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DoCoMo said near deal to sell iPhones

by Kazuaki Nagata

Staff Writer

NTT DoCoMo Inc. appears set to finally join its domestic archrivals and start providing Apple Inc.’s iPhone, with the carrier reportedly prepared to market the latest version that will be unveiled next week.

Major domestic media outlets, including NHK, the Asahi Shimbun and Nihon Keizai Shimbun, all reported Friday that DoCoMo plans to begin selling the new iPhone model later this month.

In a statement, DoCoMo only said that “we have not made any decision that can be disclosed at this point.”

Despite being the only non-iPhone provider among the nation’s three major mobile phone carriers, DoCoMo has the largest share of the domestic market, with more than 60 million subscribers. However, it has been unable to stop hemorrhaging subscribers to KDDI Corp. and Softbank Corp. because they each offer the iPhone, giving them a significant competitive edge.

Securing the right to distribute the latest version of the popular smartphone may enable DoCoMo to stem this outflow.

Since Softbank in 2008 became the first Japanese carrier to market the iPhone, it has held onto the top spot in terms of net mobile subscription increases for five years in a row. KDDI, which was fading in the smartphone market, has meanwhile monopolized the No. 1 position for landing defectors from other carriers since beginning to provide the iPhone in October 2011.

While adding the iPhone to its lineup would be a major boost for DoCoMo, it would likely be a big blow to domestic handset makers, many of which had enjoyed stable market shares before the smartphone era but now find themselves struggling to keep up with the competition.

NEC Corp. announced last month its withdrawal from the smartphone sector and Panasonic Corp. is also thinking of halting production of the devices for the individual customer market.

Even though Apple only supplied the iPhone to Softbank and KDDI in fiscal 2012, it still posted the largest unit sales to grab a 25.5 percent slice of the domestic pie, according to Tokyo-based MM Research Institute.

Hiroshi Sakai, an electronics industry analyst at SMBC Friend Research Center, said the magnitude of the impact on handset producers would depend on how DoCoMo decides to market the iPhone. Apple is reportedly planning to unveil a cheaper model alongside its high-end version.

“If it is just the high-end iPhone, I think Japanese makers have probably expected that it would happen (at some point),” but they could be in bigger trouble if DoCoMo decides to also provide the cheaper model, Sakai said.

To bolster itself against its iPhone-toting rivals, DoCoMo has run special campaigns featuring selected smartphones that have reaped big returns. In the past few months, for instance, it has sold more than 1 million units of Sony Corp.’s Xperia A handset by lowering the price.

But this, apparently, has not been enough for the company to stop bleeding customers.

Adding the iPhone to its arsenal is something DoCoMo has been considering for some time. But the carrier has been unable to make up its mind because such a deal would force it to rejig its business strategy.

“The iPhone is a great phone and we’d love to add it to our lineup,” DoCoMo President Kaoru Kato said in May as the carrier unveiled its latest handset models. But it would be difficult, he added, if DoCoMo has to place significantly more promotional focus on iPhone sales over other handsets.

The company has said that Apple is likely to ask it to promote the iPhone to the point that it would account for more than half of DoCoMo’s smartphone sales. Kato said earlier that DoCoMo was looking to deal this ratio down to between 20 and 30 percent.

Another difficulty is that DoCoMo likes to heavily customize its smartphone handsets so the firm can run its own services, including for shopping, video and music. But with the iPhone, Apple runs its own service.