Friday, September 13, 2013
EDITORIAL: iPhone Forces DoCoMo To Rethink Smartphone Strategy
TOKYO (Nikkei)--NTT DoCoMo Inc. (9437) will finally begin offering Apple Inc.'s iPhone. While the news cheers many of its users because it broadens their choice of carriers, DoCoMo faces the stiff challenge of overhauling its smartphone strategy.
Riding The Wave
The iPhone came to Japan in 2008 through SoftBank Corp. (9984), which won exclusive domestic sales rights from Apple. In those days, touch-panel smartphones were thought to be too novel for Japanese users, but the devices resoundingly disproved such thinking, becoming mainstream within just five years.
The device also transformed the industry landscape. Telecommunications firms once dominated the global mobile phone market, but they are now being dwarfed by U.S. IT firms. The iPhone has eaten into the 40% market share held by Finnish mobile carrier Nokia Corp., for example.
DoCoMo had long resisted riding the iPhone wave and tried to retain its own technological edge in the mobile phone market. Fears that the sale of the global-standard iPhone would stoke competition and eventually deprive the telecommunication industry of its market leadership prompted the Japanese firm to develop its own devices using Google Inc.'s Android operating system.
But its efforts could not stop trend-conscious users from switching to the iPhone. It has lost 3.5 million customers to SoftBank and KDDI Corp. (9433), which began offering the handset in October 2011. The blow left DoCoMo with little choice but to rethink its strategy.
More Change Needed
The decision to sell the iPhone, however, is just the start for DoCoMo, as it will have to make more important management decisions down the road. It reportedly agreed with Apple to have iPhones account for 40% of its new contracts. But to sell the global-name handset, it must review its own services.
DoCoMo said it will ensure the continuation of its text messaging and e-commerce transaction services through apps for iPhone users. But the specs of the handset need to be changed if the Japanese company is to accommodate its unique functions, such as the Osaifu-Keitai e-payment system, one-seg digital television broadcasts and smartphone-optimized TV programs, launched following Japan's switch to the terrestrial digital broadcasting system.
To maintain its own technologies in the iPhone, DoCoMo needs to gauge which functions and services users need. It should work with SoftBank and KDDI to urge Apple to adopt the functions that are essential to the Japanese market.
DoCoMo's handset suppliers also need to implement changes. The convoy partnership, in which device makers produce handsets at the request of telecommunication firms, no longer works. They need to broaden their reach in untapped overseas markets, and the government should also back such efforts.
Apple's release of a low-end iPhone model shows the U.S. firm is also looking to attract more users in emerging markets. DoCoMo's entry into the iPhone market presents an opportunity for the Japanese mobile sector to become truly global.
(The Nikkei, Sept. 13 morning edition)