The Japanese have a name for their problem: Galápagos syndrome. Japan’s cellphones are like the endemic species that Darwin encountered on the Galápagos Islands — fantastically evolved and divergent from their mainland cousins — explains Takeshi Natsuno, who teaches at Tokyo’s KeioUniversity.
This year, Mr. Natsuno, who developed a popular wireless Internet service called i-Mode, assembled some of the best minds in the field to debate how Japanese cellphones can go global.“The most amazing thing about Japan is that even the average person out there will have a superadvanced phone,” said Mr. Natsuno. “So we’re asking, can’t Japan build on that advantage?”
Yet Japan’s lack of global clout is all the more surprising because its cellphones set the pace in almost every industry innovation: e-mail capabilities in 1999, camera phones in 2000, third-generation networks in 2001, full music downloads in 2002, electronic payments in 2004 and digital TV in 2005.
Japan has 100 million users of advanced third-generation smartphones, twice the number used in the United States, a much larger market. Many Japanese rely on their phones, not a PC, for Internet access.
Indeed, Japanese makers thought they had positioned themselves to dominate the age of digital data. But Japanese cellphone makers were a little too clever. The industry turned increasingly inward. In the 1990s, they set a standard for the second-generation network that was rejected everywhere else.
Carriers created fenced-in Web services, like i-Mode. Those mobile Web universes fostered huge e-commerce and content markets within Japan, but they have also increased the country’s isolation from the global market. Then Japan quickly adopted a third-generation standard in 2001. The rest of the world dallied, essentially making Japanese phones too advanced for most markets.
The industry remains fragmented, with eight cellphone makers vying for part of a market that will be less than 30 million units this year. Several Japanese companies are now considering a push into overseas markets, including NEC, which pulled the plug on its money-losing international cellphone efforts in 2006. Panasonic, Sharp, Toshiba and Fujitsu are said to be planning similar moves.
“Japanese cellphone makers need to either look overseas, or exit the business,” said Kenshi Tazaki, a managing vice president at a consulting firm in Japan.
The forum Mr. Natsuno convened to address Galápagos syndrome has come up with a series of recommendations: Japan’s handset makers must focus more on software and must be more aggressive in hiring foreign talent, and the country’s cellphone carriers must also set their sights overseas.
“It’s not too late for Japan’s cellphone industry to look overseas,” said Tetsuro Tsusaka, a telecom analyst at Barclays Capital Japan. “Besides, most phones outside the Galápagos are just so basic.” (The New York Times)