The Japanese mobile industry is unique, with its own handset requirements, spectrum and even 3G platforms, so there has been little crossover with the rest of the world. Now, as its market saturates, its carriers and phonemakers are looking for new opportunities in less crowded territories.
The operators, particularly leader NTT DoCoMo, are forming alliances with fellow carriers in countries like India, while Softbank is working with the powerful Vodafone-Verizon-China Mobile triumvirate on 3G and LTE software. Now DoCoMo has also formed a new mobile phone partnership with Spain's Telefónica, which could increase the buying power of both firms and open new channels for the Japanese manufacturers.
The Japanese cellcos, especially DoCoMo, work more closely with their suppliers than any other operators, and expect a high degree of control over handset hardware and software design (which they also co-fund). This has led to a situation where Japan's phonemakers dominate their home market, which the likes of Nokia and Apple have found hard to penetrate (Nokia recently pulled out, apart from its luxury Vertu range); but because they are working to such specific requirements, the Japanese firms also find it hard to sell abroad. There has been a wave of consolidation, and now the leaders, such as Sharp and Toshiba, are seeking new routes to market.
DoCoMo itself may come to their aid, in the interests of its own new alliance with Telefónica, which could provide a counterweight to the Vodafone consortium. Telefónica is dominant in Spain, Latin America and, through O2, the UK and Ireland, and has various other European activities.
As well as Japan, DoCoMo has deepening ties with several south east Asian economies and with India. The first concrete move in their new pact is a joint launch of a Windows Mobile handset from Japan's Toshiba, which will be introduced simultaneously in Japan and Spain next month, and then in other markets.
The product is a full touch-panel design which will be branded TG01 by Telefónica and Pro Series T-01A by DoCoMo. Broader cooperation should follow, particularly in the area of collaboration on services and applications for web-enabled, open OS devices.
DoCoMo's senior VP and product managing director Kiyohito Nagata said in a statement: "DoCoMo looks forward to working with global operators such as Telefónica to jointly develop mobile services and applications for mutually enhanced global competitiveness. At the same time, we would be pleased if such efforts have the added effect of supporting Japanese mobile phone manufacturers in their attempts to expand handset sales overseas."
Other Japanese phonemakers are also looking for new openings. Sharp is particularly interested in Latin America, and so may hope to leverage the new closeness of Telefónica and Sharp's biggest phone customer, DoCoMo. It says it will soon launch a product in Brazil, which would be the first Japanese phone available in Latin America and would probably feature mobile TV.
The company has already launched several models in China, also seen as a major opportunity for Japanese manufacturers because its new 3G networks are wide open in terms of handsets, with no brands entrenched as yet. Panasonic is also considering a return to international markets, after pulling out of overseas sales in 2005 because of the difficulty of competing against larger players like Nokia. Despite support from DoCoMo, Toshiba plans to stop manufacturing in Japan and move these activities abroad.
Japanese operators have led a trend that shows some signs of spreading to Europe – lengthening handset replacement cycles in order to reduce expenditure on subsidies, either through incentives to delay upgrades (a tactic already used in the UK by O2), or with an instalment sales system now gaining ground in Japan. This has encouraged users to hold onto their phones for longer, and handset unit shipments in the country plummeted by 30% in the year ended March 2009, to 34.64m. Sharp saw its handset sales fall by almost 35% in the same period, to 9.92m units.