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Opinions Divided Over iPhone’s Success in Japan

July 11, 2008

By Mai Iida, Kyodo News International, Tokyo

Jul. 11–TOKYO — Can Apple Inc.’s iPhone become another blockbuster in gadget-loving Japan, like the iPod music player?

Some say that iPhone 3G has a good chance for success, considering the strong interest shown by Japanese consumers ahead of its launch. But others remain calm and say people here, who already use cellphones for TV, e-money and a train pass, may not be as surprised at the high-tech functions of the new gadget as much as overseas consumers.

Softbank Mobile Corp., Japan’s No. 3 mobile phone carrier, launched the gadget Friday, the first chance for Japanese consumers to buy iPhone.

Some people started queuing up in front of Softbank Mobile’s flagship store in Tokyo three days before its launch, and once the gadgets went on sale, they flew off the shelves.

Apple’s iPod music player has been one of the best-selling gadgets here. It has seized more than half of the Japanese mobile audio player market since its debut six years ago, with its design and functionality as well as the strong recognition of the Apple brand appealing to consumers.

“I think iPhone will be a hit, but I do not think it will become a mainstream model in the (Japanese) mobile phone market,” Naoto Osugi, analyst at the Daiwa Institute of Research, said, citing concerns over iPhone’s inability for TV and e-money, as well as for use in infrared data communication.

He said the lack of pictographic characters, a popular communication language for e-mails among Japanese users, may also discourage some subscribers, especially the young, from switching to iPhone.

For Softbank Mobile, Osugi said iPhone 3G will surely be a money-maker, as the new phone’s average earnings per unit is higher than that of the firm’s other models, chiefly due to its relatively high data communication fee.

Softbank Mobile, the mobile phone unit of Internet conglomerate Softbank Corp., sells new iPhone handsets for 23,040 yen for an 8-gigabyte model and 34,560 yen for a 16-gigabyte model under a two-year contract.

Excluding payments for the handset, the phone’s minimum monthly running costs total 7,280 yen, including the basic fee for calls and data communication service for unlimited use of Internet access and e-mails.

Hiroshi Yamashina, analyst at Nikko Citigroup Ltd., views Japan as a good market to sell the smart phone because of how expensive cellphone handsets are here. The most sophisticated models can cost over 50,000 yen.

“I think iPhone can capture good demand as a digital audio player, rather than from people who want to replace their old phones,” Yamashina said.

He said the touch-screen iPhone should also attract heavy Internet users because many conventional cellphones are inconvenient for browsing the Internet.

“It can sell about 1.2 million units in the first year” in Japan’s market of over 100 million subscribers, Yamashina predicted.

The first version of iPhone sold about 6 million units in the Untied States and Europe following its debut in June 2007.

Apple did not launch the first version in Japan as the phone’s networking system was older than that for the latest Japanese mobile phone models, and waited until Friday to roll out the new version with speedier 3G service.

Osugi said Apple’s handset launch means a big change in the business structure of the Japanese mobile phone market where carriers usually take the lead over electronics makers in developing handsets.

According to a Kakaku.com online survey, 32.8 percent of nearly 8,000 respondents said they are considering buying iPhone, and another 16.9 percent said they plan to buy it.

In a move that could further intensify competition in the smart phone market, Japan’s largest mobile phone carrier NTT DoCoMo Inc. is preparing to introduce the BlackBerry 8707h series with personal computer-like functions to individual users on Aug. 1, in addition to its conventional users of corporate clients.

DoCoMo lost the competition with Softbank for the right to sell iPhone in Japan. It said, however, it has not yet given up the chance for the gadget’s launch on its own.

In Japan’s nearly saturated mobile phone market, if and how iPhone affects people’s use of mobile devices and the power balance of Japanese mobile phone carriers and related companies is yet to be seen.

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To see more of Kyodo News International, go to http://www.kyodonews.com

Copyright (c) 2008, Kyodo News International, Tokyo

Distributed by McClatchy-Tribune Information Services.

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