Japan's third-biggest mobile carrier has announced it will begin distributing Apple's new 3G iPhone later this year. What makes Apple's latest iPhone deal with Softbank so significant is that the Japanese have a long history of preferring locally made products over imports.
Gartner Research Director Carolina Milanesi said she thinks the iPhone may be able to gain market traction in Japan due to the element of "ease of use and cleanness of design" that have driven its wide appeal to date.
"Growth in Japan's mobile market has remained flat for some time now, and unless there's the introduction of some new technology or product, you won't see any blip in sales," Milanesi added.
Moving Beyond Exclusivity
She observed that many of the handsets currently being sold in Japan look downright bulky. "They're not elegant, like what we are used to seeing in Europe," Milanesi said. "Although from a technology point of view Japan is a very advanced market, as far as user interface and design are concerned, they are not leading the way."
Apple's deal with Softbank is a bit counterintuitive, given that the network operator is far smaller than Japan's market leader, NTT DoCoMo. On the other hand, Softbank has Japan's fastest-growing mobile subscriber base.
In the long run, Japan may turn out to be one of those markets where Apple departs from the exclusivity model it initially elected for the U.S., France, Germany and the U.K.
Apple realized that if it wanted "to have a bigger market share, it would have to move away from exclusivity," Milanesi said. "So there are quite a few other countries now where Apple is going with more than one carrier."
NTT DoCoMo recently indicated it may still be in the running for an iPhone deal. "If there's still a possibility of releasing iPhone from DoCoMo, we would consider it, though we cannot comment on whether we have specific negotiation plans with Apple," an NTT DoCoMo spokesperson told The Wall Street Journal.
Riding the Wave
According to Gartner, handset sales in the Asia-Pacific area rose 26 percent to 114.4 million mobile devices in the first quarter. Furthermore, the research firm expects regional 3G phone shipments to grow from 35.58 million units in 2008 to more than 117 million in 2011.
Apple's iPhone is currently slated to enter mobile markets in Australia, Hong Kong, India, Macau, Singapore and the Philippines this year. "They are picking countries where the addressable market is quite sizable," Milanesi said.
However, Gartner researchers note that mobile handset growth in the region during the first quarter was driven in large part by lower-priced phones. So Asian iPhone demand could be dampened by the fact that handset subsidies from the region's carriers are not at the same level in Asia as they are in the U.S. and Europe.
Moreover, market participants in many Asian countries only have control over one part of the channel, Milanesi noted. To be successful, Apple will need to make sure it reaches "the broadest possible addressable market, through distributors as well as operators," she said.