WW-168 -- The Smartphone Market in Japan

J@pan Inc presents the Wireless Watch Newsletter

****OUT NOW: J@PAN INC MAGAZINE'S****
IT SPECIAL (NOV/DEC 2007)
J-SOX Software Solutions-Virtual Machines-Industry Analysis-
PLUS A New Treatment for Cancer & Travel in Okinawa
Read online at www.japaninc.com

W I R E L E S S W A T C H

Commentary on the Business of Wireless in Japan

Issue No. 168
Thursday November 15, 2007
Tokyo

How do you create a smartphone market in one of the world's most
sophisticated mobile countries?

Smartphones are on the march in Japan. Device makers, Sharp and
HTC, are behind the push of Windows-based smartphones in the
Japanese market. HTC is a Taiwanese company that started out
doing ODM and OEM for Personal Digital Assistants (PDAs) in the
nineties, before making its entry into the global smartphone
market. Since 2006, its handsets have been launched in Japan -
two on SoftBank, one on DoCoMo and two under HTC's independent
brand as SIM-lock free devices.

What actually is a smartphone? For many people in Japan, a
'smartphone' likely has the image of a slide-type large, heavy
hard-to-use handset with a QWERTY keyboard. 'A smartphone is not
defined by whether it possess a QWERTY keyboard, a ten-key, or a
touch panel, but is defined by the ability of a device to serve a
specific set of user needs,' says Jennifer Chang, President of
HTC in Japan. She has been working with SoftBank and DoCoMo to
create the smartphone market in Japan. 'More than 50% of
smartphone users are new subscribers for the carrier, and
therefore generate incremental revenue. The data ARPU from
smartphone users is between 8,500 and 10,000 yen which is higher
than that from other devices,' according to Mrs. Chang. HTC
targets the user segment of innovators and early adaptors in the
age group between 25 and 45 years old.

Some functions of HTC's global smartphone portfolio sold locally
are customized for the Japanese market. Besides Japanese language
functions and a slightly different keyboard, HTC added the
'manner mode' button to switch the phone to silent mode - very
important in Japan where making noise in public is still 'not
done.'

What are the challenges in Japan? Traditionally, Windows Mobile
is not very easy to use - you have to go through many menus to
operate the phone. Next spring, HTC will launch their Touch phone
with DoCoMo featuring a user-friendly touch panel interface
making life much easier. Another hurdle to overcome is battery
life. Several heavy users reported that batteries ran out of
power within one hour when using Skype or instant messaging. HTC
also needs to educate the market about smartphone benefits. 'It
is rather easy to educate the carrier and end-user, but our
biggest challenge is to convince the distribution and retail
channels,' according to Mrs. Chang.

Will content, application and service providers be interested in
tailoring their products for smartphones with a small market
share? Carriers could help by making their billing interface
available for third parties like they did with their mobile
portals. Security concerns and very limited control over the
Windows Mobile platform will make Japanese carriers reluctant to
do this, thereby missing an important part of the value chain.

For 2009, HTC expects a 2-2.5% market share for smartphones in
Japan - still behind the current 9% global share but not bad for
this sophisticated market where the introduction of new devices
and technologies is largely dictated by the mobile carriers.

By Arjen Van Blokland

To comment on this newsletter please visit the website version of
the article at www.japaninc.com/ww168

WHAT DO YOU THINK OF J@PAN INC?
We invite you to take a survey and to win a bottle of
Tanqueray Number Ten gin for your troubles. Basically, we're
interested to know what readers think of J@pan Inc magazine,
since we significantly boosted readers and content at the start
of this year: http://tinyurl.com/yof8sd

++EVENTS

----------------- ICA Event - Nov 21 ---------------------

Event: Recent Trends in the IT Job Market -
Essential Insights for IT Career Management

Overview: A Round-Table Discussion with Industry Specialists
Details: Complete event details at http://www.icajapan.jp/
(RSVP Required)

Date: Wednesday, November 21, 2007
Time: 6:30 Doors open, Light buffet, beer, wine, soft drinks
provided courtesy of ISG
Cost: 3,500 yen (members), 5,500 yen (non-members)

Open to all - venue is Daynite in Otemachi
http://www6.ocn.ne.jp/~daynite/

--------Marcus Evans Events - Supported by J@pan Inc-------

Date :27th - 28th November, 2007
Venue: Hilton Tokyo Hotel

1) Creative Advertising and Media Marketing Strategy
http://www.marcusevans.com/events/CFEventinfo.asp?EventID=12919
This event features leading case studies from Fuji Xerox, KDDI
Corporation, Nissin Food Products, Kubota and Nihon Michelin
Tyre Co. There will be no future without effective advertising!

2) Quality Sourcing and Strategic Procurement
http://www.marcusevans.com/events/CFEventinfo.asp?EventID=12593
Come listen to best practices and case studies from renowned
organisations like Pioneer Corporation, Bayer Healthcare, Fujitsu
and Mastercard.

'J@pan Inc readers are entitled to a 10% discount upon
registration with Ms. Esther Wong.'

For further details and brochures, please contact:
Ms. Esther Wong
Tel No: +603 2723 6736 Fax No: +603 2723 6699
Email add: estherw@marcusevanskl.com
-----------------------------------------------------------

MIDEMNET FORUM: MUSIC BUSINESS IN THE DIGITAL AGE
26/27 January 2008 - Cannes - France - at MIDEM, the world's
music market. MidemNet Forum brings you an invaluable update
on how digital is driving the music business forward, changing it
rapidly and radically. Over 2 days of intense conference sessions
and serious networking opportunities, you will debate and engage
with more than 1,300 key international executives and play an
active role in shaping the future of the industry.

Speaking at MidemNet 2008: Janus Friis, Co-Founder, Joost, Kazaa
and Skype - Jean-Bernard Levy, CEO, Vivendi - Tero Ojanpera, EVP
& CTO, Nokia - Kevin Roberts, CEO Worldwide, Saatchi & Saatchi.
The earlier you register, the less you pay. Hurry, seats are limited!
www.midem.com

-----------------------------------------------------------
Japan's First Family Social Network is here! www.piqniq.jp

Are you raising a family in Japan? Do you speak English?
Would you like to meet other English speaking families in
your area? Piqniq is a Social Network Service tailored
specifically for you!
Our concept is "Families helping Families" and we invite
anyone that wants to meet other families, help other families,
or discuss family-related issues pertinent to life in Japan
to come and join the Piqniq today!

For more information: www.piqniq.jp

business