Foreign handset makers’ goal in Japan

Japan's leadership in launching 3G networks provides an opportunity for foreign handset makers to enter Japan's phone market, once being locked because of the proprietary 2G standard used by local mobile operators.

While Japanese carriers can cut costs by encouraging the import of handsets from abroad, the benefits for foreign manufacturers remain unclear.

Japanese market is saturated with a little opportunity for growth. The majority of handset sales is generated by replacement purchases of advanced handsets. Japanese consumers are tech savvy and spoilt by local vendors who offer attractive high-quality handsets.

Foreign manufacturers must present strong reasons to make Japanese users switch from local brands to international ones. So far, this attempt was not very successful. According to Financial Times (Jan.3, 2006), DoCoMo has managed to sell only about 20,000 out of 200,000 3G phones it procured from Motorola.

Perhaps, the main benefit foreign makers can get from their Japan quest is to learn from a joint development with domestic carriers. Working to meet the requirements set by Japanese carriers will provide manufacturers with the knowledge and skills they can use making handsets for other than Japan markets. Among the manufacturers who have expressed an interest in Japan's market are Nokia, Motorola, Korea's LG, Samsung and Pantech. The ones who should be worried are domestic handset makers who cannot match the economies of scale of large global manufacturers.

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