Tokyo:
NTT DoCoMo Inc, Japan's largest mobile provider and a pioneer of the
mobile Internet, is one of just a few holdouts among the world's big
mobile carriers not offering Apple Inc's iPhone to its 60 million
customers.
It is paying heavily for that obstinacy - with a net 3.2 million users
jumping ship to its two domestic rivals over the last 4-1/2 years - but
is determined to protect the walled garden of services it has built
around its own smartphones.
"We're trying to develop a lifestyle system," NTT DoCoMo CEO Kaoru Kato told Reuters in an interview this week.
While customers and even some executives increasingly clamour for it to
relent and sign an iPhone deal, DoCoMo is showing no signs of softening
towards Apple.
"The biggest problem is the impact on the services that we offer," Kato said.
DoCoMo's broad offering of exclusive features, however, is no longer
attracting what has become the iPhone generation. It is expected
eventually to either reach a deal with Apple or risk losing its crown at
the top of its industry.
"Unit sales are doing quite well this year but they're still losing
customers to other networks," said Hiroshi Yamashina, senior telecoms
analyst at BNP Paribas. "If that's the case then they really have no
choice but to go for the iPhone."
Japanese consumers favoured DoCoMo's mode of integrated system back
when it launched the world's first large-scale mobile web access service
and introduced streamed TV to cellphone users. But its wide array of
features - while retaining its share of fans - is not considered
sufficient to counter the appeal of the iPhone.
"Its photo service, for example, is very difficult to use and I'm not
sure anyone still bothers in the age of Instagram and Flickr," said
Yamashina.
WALLED GARDEN
DoCoMo's resistance contrasts with holdouts in other markets that are giving in this year to the demand for iPhones.
T-Mobile US Inc's CEO said its April release of the iPhone filled a "huge void" in its line-up.
China Mobile Ltd, the world's largest mobile carrier by number of
subscribers, is moving to upgrade its service with 4G technology to
allow the 10 million of its customers who already own the iPhone to
connect to its network, rather than being restricted to WiFi.
DoCoMo's stubbornness is particularly noteworthy in Japan, where the
iPhone not only has established itself as the kingpin in the smartphone
market, with a 42 percent share in the last three months of 2012, but is
fending off Samsung Electronics Co Ltd's Galaxy series, which has found
popularity in other major global markets. Samsung has 46 percent of
Western Europe's smartphone market, but has reached only one-fifth of
iPhone's sales in Japan.
DoCoMo's stance may also reflect strict contractual obligations imposed
by Apple. While negotiations between the two have been a strictly
guarded secret, Kato's predecessor made comments at a shareholder
meeting last year suggesting the U.S. company was demanding iPhones make
up half of its handset sales.
DoCoMo's requirement that its company logo be imprinted on all its
devices also conflicts with style-conscious Apple's insistence that its
products be left as manufactured.
For now, DoCoMo hopes to retain customers with smartphones running
Google Inc's more flexible Android operating system. Its marketing
efforts this summer are focused on Sony Corp's Xperia A and Samsung
Electronics' Galaxy S4.
DoCoMo has moved 830,000 Xperia A handsets since their mid-May launch,
already close to its target of 1 million by autumn, but the S4 is
lagging with less than half of Xperia's total.
But DoCoMo is still haemorrhaging customers to its rivals, with monthly
data on Friday showing a net loss of 146,900 existing users to other
carriers in June, the 53rd consecutive month of such losses.
But with DoCoMo's total subscriber numbers up 630,000 in the first six
months, as it gets a lift from overall smartphone demand even without
the iPhone, and with its profits strong, it may opt for a waiting game
with Apple.
There are no signs the iPhone's popularity might soon wane in Japan,
while the breadth and reliability of DoCoMo's network could be a selling
point.
"At some point, SoftBank and KDDI will reach a saturation point for
iPhone sales," said an executive at a rival mobile carrier. "Apple may
have no choice but to look to DoCoMo to sell more iPhones. Perhaps
DoCoMo is just waiting."