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Land of the Rising Smartphone

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LR Mobile News Analysis
Light Reading
9/25/2006
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Extending its strategy for world smartphone domination to the world's most highly developed smartphone market, BlackBerry today said it will release a Japanese-language version of its popular BlackBerry device in early 2007.

The kanji-based device will follow RIM's English-language BlackBerry, which goes on sale tomorrow from Japanese carrier NTT DoCoMo Inc. (NYSE: DCM)

"We're working to have a solution for entering Japanese fonts in the first two quarters of next year," said RIM president and co-CEO Mike Lazaridis at a press conference in Tokyo this morning.

RIM has made no secret in the last year of its plans to establish beachheads in the major markets of East Asia. Last May the Waterloo, Ontario-based mobile email giant inked a deal with China Mobile Communications Corp. to bring BlackBerry email service to the mainland, using SIM (subscriber identity module) cards that attach to China Mobile's existing cell phones.

The move into Japan, says Carmi Levy, senior research analyst at Info-Tech Research Group , is inevitable as competition in RIM's core market -- North American enterprises -- continues to heat up, and as big cell phone makers Nokia Corp. (NYSE: NOK) and Motorola Inc. (NYSE: MOT) develop smartphones for the global market. (See RIM Dominance Slips, Slightly.)

"The faster RIM can set up shop and gain some initial momentum in Far East markets," says Levy, "the more able it will be to carve out market share in advance of the larger and deeper-pocketed handset manufacturers."

Gartner Japan analyst Kanae Maita predicted earlier this year that Japan's smartphone market would expand by nearly 50 percent to 370,000 units by the end of 2006.

That doesn't mean that RIM's success in Japan -- easily the most sophisticated mobile device market in the world -- is assured. Many Japanese smartphones already have push email capability and other features offered by the BlackBerry, and RIM has only recently added the ability to run over high-speed 3G networks like NTT Docomo's W-CDMA system. (See Device Trends Cross Pacific.)

In June, after RIM said it would begin selling the BlackBerry in Japan, a poster on mobile-device-geek Website Engadget compared the move to "a minivan competing in a sports car race."

Earlier attempts by Western wireless operators to penetrate the Japanese market have faltered: In March, Vodafone Group plc (NYSE: VOD) unloaded its wireless network in Japan for $15.5 billion to SoftBank Corp. .

In fact, the initial demand for BlackBerry in Japan is expected to come not from Japanese firms but from expatriates: "It's hard to judge how much demand will come from Japanese natives since few have any experience with the BlackBerry," points out Todd Kort, principal analyst at Gartner Inc. But, he adds, "the move into Japan makes good sense because there are so many multinational companies doing business there who wish to use the BlackBerry."

NTT Docomo said it has taken 1400 pre-orders for the Japanese BlackBerry -- most of them from foreign multinationals. Expat workers, however, would constitute a niche market at best: There are probably a total of around 30,000 English-language expatriates currently working in Japan.

RIM can take heart from the success of Japanese carrier Willcom, which has sold more than 150,000 of its W-Zero3 smartphone, which features mobile email via Microsoft Exchange.

Like pop music, however, mobile device usage is highly dependent on local tastes, habits, and fads. And RIM's bread and butter -- mobile email for busy executives -- will likely not be enough in Japan to provide the chart-topping success it has enjoyed in North America.

"The relative sophistication of the Japanese market in general will likely mean users there will demand more sophisticated services," adds Levy. "Basic voice and data packages won’t fly in Japan."

— Richard Martin, Senior Editor, Unstrung

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