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The Nikkei calls it a sudden collapse of the monopoly. I simply think the writing was on the wall.

The iPhone is coming to KDDI/au.

The Writing was on the wall

I had predicted that the iPhone would land at KDDI —and not DoCoMo, the market leader— last March already.

No need to rephrase myself, the reason number 1 was simple:

Exclusive deals are gone. As many -and we- had correctly guessed it, SoftBank’s exclusivity ran for two years. July 2008 – July 2010.

Japanese customers willing to put their hands on the iPhone will now have a choice, if rumors are correct —and I strongly believe they are.

SoftBank or KDDI.

And with the iPhone 5 being a “world phone”, a multi-standard phone that can work on different technologies —SoftBank uses GSM, KDDI/au W-CDMA—, it’s …one iPhone to rule them all. No need for Apple to manufacture two different handsets for the dueling carriers.

SoftBank Crown Jewel

SoftBank was the first and exclusive provider of the iPhone in Japan so far. I still remember the 17 hours queue on Omotesando-dori that July 11, 2008 (the 2G network being only but a memory in Japan, the iPhone 3G was the first release here). It was my first iPhone and it was the prime reason behind the existence of this blog (getting a phone when not fluent in Japanese was tough back then, it’s now easier, and my Japanese is far better too).

In the years since, there has been a lot of non-sense about the apparent failure of the handset to succeed here. A year ago, without official sources, I was estimating that the iPhone had sold 5 million units in Japan. Naysayers can shut up.

Inferring from various sources, I’d say that number is in the 7.3 – 7.5m range now and represents 50% of all the smartphones in the country, even reaching the 70% within the 16-24 y.o. market —iOS has a bigger overall share with maybe 4m iPods and around a million iPads. Gartner stated that Japan accounted for 6% of iPhone shipments in a report last fall.

Market Expansion

SoftBank is only the third cell provider in Japan in market share. It boasts around 27m subscribers, having gotten a big boost out of the iPhone sales —it has basically beaten its competitors in new contract sign-ups for 17 months straight.

No doubt Apple was willing to expand its opportunities by adding the 34m of KDDI.

I know, why not go for DoCoMo and its 59m subscribers directly? I estimate that it’s still in the works, but that it was just easier to deal with KDDI. That carrier hasn’t had a real smartphone smash hit and is desperate to catch up.

This position has made the negotiations easier. Especially when you think that such negotiations can be unusual for Apple, as Japan is a country where mobile operators traditionally control or heavily influence handset manufacturers, hardware specs, features sets, installed-software and product life cycles, a model that Apple shattered.

I’m also pretty sure that the deal includes a hefty sum from KDDI. But we might never know.

Another possible factor: chatter is that iPhone sales growth slowed down in Q1 2011, a possible trigger for Apple to look elsewhere. I’m pretty certain negotiations had started before those numbers were known though.

Interestingly, KDDI is the mobile operator which offers the most smartphones in its line-up, but none of them has been a smashing success like the iPhone or the Samsung line at DoCoMo.

About 20m smartphones will be sold next year in Japan. The annihilation of the dumb phone market might be as soon as 2015 at this growing rate. Viva Android and iOS!

Customer Choice

From a customer point of view, the quality of KDDI’s network compared to what many say is the worse of the three, SoftBank, will undoubtedly push some current iPhone owners to switch —well, transfers of users is the rule anyway, it’s not as if Japan has any room to grow, the numbers of subscribers already surpasses the number of inhabitants in the island.

The big question is when. Sources disagree. Some say the iPhone 5 is coming on KDDI by this October/November. Others insist it’s not before January 2012. That last date is plausible: it could be the second roll-out of iPhones after the US. Apple has applied this country roll-out differentiation in the past to cope with demand. We could learn it officially as soon as September 29 anyway.

But customers seems eager to get it sooner than later. Twitter in Japan was all abuzz about the prospect today, with the news trending throughout the day, showing signs of interest to say the least —but also disappointment in no DoCoMo iPhone news.

Another place that knows about trends: the Tokyo stock market. It has hit Softbank’s stock with a 12% fall. Ouch.

Is it a turning point for SoftBank? That’s a debate for another article.

Let it be written down though, my bet is that DoCoMo will reach an agreement with Apple in 2012.

Only by then it will ready be One iPhone To Rule Them All.

Update: it’s now official

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