By V. Phani Kumar
The rising popularity of smartphones in Japan is likely to
transform the mobile-phone industry there, helping service provider
Softbank Corp. and handset-parts makers at the cost of local
companies whose offerings revolve around the home-grown "i-mode"
mobile Internet service.
The launch of smartphones, such as Apple Inc.'s (AAPL) iPhone
and Google Inc.'s (GOOG) Android phones, will encourage a
transition from high-end mobile phones to smart phones over the
next two years, and may "mark the start of the end for i-mode era,"
say analysts at Deutsche Bank.
I-mode is a wireless technology, developed by Japan's largest
mobile service provider NTT DoCoMo Inc., which allows user to
access Internet services on their handsets.
Deutsche Bank analysts said that the Japanese mobile phones are
currently largely produced and sold in Japan, but that smartphones
are leading a change there, with service providers aggressively
luring subscribers from rival companies through smartphone
promotions.
"The emergence at last of a successful overseas handset in Japan
will have an impact beyond a smaller market share for Japanese
handset makers," Deutsche analysts led by Yoshio Ando wrote in a
recent note, referring to the iPhone's growing popularity in
Japan.
Among Japanese mobile service providers, Softbank currently
offers the iPhone, with rivals NTT DoCoMo and KDDI Corp. reportedly
planning to offer smartphone-based services in coming months.
Although penetration rate for smartphones is only estimated to
be about 3%, "smart phones are pivotal due to the potential they
hold for the high-end mobile-phone sector," Deutsche Bank said.
The brokerage named Softbank as the "carrier with the best
prospects." They also listed parts makers such as Toshiba Corp.
(TOSYY) and Disco Corp. , which make flash-memory parts, as having
"the best outlook for Japanese shares, as they stand to reap
greater sales."
At the same time, the emergence of smartphones is likely to
shrink the market for Japanese handsets, with new models offered by
Korean and Taiwanese manufacturers expected to intensify price
competition further.
"The only alternative is for manufacturers to remain viable by
continuing to merge with the aim of generating survivor benefits,"
said Deutsche Bank analysts.
"The largest grouping, the NEC/Casio/Hitachi combination, has
shown no intention of adopting Android. We believe this reveals
insufficient desire to enter overseas markets," Deutsche Bank said,
referring to Casio Computer Co. (CSIOF), Hitachi Ltd. (HIT), and
NEC Corp. (NIPNF), which merged their handset businesses last
year.
On the other hand, electronics major Fujitsu has committed
itself to a mobile operating system, "which has achieved limited
traction beyond Japan. This leaves it inadequately placed to
develop internationally," they said, referring to Fujitsu Ltd.
(FJTSF).
In Thursday's trading, shares of Softbank slipped 1.2%, NTT
DoCoMo (DCM) gave up 0.8%, and KDDI (9433.TO) added 0.5%. Toshiba
Corp. lost 1.1%, and Disco slid 1.8%.
The moves came amid broad-market weakness, with the Nikkei 225
Average sliding 0.9% to 10,106.59. Elsewhere, Australia's
S&P/ASX 200 fell 1%, Hong Kong's Hang Seng dropped 0.8%,
China's Shanghai Composite rose 1%, and India's Sensex declined
0.3%.