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How will iPhone 3GS fare in Japan?

by Kazuaki Nagata

Apple Inc.’s iPhone 3GS, the newest in the iPhone series, will debut on June 26, plunging into Japan’s cell-phone market, where competition is getting more intense as phone carriers release impressive summer 2009 lineups.

For example, Taiwanese electronics maker HTC Co. is providing a phone from NTT DoCoMo Inc., powered by Google Inc.’s software platform Android, while KDDI Corp. is introducing a phone that can shoot video in high-definition quality.

Considering a variety of choices, some consumers, including existing iPhone 3G users, are probably wondering if the iPhone 3GS, which will be in a Softbank Corp. lineup, would be a worthwhile upgrade.

People have different uses and needs for their cell phones, so it is natural that answers vary. Yet as that the handset’s changes are not so drastic, upgrading may not be attractive for existing iPhone users.

Looking at the design of the phone, there is hardly any change. But many improvements have been made inside the device.

As the iPhone 3 GS’s “S” stands for “speed,” the new models come with a faster processor than the previous model. For instance, it starts up its SMS program 2.1 times faster.

The camera function is also improved, upgraded from two megapixels to three with an auto-focus support, although it still can’t help looking pale compared to other Japanese phone cameras, some of which have 10 megapixels. The 3GS can also shoot video.

In addition, the phone has voice recognition control, allowing users to call friends simply by saying his or her name to the phone, music can also be played using the same method.

The phone is operated with iPhone OS 3.0, which has more than 100 new functions in comparison to its predecessor. One key new function allows for text to be cut and pasted, which many iPhone users were craving.

The existing iPhone users can upgrade their OS to the 3.0 for free.

As for the cost, the 16 gigabyte model is priced at ¥11,520, and the 32 GB is ¥23,040, on a special campaign offer, while it retails at ¥23,040 (16 GB) and ¥34,560 (32GB) for those wanting the phone out of contract.

The debut of iPhone 3G was widely reported in the media and drew a frenzy from consumers. But many observers agree that the iPhone sales have not been as good as expected.

Apple and Softbank have not disclosed the number of iPhone 3G’s unit sales

Hiroshi Sakai, chief analyst at SMBC Friend Research Center, said the new iPhone probably wouldn’t draw an explosive demand, although the sales can be swayed by how strongly Softbank promotes the product.

Sakai said a tendency has been seen in the past where iPod users have upgraded each time a new model comes out. “But cell phone users have to think about the communication fee and contract, so the improvement of the handset’s quality just itself may not necessarily urge them to buy the new one,” he said.

Sakai also pointed that the smart-phone market in Japan has got more competitive in comparison to when the iPhone 3G debuted last year.

“There have been more of smart phones that users can operate intuitively, so the competition has become tougher,” he said.

In the meantime, Sakai said the iPhone will gradually increase its customer base.

“I think it is true that iPhone has improved. My impression is that it will gain a wide range of users over time, not only technology enthusiasts.”