Talking Points: the iPhone's Impact in Japan

Posted by: Kenji Hall on August 13, 2008

Before the iPhone arrived in Japan last month, there was enough speculation about its prospects to keep a roomful of bookies busy. The only thing you could say for sure was that there was no consensus. At one extreme were the skeptics: The iPhone would be a disappointment because Japanese handsets already let users browse the Internet, pull up maps, and play music and videos, they said. At the other end were the Mac-philes. They predicted that the iPhone would drive Japanese phone makers back to the drawing board to come up with their own touch-panel screens and downloadable software.

They were both wrong.

For sure, the iPhone doesn't represent a quantum leap in technology. I've spoken with users here who complain that the iPhone is incompatible with the features of many Japanese Web sites because it lacks Adobe's Flash animation software. They also point out that Japanese sites come in two versions—one for large PC screens and one that's been stripped down for tiny cell phones. The iPhone has a screen that's somewhere in between. At times, the gizmo is also slow at pulling up Web pages, and Softbank's unreliable network has been known to cut off in the middle of an e-commerce transaction.

But the iPhone offers something no other Japanese handset has figured out how to do: It's fun to play with. That alone could help it reach an audience far broader than the tech geeks who lined up to be the first to buy the iPhone last month. Many Japanese handset makers don't see how a "feature" such as this might attract self-described technophobes. They tend to either make devices that have so many features they're hard to use, or so few (think of traditional landline phones from the 1980s) for tech-illiterate middle-aged and elderly consumers.

So then are Japanese tech companies rushing to copy the iPhone? Not exactly. One senior mobile telco executive told me that none of the top brass at Japan's leading wirless operator, NTT DoCoMo, personally owns or uses an iPhone. That says a lot because in Japan the carriers tell handset manufacturers like Panasonic, NEC, Sharp or Kyocera what features to install in phones. "Most of the top execs of the manufacturers are over 50 and don't know what their own products do," said the exec, who asked not to be identified.

No doubt DoCoMo has engineers dissecting the iPhone; but hardware engineers are likely to conclude that the iPhone is an inferior piece of electronics. And inside a company like DoCoMo, which has a massive R&D budget, the aversion to anything "not invented here" is strong.

Softbank's Tetsuzo "Ted" Matsumoto would agree. Before becoming a senior executive vice president at Japan's No.3 wireless operator he dealt with the carriers and handset makers as Qualcomm's Japan chief. He saw how the carriers wasted money on R&D and ordered tech manufacturers to develop cutting-edge phones with no worries about cost. To keep carriers happy, manufacturers got used to saying yes. "So they stopped thinking about how to make phones more cost effective," says Matsumoto.

With such deep pockets at their disposal why haven't Japanese manufacturers made an iPhone? Because it's not just about money. "There's no Steve Jobs in this country," says Matsumoto. "He has the power to unite the marketing and technology and business groups. Unfortunately, Japanese companies aren't structured that way."

You could argue that it's too early to be talking about the iPhone's impact. After all, it only launched a month ago. (The iPhone 3G is the first version to sell in Japan.) Apple doesn't release country-by-country sales figures and prohibits Softbank from disclosing the numbers. But Gerhard Fasol, co-founder of Eurotechnology Japan, estimates the two have sold between 75,000 and 125,000 iPhones in the past month and could sell as many as 1 million before the end of 2008.

Those are numbers that would make everyone in Japan's mobile industry pay attention. The fact that Softbank was willing to sell the iPhone suggests that Softbank wants to be an agent for change. "I hope the iPhone's introduction leads to a sense of crisis at Japanese handset makers," says Matsumoto. "They have been coddled in this market. The iPhone could be the trigger that forces them to make changes."

Reader Comments

Habib

August 13, 2008 6:48 PM

interesting....I mean that comment on Steve Jobs...

Jennifer

August 13, 2008 7:22 PM

Other analysts are saying that Japan is going to sell 100,000 iphones for the WHOLE YEAR.

http://www.japancorp.net/Article.Asp?Art_ID=19399

Brian

August 13, 2008 11:00 PM

Talk about wrong. You act as if the Japanese phone companies COULD copy the iPhone. There is no way. The iPhone is a computer. If the Japanese were going to produce a computer, don't you think they would have done it by now?

Sony, etc.. don't count as computer companies anymore than the stupid guy that put's a motherboard in a case, with a power supply, etc.. and thinks he 'built' the computer. Anyone can put generic parts in a box and install some lousy operating system such as windows or linux.

You think the iPhone isn't a quantum leap. Well, it doesn't make you fly, so maybe you are right. If the iPhone isn't a quantum leap, what is? The Zune?

Hugo Mildenberger

August 14, 2008 1:35 AM

It is know that the Japanese market is in many ways more advanced and customers are used to some nice features and functions. Also it is wide published that the iPhone 3G has shortcomings when compared.

It can be argued if these shortcomings are or will be responsible for its performance in Japan. Time will tell. One major reason for the iPhone to have a big impact is the carrier. As mention above Softbank has not the best network, which has a direct impact on iPhone sales. If Apple would allow others to sell it's iPhone as well the sales would go up.

docomo has no problem to run the iPhone 3G on its network, whereby for KDDI au it would be rather difficult and would require some hardware changes.

Some of the other missing functions could be covered by software update, especially the icons who are essential for any typed message from a mobile phone. second would be the QR Code reader.

My guess is that Softbank and/or Apple are not happy with the sales volume as it is now. Because Softbank has changed its pricing plan just one month after it started to sell the iPhone 3G. It is very early to do such a move. The new pricing plan can be read here:
http://www.iphone-app-reviews.com/68/new-softbank-prices-for-iphone-3g-japan/

Michael Keferl

August 14, 2008 7:53 AM

Whoa....I was at this presentation, and I don't recall Dr. Fasol saying anything about selling one million units in Japan. Kenji, when did he say this? I'd love to be corrected on this, but Gerhard is quite bearish on the iphone (as are most other sane people) in Japan.

mark

August 14, 2008 12:11 PM

The author can't yet conclude that either of the predictions are wrong. If, as he says, there are 1 million iPhones sold before the end of the year, then it seems the others will come up with their own iPhone wannabe. But if, there are only 100K sold, then iPhone would be a disappointment. So the author is most likely WRONG, since he's provided no data to back his claim.

It's truly disgusting when writers stick in useless words in the early part of an article that aren't backed by any facts. Useless crap. Kenji Hall; next time I see that byline, I'll just move on.

Constable Odo

August 14, 2008 12:33 PM

Those figures are interesting and not all that encouraging so far, in my opinion. I'm hoping that visibility, word of mouth and ease of use will eventually boost iPhone sales in Japan. Japan is one country where to "think different" is one of the worst things you can do, so I understand their reluctance to change. (If the nail sticks out, hammer it flat)

I for one will be satisfied if SoftBank can sell 500,000 iPhones this year.

It must be nice to be in a country where cost is no object to develop a device. The Japanese companies will be able to beat out the iPhone in hardware, but won't be able to duplicate OSX Mobile which is the iPhone's main advantage.

Viswakarma

August 15, 2008 12:12 AM

iPhone is a Quantum Leap in integration of User Needs!!!

FreeTibet

August 15, 2008 5:24 AM

I have to say that people buying such gizmos as iphone, ipod, etc., only worth that much. People who do not have depth tend to follow shallow fads!

tom

August 16, 2008 7:13 PM

Lets face it people purchase the Iphone for it's good looks. The Iphone lacks many features. Which is why Windows Mobile is still the best Smartphone out there. Iphone is a waste of time and it is not a business phone. It is a personal phone.

--------------------

All of the list below shows Iphone lack of features missing. Windows Mobile can do and have all these features already:

1. It won't perform simple computer operations such as word processing, spreadsheets, relational databases, and PowerPoint presentations
2. You can't use your own MP3 sounds to make ringtones.
3. No MMS
4. No expansion slots
5. No flash camera
6. Doesn't take videos
7. Doesn't have dual cameras for video conferences and self-portraits; you can't take screen shots either; only has 2.0 MPX
8. There's no QWERTY keyboard or even a phone keypad. Instead, it has a klutsy popup input panel. It takes average person five minutes to type my name correctly without any errors owing to my fingers being on the gorilla end of the scale. The input panel is made for fingers of a five-year old.
9. Can't even perform the simple operations of highlight, copy, cut, and paste
10. Doesn't have an eBook reader program
11. No InfraRed--can't beam files, photos, tunes, text, contacts, applications
12. Doesn't have Bluetooth 2.0
13. Can't use wireless Bluetooth headphones
14. Won't work with optical eyewear players
15. Doesn't have 802.11 G/N Wi-Fi
16. Doesn't have universal mini-USB connector for syncing and charging
17. Doesn't have real downloadable programs, only Web Apps that force you to go online to use. What if you don't want the expense of going online or there is no connection? Apple boasts 600 Web Apps. Windows Mobile has 15,000+ actual programs.
18. You can't transfer files between devices or even to a MAC with an iPhone, and there's no peer to peer connectivity possible either.
19. There's no removable battery. You have to send the unit to Apple at your own expense and suffer downtime. Wow.
20. There are no peripherals for the iPhone such as a Bluetooth keyboard, mouse, headphones, GPS, printer, scanner, hard drives, storage cards, video eyewear, or projectors.
21. There are no voice commands for viewing photos, videos, files, listening to tunes, or running applications. I really enjoy bossing my pocket concierge around with voice commands. You can't talk to iPhones; you have to poke them in the tummy with your finger to get them to do anything.
22. You can't watch and control your home TV DVR remotely from anywhere in the world
23. There's no FM or satellite radio
24. You can't use an iPhone as an extension of your desktop monitor and move the mouse and data between them.
27. Touch screen is not sensitive to a standard stylus, only a blunt instrument like a finger or a ball-peen hammer.
28. Finger gestures are crazy-making on a page with lots of hyperlinks because you cannot point precisely
29. Cannot change page transitions or animations
30. You cannot control your computer or anything else remotely with an iPhone; you can't even have the fun of using it in a bar to change the TV channels surreptitiously.
31. No programmable hardware buttons for easy control and access to such functions as volume control, camera, and digital recording.
32. No Flash for viewing websites

steve

August 16, 2008 7:15 PM

All of the list below shows Iphone lack of features missing. Windows Mobile can do and have all these features already:

1. It won't perform simple computer operations such as word processing, spreadsheets, relational databases, and PowerPoint presentations
2. You can't use your own MP3 sounds to make ringtones.
3. No MMS
4. No expansion slots
5. No flash camera
6. Doesn't take videos
7. Doesn't have dual cameras for video
8. No Flash for viewing websites

Rick Hunter

August 17, 2008 11:35 AM

Tom & Steve,

I see FUN and GREAT HW & SW INTEGRATION is not listed for WM6 smartphones. That is too bad. R.I.P. Windows Mobile.

Go, iPhone 3G! Break 30M for 2009!

Cheers!
RH

Bryan

August 18, 2008 3:53 PM

Tom 40% of your list is simply incorrect. Tom & Steve, have fun with your small screens, bulky phones, and lack of any real developer interest in an archiac operating system. I find it hilarious that there is no good Twitter client for Windows Mobile that's been around a long time.

As for your list, I'll address some of your claims:

"Doesn't have 802.11 G/N Wi-Fi"

- It has B and G. Show me something that takes advantage of N and thats useful on your smart phone.

"Doesn't have real downloadable programs, only Web Apps that force you to go online to use. What if you don't want the expense of going online or there is no connection? Apple boasts 600 Web Apps. Windows Mobile has 15,000+ actual programs."

- Have you been sleeping in a cave the past 6 months? Apple announced last year they are letting developers write real programs for the iPhone, not webapps, REAL applications. People have been releasing them through the iTunes app store and making a good living on them. The app store has been out for a month and there are already 1,100+ applications avialable... At this pace we will have more applications than Windows Mobile in 1 1/2 years.

"There's no FM or satellite radio"

- There is satillite radio coming soon but it will be through edge, 3g, or wi-fi. 3g has more than enough bandwidth to handle it. Sirius XM is releasing their own iPhone app in the coming months. The iPhone doesn't need the additional hardware to make it bulky and drain more batteries just to have satillite radio. FM radio? Who cares. Would you like the phone to have the ability to send telegraphs too?

"You can't watch and control your home TV DVR remotely from anywhere in the world"

- The App store just went live about a month ago of this posting. Slingbox is working on an application for the iPhone that will do just this.

"No programmable hardware buttons for easy control and access to such functions as volume control, camera, and digital recording"

- Uhhh... yes, I can control the volume just fine with the VOLUME buttons on the side of the phone. As far as other buttons for controlling whatever, thats something you need when you have an OS with isn't intutive. iPhone OS is very intuitive so things like this are simply controlled with a touch or flick of the finger.

"You can't transfer files between devices or even to a MAC with an iPhone, and there's no peer to peer connectivity possible either."

- There are none that come WITH the iPhone, but there are several you can download off the iTunes App store. Yes people are activly developing software for the iPhone unlike certain other phones.

"You cannot control your computer or anything else remotely with an iPhone; you can't even have the fun of using it in a bar to change the TV channels surreptitiously"

- Do you make a lot of asumptions or have just not done any real research on the phone. Apple released an application to let you control your iTunes library on a PC or Mac from the phone. Several 3rd parties have released apps to control your Windows or Mac desktop from the iPhone itself. Look into something called VNC.

antron

August 18, 2008 4:00 PM

tom,

i am just going to refrain from taking your list apart one-by-one. for once most of the software feature you mention are easily provided by current or future app-store apps. they have nothing to do with the iPhone's OS or capabilities. they are not build into WM as well but merely apps running on it. secondly, most of the other features you mention are device depended and are no inherent advantage of WM itself. thirdly, i like you to look at the rocky road WM had and is still on; that its only advantage, with PalmOS was failing, being the only one in the market. the game changed now. it is agreed that WM may have advantages on the user base for now but it will be fading with the example of the iPhone's OS and consequently other mobile OSes taking cue, such as Android, pushing the market. To make a last point, MS better work on their UI, reliability, stability, and HW integration to be able to stay up there with WM. it may have worked until now but it was by best clumsy to use.

Peter Alford

August 18, 2008 5:35 PM

Re comments by Michael Keferl and "Mark" on 1 million sales.
Kenji Hall is correct in what he attributes to Gerhard Fasol. Gerhard said during the presentation he would post further details of his iPhone sales estimates on his blog, later that day.
This is part of what he posted on eurotechnology.com/blog ...
Our estimate: about 640,000 - 1 Million iPhones may be sold in Japan during 2008: If we assume that iPhone sales in Japan will continue at the current rate, then we can estimate that between 640,000 - 1 Million iPhones could be sold during the remaining part of 2008 in Japan, which would be about 1.2% - 2% of mobile phones sold during 2008.

Ari

August 18, 2008 9:15 PM

As a current customer on another carrier in Japan, I've been holding off on getting an iPhone because:
1. No integrated RFID e-wallet.
2. No emoji support (this is important!)
3. No built-in GPS.
The above are all standard features on current Japanese models, and ones which I use daily. People here do not expect the iPHone to be a mini-computer, so many of Tom's comments are pretty much irrelevant.

Arthur

August 19, 2008 2:38 AM

If Twitter is going to enter the discussion then I suggest sensible people stop reading now. Who the hell cares what you fed your cat this morning or what was in your sandwich for lunch. I thought Facebook was a gross waste of time until I saw Twit. Or was it Twat?

Richard Dib

August 19, 2008 3:05 AM

I fail to see how the Japanese cellular market is more advanced than what the iPhone represents...

Actually, it feels like Japanese cellular phones are Frankensteins of useless features with very little cohesion. I recently saw one japanese phone with a TV antenna sticking out ... is that insane or what?

The iPhone not represents a platform that can be easily expanded by software, but provides a complete ecosystem of services coupled with the device. No Japanese cell phone provides that.

The other thing is the fact that the iPhone is a computer. It will be very hard for a Japanese company to duplicate that. For example, if Sony could do it then ... how come they keep building clones based on Microsoft Windows? How come they have not been able to come up with their own operating system, specially since their writing is so different? How about Sony's failure to compete with the iPod and iTunes?

I believe that Japan's telecommunication companies are in for a shock. Their arrogance will only make then realize their failure when it is too late.

Squeezebox

August 19, 2008 3:33 PM

What middle-aged and elderly people are looking for is a cell-phone that they don't have to look at the instruction book in order to use. Apple revolutionized the PC industry in the 1980's with their graphical user interface. Rather than having to remember the name of a program, all you had to do was click on the picture and up it came. The I-Phone works much the same way. Rather than loading up a phone with features, how about making the existing ones easier to figure out?

Tokyo Dan

August 19, 2008 8:36 PM

Here's a podcast where they talk a bit about the iPhone NOT making it in Japan.
(8 minutes and 54 seconds in)
http://feeds.feedburner.com/~r/planetjapan/upPq/~5/369073025/pj142.mp3

dubious

August 22, 2008 2:04 AM

TV antenna sticking out? insane? for the japanese market, where the average train commute to tokyo or osaka or even fukuoka is over an hour at least, this is a necessity. if you're a exec at a TV network or at a wireless service provider, this is an important source of revenue. You'd have to be nuts to ignore this kind of revenue source...but obviously Steve Jobs is smarter than I am (and of course Masayoshi Son, who by the way, was educated in the US, and not really a Japanese)

Anil

August 22, 2008 6:16 AM

iPhone is a great looking product with many flaws and great marketing (read American!)....

I cannot beleive that 1 million Japanese are going to be fooled by this... but time will tell..

batman's cat

August 30, 2008 2:46 AM

The first thing that people must realise is that although the iphone is great, it isn't perfect. Of course other phones will be better in certain areas. I recently read a comparison to a popular Japanese phone, the casio sw53, where in terms of spec it seemed to be lagging behind. However, in reality this casio phone is little more than a cell phone with a bunch of cool features that are kinda useful but really quite lacking. In terms of web browsing, the iPhone blows regular cellphones like the casio w53 out of the water. Of course, the casio has Japanese specific features, that are really a little more than a novelty: low quality free tv stations, a 'e-wallet' that performs the function of a silca card that cost about $1 and is the size of a credit card, a 5.1 mp flash etc. camera that is still only really useful for snap shops and well behind even a basic digital camera. The GPS works well, and as a cell phone it is nice, but trying to make a direct comparison between such a phone and an iphone must be the result of just comparing stat sheets. Hands on experience will show very clearly that for multimedia purposes i.e. music video and especially web surfing the iPhone is light years ahead. Again, despite the impressive specs, the casio is just a regular cellphone with a regular interface, an interface which drastically reduces the usefulness of the multimedia aspects of the phone. No head phone socket or built in HD etc either.

A better comparison would be with WIllcom models, such as the willcom d4. The willcom d4 really does destroy the iphone in specs, but is more of a handheld pc with cellphone tagged on (oyu have to use a headset to make calls), is about 4 times heavier and much much more expensive.

I think the myth about Japanese cellphones being so great arises from people simply looking at state sheets with no hands on experience. The important thing is not what features a phone has got, but how they are implemented, how usable they are.

gto

September 8, 2008 9:10 AM

YES, iPHONE WILL MAKE AN IMPACT
1 million iPhones is PUNY 4 the Jpn mkt, but it will SHOCK + hopefully jolt Jpn electronics manufacturers to embrace some unique features such as
1) Design
2) Ease of use - interface + software
More competition = Greater choices for Consumers

Hanjo

September 13, 2008 6:54 AM

I honestly think the iPhone will make an impact. I bought an iPhone 3G and am happy enough that I can use this phone on my trip to Japan this autumn.

I used a WM-based HTC-device and indeed, it offered one or two features the iPhone didn't initially offered, but the UI sucked seriously, I never really surfed the web on my cell-phone before the iPhone, even if i could. And those features I first missed are now available through third-party applications from the appStore.

What really bothers me currently is the rather buggy synchronization, but I hope this will be improved in future firmware-updates. For the first effort to build a mobile phone, Apple definitely did a great job.

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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