Apple's iPhone in Japan: Where's DoCoMo?

So what happened to Apple's iPhone talks in Japan? It was thought that Apple ( NSDQ: AAPL) would go with NTT DoCoMo ( NYSE: DCM), the country's largest carrier with its 53.5 million subscribers. Instead they struck a deal with its smallest, but perhaps most aggressive operator, Softbank, which counts 18.8 million customers.

But a Businessweek feature looking at Apple's options in Japan notes that the Softbank deal is most likely not an exclusive one. There was no mention in Softbank's terse iPhone announcement, though this is usually the sort of news that operators like to crow about. Most likely, Apple is using the Softbank deal to put pressure on DoCoMo, which in the past has openly balked at the revenue sharing deal?said to be as high as a 30 percent cut of airtime revenues?that operators must submit to in order to carry the iPhone.

Moreover, while DoCoMo, the former incumbent, has long been accustomed to dominating Japan's mobile market, they've been locked in a fierce price war with Softbank and number two carrier KDDI, which have begun to make inroads into its market share. For the first time in twelve years that the Japanese telecoms regulator has been keeping records, DoCoMo's slice of the market has dipped below 50 percent?at 49.7 percent to be exact. As the article notes, DoCoMo may be in danger of losing more customers to Softbank over the deal.

But perhaps it's a risk DoCoMo may be willing to take. If it cuts this deal with Apple, there's a fear that other handset makers will request similar ones (though isn't this a fear for Softbank as well?) Plus, there's the notion that the iPhone just might not be a mega hit in a market where mobile phones are already packed with some of the most sophisticated features in the world, such as the ability to record TV shows for later use, bar code readers, commuter passes as well as high speed access to the mobile web.

Still, since Softbank's announcement, DoCoMo has reportedly been "unhappy" that its smaller rival beat it to the deal, according to AP. Reuters reports that DoCoMo spokesman Shuichiro Ichikoshi said the company "has not heard back from Apple after talks to sell iPhones."

Meanwhile, one analyst believes that if Softbank is the only carrier, the iPhone will 200,000 to 300,000, 500,000 "tops." Tokyo-based UBS managing director and telecoms analyst Makio Inui said, "It's not going to move the needle in this market." Softbank CEO Masayoshi Son apparently has his own doubts about the phone as well, and is said to be "skeptical" about its ability to bring in the Japanese subscribers. Number two carrier KDDI, meanwhile, said it was not interested in offering the iPhone as its customers tend to skew younger, and as such already have music phones.

Related

iPhone Roundup: KPN Calls iPhone Useless; DoCoMo Difficulties; Apple Third In Global Market Apple Talking To Japan's NTT DoCoMo And Softbank What If The iPhone Weren't A Slam Dunk In Japan?

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