Apple's iPhone has wowed most of the globe — but not Japan, where the handset is selling so poorly it's being offered for free.
What's wrong with the iPhone, from a Japanese perspective? Almost everything: the high monthly data plans that go with it, its paucity of features, the low-quality camera, the unfashionable design and the fact that it's not Japanese.
In an effort to boost business, Japanese carrier SoftBank this week launched the "iPhone for Everybody" campaign, which gives away the 8-GB model of the iPhone 3G if customers agree to a two-year contract.
"The pricing has been completely out of whack with market reality," said Global Crown Research analyst Tero Kuittinen in regard to Apple's iPhone prices internationally. "I think they [Apple and its partners overseas] are in the process of adjusting to local conditions."
Apple's iPhone is inarguably popular elsewhere: CEO Steve Jobs announced in October that the handset drove Apple to becoming the third-largest mobile supplier in the world, after selling 10 million units in 2008. However, even before the iPhone 3G's July launch in Japan, analysts were predicting the handset would fail to crack the Japanese market. Japan has been historically hostile toward western brands — including Nokia and Motorola, whose attempts to grab Japanese customers were futile.
Besides cultural opposition, Japanese citizens possess high, complex standards when it comes to cellphones. The country is famous for being ahead of its time when it comes to technology, and the iPhone just doesn't cut it. For example, Japanese handset users are extremely into video and photos — and the iPhone has neither a video camera nor multimedia text messaging. And a highlight feature many in Japan enjoy on their handset is a TV tuner, according to Kuittinen.
What else bugs the Japanese about the iPhone? The pricing plans, Kuittinen said. Japan's carrier environment is very competitive, which equates to relatively low monthly rates for handsets. The iPhone's monthly plan starts at about $60, which is too high compared to competitors, Kuittinen added.
And then there's the matter of compartmentalization. A large portion of Japanese citizens live with only a cellphone as their computing device — not a personal computer, said Hideshi Hamaguchi, a concept creator and chief operating officer of LUNARR. And the problem with the iPhone is it depends on a computer for syncing media and running software updates via iTunes.
"iPhone penetration is very high among the Mac users, but it has a huge physical and mental hurdle to the majority who just get used to live with their cellphone, which does not require PC for many services," Hamaguchi said.
Cellphones are also more of a fashion accessory in Japan than in the United States, according to Daiji Hirata, chief financial officer of News2u Corporation and creator of Japan's first wireless LAN.
So that would suggest that in Japan, carrying around an iPhone — an outdated handset compared to Japanese cellphones — could make you look pretty lame.
Take for example Nobi Hayashi, a journalist and author of Steve Jobs: The Greatest Creative Director. His cellular weapon of choice when he spoke to Wired.com June 2008? A Panasonic P905i, a fancy cellphone that doubles as a 3-inch TV. It also features 3-G, GPS, a 5.1-megapixel camera and motion sensors for Wii-style games.
"When I show this to visitors from the U.S, they're amazed," Hayashi told Wired.com. "They think there's no way anybody would want an iPhone in Japan. But that's only because I'm setting it up for them so that they can see the cool features."
Kuittinen said he's predicting Apple's next iPhone will have better photo capabilities, which could increase its odds of success in Japan. However, he said the monthly rates must be lowered as well.
Otherwise, Apple might as well say sayonara to Japan.
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