11/16/98 JAPAN: WHERE LESS IS REALLY MORE

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JAPAN: WHERE LESS IS REALLY MORE

With four mobile phones, Joichi Ito is a living, breathing market test of wireless technology. As he raced to catch an international flight in late October, the 32-year-old Internet pioneer spent most of the 90-minute drive to Tokyo's Narita airport on his Japanese digital cellular phone--checking voice mail and downloading E-mail messages to his notebook PC. He also carried a personal handyphone system (PHS) handset in the event he needed high-speed data-transmission capability. After landing in Los Angeles, he pulled out a U.S. digital phone to check E-mail again. He also has a European phone, though he didn't bring it on this trip.
Which country does he think has the best phones? No question: Japan. ''I care about size and function,'' says Ito, who founded Digital Garage, a company that represents the U.S. search engine Infoseek (SEEK) in Japan. ''And [Japanese] phones come in the smallest formats with the most functions.''
That's not just national pride. As wireless use has boomed around the globe in recent years, Japan is the country that's pushing the envelope in wireless phone design, making devices ever smaller and lighter. Consider Ito's phone of choice: a sleek, 2.8-ounce wonder from Matsushita Electric Industrial Co.'s (MC) Panasonic division that fits in the palm of his hand. In contrast, Nokia Corp.'s (NOK.A) 6160 phone--all the rage in the U.S.--is 70% heavier, at 4.8 ounces.
That doesn't mean the Japanese are skimping on features. Ito's phone comes with all the typical bells and whistles digital phones offer elsewhere--Caller I.D., voice mail, and a variety of ring modes, such as a vibrator function. And for a reasonable $225, the Panasonic 206 goes Well beyond the norm. It can store up to 500 names and phone numbers, using the Roman alphabet or Japanese characters. It boasts an answering service provided by the carrier as an alternative to voice mail. And if Ito receives a call from someone listed in his VIP group, such as key business associates or his girlfriend, the LCD screen on his phone lights up orange instead of the regular green. Like many of his generation in Japan, Ito's wireless handset is his primary phone. ''I don't even know my home number,'' he says.
What's driving the technological innovation? It helps that the Japanese cellular market has exploded over the past five years from almost nothing to 36.5 million subscribers--a 29% penetration rate that puts it behind only a handful of countries, including Finland and Israel. More than that, Japanese consumers have shown an insatiable appetite for ever-smaller phones that has been fed by fierce competition among consumer electronics giants such as Sony Corp. (SNE) and Matsushita. Ito, for example, has gone through 30 mobile phones in nine years.
Still, Japan's design wizardry hasn't spread to the rest of the world yet. Forays outside the country by Sony, Matsushita, and NEC (NIPNY) have met with only moderate success. ''Japan makes the smallest, most advanced handsets in the world,'' says analyst Makio Inui of Salomon Brothers in Tokyo, ''though it's still not clear whether consumers in other countries want such tiny phones.''
Ito, who has been sought out by Japanese government officials for his knowledge of the Internet, has some ideas on how to make the ideal phone. He believes that the winning combination is a tiny device with dozens of functions and one common global standard. Of course, that's only a dream these days. For now, Ito is eyeing a $7,000 Iridium satellite phone developed by Motorola (MOT)--it weighs about 2 pounds but it works around the world. ''I just might buy myself one for Christmas,'' he muses. At least then he'll have only one phone to lug around when he travels.
By Irene M. Kunii in Tokyo

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