Nokia has announced plans to cease selling its mobile phones and other devices in Japan, bringing to an end the company’s decades-long struggle to supplant indigenous rivals such as Sharp, Panasonic, NEC, Fujitsu and Toshiba. [It currently enjoys a market share of less than 1%.]
Already feeling the effects of the slowdown in growth in the global handset market, Nokia is seeking to save costs where it can and, with new marketing practices leading to rising handset costs and falling sales in Japan, the Finland-based company concludes that ‘the continuation of… investment in Japan-specific localised products is no longer sustainable’.
Nokia may also be wary of remaining in a market where principal network operators – such as NTT DoCoMo, KDDI and SOFTBANK Mobile - are increasingly forging closer relationships with local handset producers and, rumour has it, may be developing high-end handsets of their own. [In mid-November it was reported that NTT DoCoMo would team up with KT Freetel of South Korea and local manufacturers to develop a smartphone using the Android operating system developed by Google. Such a handset could sell for 20% less than other smartphones currently on the market. NTT is certainly keen to focus on smartphones, as it is losing market share to SOFTBANK Mobile, which has been selling the iPhone since July.]
However, Nokia is not bidding a complete farewell to Japan, which remains one of the largest mobile phone markets in the world, with 100.1 million cellular subscribers (and falling) at the end of 2007, according to a soon-to-be released Global Mobile Database report from Juniper Research. The company will continue selling its very high-end luxury smartphone, the Vertu, to customers of NTT DoCoMo through an MVNO arrangement with the carrier.
Although it is doubtful that Nokia will make much money from this approach (only a few thousand Vertu devices are likely to sell, due to their high price and their owners won’t necessarily be heavier consumers of voice and data than lower-end phone users), it does set a precedent and has this analyst wondering whether Nokia could gain additional financial benefits from taking an MVNO approach in other markets, including in Europe and the rest of Asia where the company tends to enjoy higher sales than its competitors.
Certainly, with Nokia’s considerable experience and prowess in delivering content such as maps/location-based information, music, email/business communications services to mobile phones, taking the plunge into a fully-fledged MVNO business could ultimately prove to be a canny move, without going as far as to set itself up as a closed ecosystem in the way that Apple does.
This is an interesting development, and is one that I shall be watching closely. If Nokia can make a success of it in Japan, similar approaches should work very well elsewhere…
Tags: Apple, business model, Fujitsu, global mobile database, Google, japan mobile, japanese mobile market, KDDI, mobile network operator, mobile phone, mobile phones, mobile virtual network operator, MVNO, NEC, Nokia, NTT DoCoMo, Panasonic, Sharp, smartphones, SOFTBANK Mobile, Toshiba
