The news is in. .
It is the end of an old story and the beginning of a new one. Every time Apple would release a new version of its handset, the rumor mill would start running again: DoCoMo would carry the iPhone. The first we’ve actually heard about this was in June 2007, a full year before the iPhone would be released for the first time in Japan. This time around, the reports were true1
Who needs whom?
It hasn’t been always the case. Back in 2007-2008, DoCoMo was arguably in a stronger position in the Japanese market. That era was a very different one. Japan was still at the peak of its feature phone empire, foreign smartphones were basically absent—Nokia has actually left the market in 2008 and BlackBerry sales were negligible. DoCoMo, as its competitors, was able to control the whole ecosystem, from what handsets would be made by its partners—Sharp and others—to what consumers would see on the dedicated internet portals, thus limiting access to content and developers.
Apple, although historically strong in Japan in terms of marketshare for its line of products, wasn’t in a strong enough position to arm wrestle DoCoMo. And even when it became a force over the years, it seemed that the carrier was somewhat lingering to its past. It only seriously pushed smartphones in 2010, even 2011 depending on how you analyze it.
2013 has changed the narrative
2013 possesses a somewhat different narrative. DoCoMo is still the king2.
Apple has a clear interest in working with the king. 60 million subscribers cannot be dismissed. Even 30% of those, the number of iPhone users that DoCoMo executives would seem to be comfortable carrying, are valuable. Apple wanted to expand. 2013 is a defining moment. A DoCoMo with very valuable users, potent for both the average revenue per user (ARPU) and the image—quality + quality = more quality. Apple couldn’t ignore those factors.
DoCoMo changed its mind
At the end of 2012, it seemed that the question was settled. DoCoMo was affirming its Android-only philosophy. Then something happened.
If we look at the growth these past twelve months, you can see a somewhat different picture from that of a big king towering the competition. Let’s assume all three carriers started acquiring customers on Sept, 1, 2012. This is how it would look:
But, why the iPhone?
Couldn’t an aggressive marketing and discount campaigns help DoCoMo? It’s not as if it hasn’t tried. The Samsung Galaxy, arguably its flagship phone, has been extremely successful. It could have tried harder. Maybe. But there was pressure from the shareholders, probably anxious to see the margins being trimmed again and again (not that it’s the fault of Android per se) and pressure from customers, some of which had switched and want to come back—DoCoMo still has the reputation of the best overall network in Japan—or those who carry two phones for the sake of the iPhone3.
Is the answer to that (perceived) predicament the iPhone? In a way it is. , similar to what one used to see in the US. It’s also a market with a very high ARPU.
The Apple brand value (and its products obviously) has been so strong that the iPhone was able to thrive without being on the main carrier, in a country where customers are considered very loyal—even if many other factors also explain the success of the competition, from aggressive marketing to more innovative solutions.
The iPhone boost
Still, . SoftBank has been leading customer acquisition in 59 months out of the 62 months since it started carrying the iPhone. au/KDDI has been placed second in 22 months of the 23 since it started carrying it—allowing it to maintain its #2 position, something that looked increasingly impossible between mid-2007 and the end of 2011.
If I single out a three months period post-iPhone 5 release, the boost is quite evident.
Arguably, in order to remain the undisputed king.
Why was DoCoMo refraining?
DoCoMo wants control.
some of DoCoMo’s own services that we provide on Android phones won’t work on the iPhone, which doesn’t leave room for much customization, so we have to give up on them.
said DoCoMo Senior Executive Vice President Kazuto Tsubouchi to the Wall Street Journal. Emphasis mine: customization meant control.
This has always been the case, the carrier wants to control the experience. It was, after all, the standard definer in the market. It’s hard to let old habits go.
The question is now open: did DoCoMo get anything in return for carrying the iPhone?
There have been rumors of a DoCoMo logo emboss, a software boot-up logo, both highly unlikely. Even more unlikely, DoCoMo getting a pre-installed app, probably the preferred DoCoMo scenario. In the end, my take is that the pressure on DoCoMo was strong enough. A possibility would be that the carrier’s staff installs an app for the customer upon contract signing. DoCoMo would have an almost pre-installed app.
An illusion of control.
The iPhone 5S and the 5C will both be available on DoCoMo on September 20. Pre-orders will start on September 13 in stores, and online for the first 30,000 Premier Club to do so. And, of course, au/KDDI and SoftBank will have them too.
Let’s see who will get the biggest boost. Let the true competition begin.