Softbank to focus on small businesses to beat DoCoMo, KDDI

by Masaki Kondo and Yoshinori Eki

Bloomberg

Softbank Corp. expects to gain market share from NTT DoCoMo Inc. and KDDI Corp. by focusing on small businesses.

The nation’s third-biggest mobile phone company slashed fees in January to ¥980 a month, the cheapest in Japan, and offered unlimited calls to spur user growth. New corporate subscribers tripled to 220,000 in the first quarter to June 30, Softbank said.

“Japan’s mobile market for business users isn’t saturated yet,” Katsuichi Tomita, senior executive vice president of wireless unit Softbank Mobile, said in an interview last month. “We are reinforcing our effort to attract corporate clients.”

Softbank, set up in 1981 as a software distributor, sells four so-called smart phones that allow users to read business documents and surf the Web. While Softbank aims to increase its 17 percent share of the $77 billion mobile market, it faces competition from leader DoCoMo, which offers discounted plans for corporate users, and Research in Motion’s BlackBerry device.

The small-business market makes up the bulk of all companies. Japan had 5.72 million offices in 2006, according to government estimates. Offices with fewer than 10 employees accounted for 80 percent of the total, compared with 0.2 percent for those with more than 299 workers, the bureau said.

“Markets for small businesses, especially for very small ones, are much bigger than those for medium-size and large,” said the 63-year-old Tomita, who heads the marketing effort at Softbank Mobile. He declined to provide a forecast for market share.

Softbank, which gets 59 percent of sales from the mobile unit, also has a land-line division that sets up computer networks and provides fixed-line telephone connections for business clients.

DoCoMo, which posted a second straight decline in annual net income, sees growth in the market for business customers, Chief Executive Officer Masao Nakamura said July 27. The Tokyo-based company had 52.9 million subscribers as of July 31, 10 percent of which were corporate users.

“We’ll focus on gaining corporate customers, as I don’t think 10 percent is a maximum,” Nakamura said. DoCoMo counts Texas Instruments Inc. as a customer.

Softbank added 532,000 users in the three months that ended June 30, helped by the ¥980 White Plan, which allows unlimited calls among subscribers from 1 a.m. to 9 p.m.

The quarterly increase exceeded gains at DoCoMo and KDDI for the first time since Softbank bought Vodafone Group PLC’s Japan unit in April last year for almost $16 billion.

The price plan caused Softbank’s average monthly revenue per mobile user to fall 4 percent to ¥5,000 during the quarter, from three months earlier. Average customer spending at DoCoMo was ¥6,560 and ¥6,430 at KDDI.

“Mobile phones will become essential weapons for business,” said Tomita, who headed a subsidiary of Japan’s largest personal-computer maker, NEC Corp., before joining Softbank in July 2006. “We are getting customers first and will sell software and systems later that allow information to be exchanged on handsets” to increase customer spending, he said.