iPhone in Japan: The REAL Story

Posted on August 12, 2008 by Andrew Currie
A typical Japanese handset

A typical Japanese handset

Kudos to the dedicated reporters at AppleInsider for their recent fluff piece, proudly proclaiming that the new iPhone 3G rocks the Japanese smartphone market.

Here’s the synopsis of this fine bit of reportage:

Mobile providers in Japan are crediting the launch of Apple’s iPhone 3G with dramatically shifting large numbers of subscribers between providers.

Such a bold statement would have you believe that Japanese handset makers are simultaneously committing seppuku at the arrival of the JeebusPhone on their native soil. There’s just one little problem here: While not technically incorrect, AppleInsider’s premise is far more truthiness than truth.

Following the first external link leads to a story about KDDI losing subscribers to rival carrier SoftBank because of the iPhone. The page also states that SoftBank currently boasts more than double the subscribers of the mighty DoCoMo — a bit hard to believe, given that DoCoMo reached the impressive milestone of 50 million subscribers back in 2005. In fact, the company experienced a 41% growth in profits for Q1 2008, and continues to lead the world in revenue from mobile data.

AppleInsider then proceeds to list Japan-specific handset features like “QC Codes” (actually QR) and the “impractical” 1seg broadcast video service. Impractical or not, 1seg is actually quite popular in Japan, and 20 million handsets supporting the free service have been sold there.

And finally, there’s this little chesnut:

“Just the interface itself is enough reason for me to buy the iPhone,” said Andrew Shuttleworth in a Macworld story exploring the iPhone’s potential in the Japanese market.

Good for you, Andrew Shuttleworth! I guess the fact that, (1) you shill for MacWorld and (2) you speak and read English, just like the owner of the only iPhone I actually saw in the wild when I was in Japan last month, doesn’t give you any kind of bias on such matters?

While I can’t fault AppleInsider for telling zombie Mac fanboys exactly what they want to hear, I can tell you from firsthand experience that rumours of the iPhone supplanting the most advanced mobile phone market in the world have been greatly exaggerated…

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31 Responses

  1. Darryl, on August 12th, 2008 at 1:33 PM Said:

    So are you saying that the iPhone is not doing so great in Japan?

    Reply
  2. AC, on August 12th, 2008 at 1:41 PM Said:

    Hey Darryl, thanks for writing in…

    The point that I’m trying to make here is that in Japan the iPhone is just another handset — oh, and also AppleInsider sucks.

    Reply
  3. rattyuk, on August 12th, 2008 at 1:42 PM Said:

    “just like the owner of the only iPhone I actually saw in the wild when I was in Japan last month, doesn’t give you any kind of bias on such matters?”

    So that would be before it was launched in Japan then?

    Reply
  4. AC, on August 12th, 2008 at 1:44 PM Said:

    Hey John — I mean “rattyuk”…

    The iPhone was launched in Japan on July 11th. I was there from July 21st to the 28th. See how that works?

    Reply
  5. Roy, on August 12th, 2008 at 2:19 PM Said:

    This article on yesterday’s Nikkei might interest you. Copy & Pasted:

    iPhone Boom Begins To Sputter, Fails To Revitalize Handset Market

    TOKYO (Nikkei)–The iPhone 3G, the latest mobile-phone handset from Apple Inc. of the U.S., has already begun to show signs of a sales slowdown, one month after its debut, with the once hard-to-come-by item readily available at a number of stores nationwide.

    “You can buy an iPhone right away” — clerks at shops in the Tokyo metropolitan area have started telling customers since the beginning of this month. The state-of-the-art gadget ran out of stock immediately after the July 11 release, but entering the third week, demand has slowed considerably. “Those who want to get an iPhone as soon as possible might have already gotten one,” said an executive of a sales company.

    In fact, the slowing is clearly evident on the sales front. “The 16 gigabyte model is still in short supply, but there is plenty of stock of the 8GB version,” said an official at a mass electronics retailer in Tokyo.

    “The number of iPhones available at shops is particularly notable in regional areas,” said an executive at a sales company.

    Sales of iPhone start tumbling at sales outlets, as Masayoshi Son, president of Softbank Corp. said, “It became clear a month after the release that customers we attracted with these models were mainly avid users.”

    Data compiled by a research firm showed that as of July 11 — the first day of release — the two models of iPhone had a combined market share of 41% on a sales volume basis. Although it has become more difficult to obtain accurate data because the products went out of stock, the average market share per week between July 11 and Aug. 3 stood at about 6.5%, according to one estimate. Shipments of iPhones are not disclosed by Softbank Mobile Corp., the only seller of the mobile phones in Japan, but are said to be more than 100,000 units for the first month. Apparently, the much-touted handsets are losing momentum quickly, given that there was once a bullish forecast that sales might top 1 million units in the first six months.

    “Sales of the iPhone 3G started out really well,” said Masayoshi Son, president of Softbank Corp. (9984), when he reported the firm’s earnings for the April-June period on Aug. 5. “But it became clear a month after the release that customers we attracted with these models were mainly avid users.”

    As a result of the sales slowdown, Softbank Mobile decided to overhaul its pricing system, starting from August 1. The data communications fee, which was initially set at 5,985 yen per month across the board for iPhone 3G users, is now charged based on the volume of data transferred. The company has lowered the monthly minium for a comprehensive service package, including a packet transmission fee, from 7,280 yen to 2,990 yen, in a bid to attract those who have been shy away from iPhones, because of the high user fees, such as housewives and young customers. However, if the number of packet — a formatted block of data in packet mode communication — goes over 71,250, the service will cost as much as before.

    Considering the fact that a number of iPhone purchasers use mainly data communications functions, “Softbank might be trying to lure new customers by the major markdown in minimum service charges, which may turn out to be not so cheap as it looks,” said industry insiders.

    In July, Softbank Mobile had 52,000 subscribers converted from other carriers using the number portability system, thanks to the launch of iPhones 3G models. But according to data compiled by Telecommunications Carriers Association, the number of cell phone contracts totaled roughly 104 million as of July 31, about the same as the previous year. The two readings indicate that the iPhones had made little contribution to expanding the mobile phone market, although they did help Softbank Mobile take customers from rivals.

    Installment payments hit sales

    A change in the pricing system of handsets by major mobile carriers — introducing monthly installment payments while reducing subsidies for sales companies to lower the prices — has been dampening replacement demand among cell phone users. That is because a growing number of users are tending to stick with their handsets longer, for at least two years under contracts for the new installment payment system (if they want to stay eligible for monthly discounts for their purchases). In June, KDDI Corp. (9433) introduced the system, following the lead of Softbank Mobile and NTT DoCoMo Inc. (9437).

    MM Research Institute, a Tokyo-based research firm, estimated that the cycle of replacement demand would lengthen to 34.7 months in fiscal 2010 from 26.8 months in fiscal 2007 due to installment payments, among other factors. Although the earnings environment has improved by decreased subsidies for sales companies, the top three firms saw sales of new mobile phones tumble by about 20% each in the April-June quarter on the year. If handset sales continue declining, that will deeply cut into their bottom lines.

    Average revenue per user, or ARPU, at Softbank Mobile was 4,180 yen, far below rivals — 5,890 yen at NTT DoCoMo and 5,900 yen at KDDI’s au service — primarily because it introduced the lower-priced charging system earlier than its rivals and also it lagged in third-generation telecommunications service.

    Mobile phones featuring data communications capabilities, such as iPhones, will likely be the lifeline of mobile telecom carriers. The X series lines from Softbank Mobile are another example of such advanced models, which have the same keyboard configuration as that for a personal computer.

    On Aug. 1, NTT DoCoMo started selling the BlackBerry from Canada’s Research in Motion Ltd., a smart phone widely popular among businesspeople in North America and Europe, online to individual customers in a bid to compete with Softbank’s iPhones. The release of the gadget is also aimed at earning data communications fees.

    – Translated from an article written by Nikkei staff writer Yosuke Suzuki

    (The Nikkei Marketing Journal Monday edition)

    Reply
  6. AC, on August 12th, 2008 at 3:14 PM Said:

    Ah, the cavalry has arrived… Thanks, Roy!

    More comments to come, folks — once I attend to the myriad spelling errors and death threats ;)

    Reply
  7. Blad_Rnr, on August 12th, 2008 at 3:15 PM Said:

    “The iPhone was launched in Japan on July 11th. I was there from July 21st to the 28th. See how that works?”

    Wow! Love the way you treat people who visit your site while deriding “zombie Mac fanboys.” Makes me want to more often…not.

    Reply
  8. AC, on August 12th, 2008 at 5:24 PM Said:

    Makes you want to more often…not what?

    Sentences still have verbs, don’t they?

    Reply
  9. Greg, on August 12th, 2008 at 5:25 PM Said:

    Well I would like to add just because you did not see lots of people using the iPhone in Japan does not mean that it’s not good or bad. Japan is not some little hick town in the USA. I have visited Japan myself and I could not tell you even what was the most popular phone when I was there as there are so many choices in Japan for cell phones.

    Reply
  10. AC, on August 12th, 2008 at 5:29 PM Said:

    Thanks for your comment, Greg.

    Once again I will state that the purpose of this post is to call out to poor reporting of AppleInsider. Whether the iPhone is good or bad is another matter entirely.

    P.S. You can read about my failed expectations for the 2nd-gen iPhone right here.

    P.P.S. Roy has found us a link for the top ten Japanese handsets sold in the last week of July. iPhone is at #6.

    Reply
  11. rattyuk, on August 12th, 2008 at 5:31 PM Said:

    Hey Andrew,

    Yes I see how that works… Just coz you didn’t see any doesn’t mean no ones buying… I don’t live in Japan and don’t visit Japan. Bully for you that you didn’t spot any and you confirmed your thoughts coz you went there and like you used your eyes and everything… Wow man that is just so clever of you. Figures will be in soon and stuff will be confirmed… Keep shilling for the other side and keep feeling happy about yourself.

    Oh and btw “John” yes how clever of you to look at my email. absolutely stunning detective work there. Right up to scratch with the rest of your amazing analysis.

    Reply
  12. AC, on August 12th, 2008 at 5:39 PM Said:

    Great to see that I’ve brought you around!

    I’m not sure what you mean when you say “the other side”, though — do you mean “the side of accurate reporting and due diligence”?

    Also, it would seem that the figures are in fact in — see Roy’s comment above, although in fairness I should point out to everybody that it hadn’t been made public when John posted this comment.

    More to come…

    Reply
  13. Hari Seldon, on August 12th, 2008 at 5:40 PM Said:

    You say that the reported early success of iPhone in Japan has been “greatly exaggerated” but you don’t really give us any information. I don’t mean to be rude but your article reads like an anti Apple rant, “zombie Mac fanboys”?

    Reply
  14. Steve, on August 12th, 2008 at 5:41 PM Said:

    AC, how do we know that you are not lying?

    Reply
  15. AC, on August 12th, 2008 at 5:49 PM Said:

    These are both excellent questions, given the level of discourse that is rapidly unfolding here.

    Okay, so the big words that are underlined are actually called links; you can click on them with your mouse and through the magic that is the internet be spirited away to a completely different site with pertinent information that corroborates my claims.

    Now those are some pretty big words I’ve just used so feel free to practice by clicking on them…

    Reply
  16. rattyuk, on August 12th, 2008 at 5:50 PM Said:

    I suspected the Nikkei article might appear here. So as usual you get a news item and then a few well-placed blogs predicting the same news but with spin and there you have it. Classic Astroturfing. Your on site visit Andrew was obviously well researched. You win. The iPhone is over. Grats.

    Reply
  17. AC, on August 12th, 2008 at 6:10 PM Said:

    I win? Sweet! What’s my prize?

    Unfortunately I must point some faulty assumptions in this latest comment of yours — specifically…

    1. That the AppleInsider piece is “news”.
    2. That Japan’s major business newspaper would be more prone to “spin” than a poorly-researched half-assed attempt at what is ultimately Apple fan fiction.

    I certainly hope you’re as active on AI’s comments board as you are here!

    Reply
  18. rattyuk, on August 12th, 2008 at 8:17 PM Said:

    Hi Andrew,

    A couple of things on your latest post. Firstly I think Apple are going to arrange for you to win an iPhone. But as a Nokia fan I suspect you would pass.

    I wasn’t commenting on the Apple insider piece at all rather than the Nikkei piece but hey.

    And I would suspect that Nikkei is just as capable of spin as the UK press are. BBC are very negative on Apple – but that is because the senior tech staff came in from Microsoft and of course Apple are not a UK company. The UK’s Financial Times often do kill pieces on Apple because it doesn’t fit in with their outlook on how companies work.

    You might have to do research on this but I don’t think I’ve ever contributed to Apple Insider’s boards in any way shape or form. I could be wrong on that as I have slept since then.

    I’m really not objecting to what you think but just that you are reporting your opinion as fact. Please don’t misunderstand me – you have said that when you were in Japan this is what you saw. Fair enough. That is what you saw. It may not be the whole truth.

    The Nikkei reporting is fine and as I said it could be true BUT we don’t know who is in bed with who in terms of Japan media. For example, Nikkei could actually be part of a media conglomerate that isn’t tied in with Softbank, maybe say DotCoMo, in which case reporting like the article above could not be trusted as they would have more to gain by spinning the news.

    All I am saying is that “iPhone in Japan: the real story” is actually YOUR opinion of what is going on – I am happy that you think that but please let’s actually see what is happening, say in 3 months time when the early adopters show their spoils to their friends rather than claiming victory within 30 days.

    John

    Reply
  19. AC, on August 12th, 2008 at 9:01 PM Said:

    So just to confirm then, you take AppleInsider’s cited sources of “a user” and “some guy” over respected wireless journalists, local media and the press releases of a publicly-traded company?

    Sorry buddy, afraid I can’t help you with that…

    Reply
  20. Ed "Haiku" Miller, on August 12th, 2008 at 9:05 PM Said:

    A Haiku

    Mac troll online;
    Infuriated he types
    And forgets grammar.

    (with apologies to real poets)

    Reply
  21. ElectricMonk, on August 13th, 2008 at 3:16 AM Said:

    Missing 1seg is understandable, given that it’s a relatively big & power-hungry chip, but missing QR codes[1] & Osaifu-Keitai (mobile wallet) is unacceptable.

    That said, add those in and the iPhone is a heck of a lot better than almost all Japanese handsets given their consistently poor UI.

    [1] Technically the iPhone can do QR codes with the free Barcode app but it’s not as well integrated as Japanese mobiles.

    Reply
  22. AC, on August 13th, 2008 at 4:18 AM Said:

    Can it translate or at least decode Japanese characters? That would be pretty cool, actually — and something that the barcode-reading app on my Nokia can’t currently do.

    BTW, that mobile wallet stuff is nothing short of amazing! I can only hope that it’s made available here in Canada some day…

    Reply
  23. Constable Odo, on August 13th, 2008 at 8:55 AM Said:

    One month is not enough to draw any conclusions as to whether the iPhone will become popular in Japan or not. A six month span would give a clearer indication. It may take some word of mouth, greater advertising and showing the iPhone around a bit. So right now the iPhone is not selling so well in Japan. It was always speculated upon that the iPhone would be a sales disaster in Japan.

    What puzzles me is that a businessman such as the one who runs SoftBank would just throw money away if he didn’t think the iPhone had sales potential. Maybe he was taking a longshot gamble? The dude is Japanese and I’m sure he must have had a committee to help make the decision to promote the iPhone. In time we’ll see if the Japanese handset user can be made to “think different.”

    Although the iPhone doesn’t have a FeliCa chip in it which would stop it from being a wallet phone, it should still be able to read QR codes if someone is willing to design that software for the iPhone. Possibly SoftBank could give Apple some help on such a project.

    Reply
  24. AC, on August 13th, 2008 at 9:10 AM Said:

    “The dude is Japanese…”

    Really, ya think? ;)

    Reply
  25. TS, on August 13th, 2008 at 9:13 AM Said:

    Though I live in Tokyo and commute on the subway daily (where every third person is texting on their cell phones) I have yet to see an iPhone in the wild. But I have no info about sales….

    However, I expect the iPhone to flop. I went to a shop to try one out. The UI is wonderful. English text input is snappy. HOWEVER, when switching to Japanese input the thing slows to a crawl. It is so slow (est. 10 secs for a character to show up!!) that it is absolutely unusable for text input. Wondered if that unit was a fluke, but a quick search on the Japanese language internet reveals lots of frustration with Japanese input.

    What good is a smartphone that you can’t input text on!?

    Reply
  26. AC, on August 13th, 2008 at 10:15 AM Said:

    Hey TS,

    I was fortunate enough to get a demo of the Japanese text input functionality on the iPhone, and thought it was a pretty innovative idea, at least (and kind of hard to explain here).

    So in practice not so good, huh?

    Reply
  27. Andrew Sheppard, on August 13th, 2008 at 11:14 AM Said:

    Andrew,

    I live in Japan, and I have not yet seen a single 3G iPhone in the only place that concerns me, my own hands. The reason is that SoftBank is swamped by demand for the iPhone. My friends who work at SoftBank suggest I come back in September.

    Cheers, Andrew

    Reply
  28. Roy, on August 14th, 2008 at 6:13 AM Said:

    There’s already a couple QR Code reader Apps available for the iPhone. But the camera on the iPhone doesn’t have macro capabilities so unless the barcode is more than 5cms in width & height it pretty much won’t work. I’ve tried it.

    The Kana input keyboard on iPhone is great when it works well which is almost never. I have to restart the iPhone constantly if I want to type Japanese. The QWERTY Japanese keyboard is not as bad. The problem seems to be with the word prediction function which slows down the application. This is being discussed alot on the Japanese Internet and unless Apple does something to fix it I don’t really see any Japanese people will want to buy an iPhone.

    Reply
  29. TS, on August 14th, 2008 at 9:17 AM Said:

    AC,

    Yes, I’d seen the demo of the Japanese text input and it was classic Apple — re-thinking a problematic user interface and taking a fresh, new approach. I was really looking forward to using it. But in actual practice, both the new input UI, as well as the traditional keyboard style, are so slow as to be useless.

    I was reading the forums on kakaku.com, IRC, and the general consensus seems to be that it is unusable, and folk are resigned to waiting for a software upgrade.

    timeout

    Okay, before sending this I decided to check the forums again. Owners seem to be finding ways to speed up Japanese input, and the recent update seems to have helped a bit. General feel seems to be “still slow, but improving.”

    There are over 7,000 comments on the forum, so lots of users. Only 71 people have rated the phone, and the rating is 3.8 out of 5.

    Overall, in my reading through several pages of comments, positives outweigh negatives — soooo, maybe the iPhone will be “big in Japan” after all??

    Reply
  31. embesunrang9999, on April 4th, 2009 at 2:12 AM Said:

    I think phones from western countries are unable to fight with the “local babies” of JPnese manufacturers ^^ I have a palegreen Toshiba 803T and it’s really stable

    Reply

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