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DoCoMo to market iPhone to win back Softbank clients

Carrier gives in, drops defense of online store

Bloomberg

NTT DoCoMo Inc. has agreed to start selling Apple Inc.’s latest iPhones in an effort to halt the erosion of its market share by its smaller rivals.

The two new models for DoCoMo’s network — a cheaper version in bright colors and an updated high-end device — will go on sale Sept. 20, the nation’s largest mobile carrier said in a statement.

Apple unveiled the 5C and top-of-the-line 5S iPhones at an event at its Cupertino, California, headquarters Tuesday.

DoCoMo had resisted the lure of the iPhone to focus on selling handsets by Sony Corp. and Samsung Electronics Co. to protect its online store, dmarket, from competing with iTunes, a policy that’s driven customers to rival wireless carriers.

DoCoMo’s domestic share of mobile users slumped to 46 percent in August, compared with 52 percent in 2008, as first Softbank Corp. and then KDDI Corp. got customers to defect by offering Apple’s handsets.

“The cause of cancellation for DoCoMo’s phones has been the lack of iPhone (provision), and this (move) will prevent customers from moving,” said Yusuke Tsunoda, an analyst at Tokai Tokyo Securities Co. “As all three (carriers) will have the iPhone, they will compete on price, sales method and network.”

Apple accounted for 36.1 percent of Japanese smartphone shipments in the latest quarter, compared with 20.6 percent for Sony and 13.9 percent for Sharp Corp., according to research firm IDC.

Adding a wireless provider controlling the largest share of Japan’s mobile phone market is critical for Apple as sales and profit growth slow and it seeks new customers for its handsets. The company plans to open a store in Tokyo’s upscale Omotesando shopping district as early as March, its first outlet in the city since 2005, a source familiar with the plans said last month.

DoCoMo has been adding fewer subscribers than KDDI and Softbank, partly because it doesn’t offer the iPhone. DoCoMo added 43,000 users in August, compared with 209,200 at KDDI and 250,300 for Softbank, according to the Telecommunications Carriers Association.

Adding the iPhone to DoCoMo’s lineup could curb growth at Softbank, Satoru Kikuchi, an analyst at SMBC, said in a Sept. 4 report. Japan’s third-ranked carrier, led by billionaire Masayoshi Son, has used the iPhone to revive its business, and this year completed a $21.6 billion deal to take control of Sprint Corp. in the U.S.

“It’s negative for Softbank, as the image that Softbank’s network is weak still remains,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “Softbank has improved its sales and profit dramatically thanks to iPhone.”

DoCoMo Chief Financial Officer Kazuto Tsubouchi said in an interview last month that the carrier was reducing the number of phone models in its stores by up to half, as it focused on promotions of Sony and Samsung handsets.

Tsubouchi said at the time that DoCoMo would consider offering the iPhone if it could limit the smartphone’s share of total sales to less than 30 percent.

  • Far East

    It is not about selling the iPhone that will save DoCoMo it is about the capacity to adapt to the underlying change stigmatized by the introduction of the iPhone 6 years ago. It underpinned a shift in consumer behavior and expectations to integrated service. DoCoMo must first change its corporate culture to empower itself to adapt to the change, or will face downfall.

    • Mike Wyckoff

      A lot of the market share was lost to Softbank’s unlimited talk plans among softbank users which really started a snowball effect where whole families and groups of friends started switching.

  • Mike Wyckoff

    The main reason I originally switched from AU to Softbank was that Softbank was the only provider carrying smartphones 4 years ago.

    Also, perhaps not many people have heard but DOCOMO was supposed to enter the iphone game 3 years ago with the iphone 4, but their insistance that the phones be customized with DOCOMO only functions (ID, IMODE ect…) was met rather harshly by Apple and talks broke off. This time, I believe they’ve bit the bullet and accepted Apples’s terms that ALL iphones are equal.