericsson, which dabbled with other platforms like Symbian and Windows Mobile for its high-end Xperia smartphones, but has used Android for its latest models. Google itself, meantime, has urged more handset makers to use Android.---“Japan has great hardware, great R.& D., great engineers,” John Lagerling, director of Android Global Partnerships at Google, told the New York Times. “Now they can also get the best software.” [Ibid]

Besides helping Japanese phone makers reduce their software development costs, the globally recognized Android standard could also help them achieve worldwide economies of scale that could further reduce overall costs. But Fasol of Eurotechnology warns that even with good Android phones, Japanese companies could cede some of the most lucrative parts of the business, selling apps, to Google.”Android gives the Japanese an opportunity, that’s for sure, but it places them at a relatively low position,” Fasol told the New York Times. “It makes them one of many soldiers in the Google army, with Google as king.” [Ibid]

“Google, in addition to retaining nearly a third of the applications revenue, has recently introduced other revenue-enhancing measures, like letting software developers accept payments within apps,” Tabuch wrote. “But phone makers would receive none of this income. And even as Android is helping Japanese phone makers lay their overseas plans, it has also opened the Japanese market to foreign competitors. Samsung, of South Korea, for example, has made inroads in Japan with its slick Android-based Galaxy smartphone.” [Ibid]

“For the Japanese phone makers, cashing in on Android’s popularity will mean learning some new skills, like marketing, while unlearning some old habits, like paying too much attention to the hardware and too little to the software,” Tabucho wrote. “Japan’s phone makers may need to become nimbler, too. Their love for continual fine-tuning of their hardware has meant they have had trouble keeping up with Google’s frequent Android updates. Many of the smartphones released this season, like the Sharp IS03, still run on Android version 2.1, which was announced more than a year---and two updates---ago. Google is soon expected to release Android version 2.4.” [Ibid]

“Working with Android has meant an overhaul of Sharp’s tightly controlled development process. In one big change, Sharp has invited outside developers to its labs to test prototypes and develop apps---a rare move for a Japanese manufacturer. In 2010, Sharp hosted two “hackathons”---programming jamborees---to encourage more developers to make apps optimized for its smartphones. At one of these sessions a group of about two dozen outside developers worked on apps at Sharp’s usually top-secret research lab near Hiroshima. And in an unprecedented move, Sharp last year released a phone that was deliberately “jailbroken”---letting programmers freely tweak some of the phone’s core software controls.” [Ibid]

Japanese Smartphone Parts

Japan electronics manufacturers provide many key parts for smartphones: Toshiba makes flash-memory devices; Elpida makes DRAM chips and Renesas makes chips, microprocessors and micorcontrollers for smartphones and other next-generation devices. All of the of these companies are putting their factories into overdrive to keep up with demand. South Korean and Taiwanese manufacturers also make many of the same parts. Recently Apple has been turning more and more to Japanese electronics companies for parts as it other main supplier—Samsung---is using many of its parts to make products that rival those of Apple.

Cell Phones Advances in Japan

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Cell phones in Japan are arguably the most advanced found anywhere. They have high resolution screens that produce sharp images and third generation networkz that allow use to shift through pages quickly. The only problem is in many cases Japanese phones can not be used outside of Japan.

In 2000, cell phones showed rock concerts with no sound. Still images flashed quickly so they looked almost like a video. In 2001, Kyocera introduced mobile video phones with a small digital camera on the back that allowed people to send pictures of themselves to friends with the same kind of phone. Costing $335 when it was introduces, the phone was as small and compact as other cell phones. The images though were often jiggly.

Japanese initially didn't take to the Internet on personnel computers with same enthusiasm as Americans but they quickly took to the Internet on the cell phones in a big way. In 2000, there were more than 40,000 web sites specifically designed for cell phones.

In 2001, Japan introduced the "third generation" of cell phone technology with great clarity and the ability to transmit data and video on color screens. The 3G technology made cell phones into wallet-sized PCs and portable play stations and with that came ring that sounded like the roar of a Tyrannosaurus Rex, services that allowed users to check their Pachinko reaction times and security systems that allow them to eavesdrop on their pets or check their house for possible intruders.

In the mid 2000s, Sony-Ericsson introduced Walkman cell phones that were like a cross between a cell phone, an iPod and a high resolution digital camera. Casio introduced models that were shockproof and waterproof and could be worn in the shower or on a scuba dive. Models for children had GPS so parents could figure out where they were.

Increasingly cell phones were being used as credit cards or wallets with electronic money functions called osaifu-keitai that allow users to buy things from convenience stores and vending machines and pass through subway and train gates. As of 2005 about 9 million cell phones used had the money function and 28,0000 shops nationwide accepted them. Payments is done through scanners positioned next to the cashier.

Cell Phone Cameras in Japan

In late 2000, cell phones with cameras were introduced J-Phone. They were a big hit. By 2003, it seemed like everyone had one. A few clicks allowed a person to take a picture, save it or send it as E-mail anywhere. People always had their cell phones with them so they could tale pictures anytime, anywhere and of anything they came across.

The Japanese quickly fell in love with taking pictures with their cell phones. Couples on dates took pictures of themselves. Young girls sent pictures of themselves with a flowery border to their friends. In national parks you’d see people gathered around a waterfall taking pictures with their phone rather than a camera. In the cities young people kept their phone cameras ready in case they saw a famous person or an especially cute outfit.

People came up with creative uses for their cameras. Housewives photographed shopping lists. Fish markets posted pictures and dates on frozen tuna for sushi chefs to make bids. Cosmetic companies offers quick analysis of photographed skin and hair samples. Police were given up-to-date images of stole vehicles and suspects.

Picture-oriented, cell phone matchmakers and dating services sprang up. People sent stored images of themselves and used as an alibi while they were somewhere else having an affair. Creeps used their cameras to sneak pictures under women’s skirts on crowded subways and under stairs and post immediately them on the Internet.

Japanese Cell Phone Products

By the mid 2000s, cell phone users had tired of advances and wanted devises that reflected their personality and taste. Special models with trendy designs were produced that appealed to fashion-conscious women and young people, A model for women introduced by DoCo Mo boasted an attractive oval shape and had features such as a menstrual-cycle calender and fake incoming call ring to provide an excuse to get out of a date. Phones designed for younger girls were shaped like cakes and macaroons. DoCoMo released an “earth-friendly” model made of natural fibers made from corn and the kenaf plant.

Kids like to decorate their cell phones with puri-kura (print club) stickers of their friends, Hello Kitty chains, and feathers and plastic flowers. Cloth pouches and snap-on plastic phone covers, available in a variety of colors and patterns, became very popular. Ring tones include choruses from enka ballads and J-pop hits, famous parts of Beethoven symphonies and theme songs from Miyazaki anime films.

Decorating one’s cell phone become a means of personal expression. “Deko” refers to the art of decorating one’s phone with glass and acrylic beads. Paper, clay and crystal beads made Austria’s Swarovski became especially popular with young women who adorned their phones with heart designs and portraits of Audrey Hepburn made of fake pearls and gems. Many are made by applying one bead at a time and cost up to $400. The two most popular designs at the Neu Neu, a shop that specializs in cell phone accessories, are the “princess” type with motifs such as crowns and roses and the “animal type” typified by a leopard-print patterns. See neuneu.com

Japanese Handset Companies

Internationally the shares of Japanese companies in the handset market is relatively low compared to Nokia of Finland, Motorola of the United States and Samsung of South Korea. Nokia and Motorola, the No. 1 and No. 2 cell phone makers in the world have a very small presence in Japan. Vodaphone tried, gave up, sold out and left. These companies have not succeeded in part because their products are not up to the quality of their Japanese counterparts. In 2008, Nokia announced it was withdrawing from Japan due to it inability to crack the market there.

Domestic mobile sales in fiscal 2009: 1) Sharp (25.6 percent ); 2) NEC Casio (15.2 percent ); 3) Panasonic (15.1 percent); 4) Fujitsu (12.5 percent); 5) Apple (7.8 percent); 6) Sony Ericsson (7 percent ); 8) Kyocera (5.6 percent); 9) Toshiba (4.7 percent ); 10) Others (6.5 percent). [Source: BCN Inc.]

Top cell phone makers in Japan in 2007: 1) NEC (17.1 percent); 2) Panasonic (14.1 percent); 3) Sharp (12.9 percent); 4) Sanyo (12.4 percent); 5) Fujitsu (10.9 percent); 6) Sony Ericsson (7.7 percent); 7) Toshiba (7.1 percent); 8) Mitsubishi (6.5 percent); 9) Casio (4.7 percent); 10) Kyocera (3.6 percent); 11) Others (2.7 percent).

The cell phone handset industry in Japan is very competitive. As of early 2008 there were about 10 handset manufacturers and the industry was ripe for a major shake up. Soon after the start of the year Mitsubishi Electric announced it was going to stop make handsets and Kyocera bought Sanyo’s handset division.

Disney introduced handsets in Japan with great expectations, with special designs aimed at girls and young women and special buttons that can be pushed to gain access to shopping sights. In July 2011, Nokia announced it was abandoning the Japan market.

Cell Phone Service Companies in Japan

The main cell phone providers in Japan are (subscribers in January 2007): 1) NTT Docomo (52,220,00); 2) KDDI (27,4330); 3) Softbank (15,660,500)

Japan’s powerful domestic network operators---NTT DoCoMo, KDDI and Softbank--- have long dictated product cycles and phone features. Each network requires that phones be tweaked especially for it. And the carriers---not the handset makers---have been the main marketers for the phones.

Cell phone companies offer many services at cheap prices and have racked up profits by people using their phones so much.

By 2006 the cell phone market in Japan was saturated. About 70 percent of all Japanese had a cell phone. The only way to get new customers was to take them away from somebody else.

A battle for subscribers broke out in the cell phone business after October 2006 when Softbank introduced a flat-rate billing system that allowed users to switch carriers without changing their numbers. The new system was accompanied by warnings from the fair trade commission that some of the advertising claims were misleading.

In March 2006, Softbank bought Vodaphone’s Japanese cell phone unit for $15.4 billion, the largest ever acquisition by a Japanese company at that time. Vodaphone amassed 15 million subscribers but generally found the going rough in Japan. With the deal Softbank became the third largest telecommunications firm in Japan after NTT DoCoMo and KDDI.

DoCoMo

NTT DoCoMo is Japan's largest mobile service provider and one of the largest cell phone companies in the world. As of January 2007 it had 52.2 million subscribers and control 55 percent of the market. In 2003, it had 38 million subscribers and control 55 percent of the market.

Docomo made a group net profit of about $5.5 billion in fiscal 2010-2011, a 0.9 percent drop from the previous year, on revenues of $48 billion. The decrease was largely due to a decrease in revenues from voice calls as more users entered monthly basic fee discount contracts.

DoCoMo was the second largest cell phone operator in the world after Vodaphone in 2004. In 2000 DoCoMo earned $6.6 billion on $40 billion in sales. In 2002, it was the second top income earner in Japan after Toyota in with taxable income of ¥410.03 billion.

DoCoMo was financed by NTT, Japan’s main telephone company, and created by NTT castoffs and surprisingly given a lot of freedom. DoCoMo became a big success after introducing the hugely popular I-mode service, the world's first Internet phone, and pioneered third generation mobile phone service, known as FOMA (Freedom of Mobile Multimedia Access), with high speed wireless Internet service.

DoCoMo tried of expand into Europe and the United States. It spent more than ¥1.8 trillion in overseas partners, including a deal with AT&T Wireless to gain access to American markets. DoCoMo's ambition seems to be nothing less than ruling the world. But in more than half of those investments ened up being written off.

Docomo share of the cell phone market dropped to 49.7 percent on March 2008, the first time it dropped below 50 percent. It faces stiff competition from Softbank and KDDI. To remain competitive it lowered its I-mode service from around $40 a month to $10 a month

One of Docomo’s biggest successes has been the popularity of its mushroom mascot Docomdake. Girls carry them as charms on their cell phones. They have inspired works of art by modern artists.

In March 2010, Docomo began offering Sony-Ericcson smartphones that used Goggle’s Android operating system. For a time it marketed Blackberry Bold smart phones in 2009.

I-Mode

DoCoMo's I-mode, the world's first Internet phone service, was introduced in early 1999 and has been hugely successful. It offers hundred of online services such as banking, restaurant guides, traffic information, surf forecasts, games, dating services, medical help, weather reports, fortunetelling, stock listing, screen save images of popular pop stars and cartoon characters, and train and airline reservations.

I-mode is slow but reliable. Companies that offer the services attached their subscription fees to the cell phone bills of their customers. Most if companies charge less than $5 a month.

I-mode provides subscribers with a menu catered to their particular interests. By clicking buttons, like a computer mouse, rather than typing text, users sure the Web, send e-mails and play games.

I-mode had 38 million subscribers in 2003. It was introduced in Europe in March 2002. European companies worried about the competition. As of 2003, it hadn’t really caught on. Only about 500,000 of the 35 million mobile users in Europe that could access it used it

Docomo has teamed up with Google to improve its I-mode services.

Docomo Joins Smartphone Os Project

In December 2012, The Yomiuri Shimbun reported: “In an effort to compete with U.S. tech giants Google and Apple, NTT Docomo Inc. is jointly developing a new operating system for smartphones that it hopes to put on the market next year, The Yomiuri Shimbun has learned. Docomo, Japan's largest mobile communication company, has joined with South Korea's Samsung Electronics Co. and other firms to develop a system that will take a larger slice of the smartphone pie. Google and Apple hold a 90 percent share of the market. The ultimate aim is to form a business group that will rival the two U.S. companies. [Ibid]

The OS that Docomo and its partners are developing is named Tizen. Samsung will probably begin selling the smartphones in 2012 and they are likely to be released in Japan and other countries at around the same time, according to sources. Application software products formatted for Google's Android and Apple's iPhone devices equipped with iOS have become easier to use. However, it is difficult for mobile phone service companies to offer their own services, such as for Docomo's online shopping, or to improve the safety of personal information for the smartphones equipped with the OS products developed in the United States. In contrast, the basic technology information used by Tizen will be made open to the public and the OS is being developed on the premise that mobile phone service companies will be able to offer their own services. [Ibid]

According to Gartner Inc., a U.S. research company, Android held a global market share of 72.4 percent in OS products for smartphones from July to September 2012, and iOS held 13.9 percent. Most apps were developed for the two products. Besides Docomo, European mobile phone service companies also are participating in the development of Tizen because they fear the hegemony of the two U.S. companies in businesses using smartphones, such as games and music distribution. [Ibid]

KDDI

KDDI is Japan’s second largest cell phone operator. As of January 2007 it had 27.4 million subscribers and a 29 percent share of the market. KDDI has made advanced on DoCoMo by developing high speed services and concentrating on the domestic market while DoCoMo wasted large amounts of resources on largely fruitless overseas projects

KDDI’s profits were up 10.9 percent in fiscal 2010-2011 in part because of smaller operating costs and a decline in sales commission fees for mobile phones. The company made a profit of ¥255.12 billion on revenues of ¥3.43 trillion.

KDDI made advances on DoCoMo in the mid 2000s in the advanced cell phone market by charging lower rates and, in some cases, offering better service. It offered things like navigation systems and and family discounts and marketed itself as hipper with trendy looking phones with checkerboard patterns and magnesium-alloy bodies.

KDDI’s Profit Falls 6.5 Percent in 2011

In April 2012, AFP reported: “Japanese telecom operator KDDI said full-year net profit fell 6.5 percent, although operating profit and revenues rose as it started selling Apple's iPhone. For the fiscal year through March, KDDI said it earned 238.6 billion yen ($2.94 billion), while sales rose 4.0 percent to 3.57 trillion yen. The firm said operating profit was 477.65 billion yen, up 1.2 percent, despite unexpected costs it incurred following Japan's devastating quake-tsunami disaster in March 2011. [Source: AFP, April 25, 2012]

In October 2012, KDDI joined Softbank in offering the Apple iPhone in Japan. KDDI, which ranks second in terms of the number of subscription contracts, boasts better signal reception, while third-placed Softbank offers a lower data communication fee. Honami Shinkawa, 20, who was handed the first iPhone 4S from KDDI President Tanaka at the ceremony, said, "I am really happy." "I was using the (iPhone) from Softbank and decided to switch" to KDDI as making phone calls home was difficult, the student from Tokyo's Nerima Ward said. [Source: Kyodo, October 14, 2011]

Meanwhile, at a Softbank outlet in Tokyo's Shibuya Ward, 27-year-old Yuka Honda said she was very happy with her purchase of the handset as she had been waiting for the launch of the new iPhone. "I chose to buy Softbank's iPhone because I can use the Internet while talking on the phone," which KDDI's iPhone cannot, the freelancer from Tokyo's Kita Ward said. KDDI employs code division multiple access, or CDMA, network technology for its mobile phone service, which does not permit simultaneous voice and data traffic. [Ibid]

For data communications, however, KDDI is charging 4,980 yen a month for unlimited data use, which is 570 yen higher than the fee charged by Softbank. [Ibid]

Image Sources: 1) Doug Mann Photomann 2) 3) Ray Kinnane 4) Hector Garcia

Text Sources: New York Times, Washington Post, Los Angeles Times, Daily Yomiuri, Times of London, Japan National Tourist Organization (JNTO), National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

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© 2009 Jeffrey Hays

Last updated January 2013

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