Japanese makers hope to export Web-ready cellphones world-wide
msnbc.com
Global sales are down as Japanese firms eye markets
By Robert A. Guth and Almar Latour
THE WALL STREET JOURNAL
April 19 ? Heading to Chicago earlier this month for a meeting,
Shigeru Sando ripped an advertisement from an in-flight
magazine that he knew would rile his colleagues at Motorola
Inc. THE AD SHOWED the Statue of Liberty holding the latest
in Japanese technology: a color-screen cellphone from Sanyo
Electric Co. Above Miss Liberty were the words: ?Oh Say
Can You See ... America?s First True Color Mobile Phone.?
When Mr. Sando, a general manager at Motorola Japan Ltd.,
showed his colleagues the ad, he was peppered with questions.
?Why do you think Japanese companies are attacking us
now?? one asked.
The answer is that new technology and intensified
competition have spurred top Japanese cellphone makers to
take their products global. ?The Japanese market is ahead of
the rest of the world? in Internet-capable mobile phones, says
Takashi Kawada, president of Matsushita Communication
Industrial Co., Japan?s largest cellphone maker. ?We?ve
got an advantage, and we want to use it.?
Sony Corp., for
instance, is in talks with
struggling No. 2 handset
maker Telefon AB L.M.
Ericsson of Sweden over a
deal that would merge the
two companies?
cellphone businesses,
according to a person familiar with the companies? plans. An
announcement could come within days, the individual said.
(See article.)
The potential free-for-all is shaping up just as
cellphone-sales growth is slowing sharply ? to an estimated
450 million sets world-wide this year from initial estimates of
650 million. The shakeout is hitting all makers, including the
Japanese, but some are hurting more than others. The world?
s No. 2 phone maker, Motorola, is cutting 7,000 people from its
cellphone unit, and last month, Ericsson announced layoffs
shortly after saying it would outsource its money-losing phone
production.
In the past five years, Japan, along with Scandinavia, has
emerged as one of the world?s most advanced markets for
cellphones. High demand and exacting customers have forced
makers to introduce increasingly sophisticated products, so
cellphones in Japan are smaller and lighter and can do more
things than many phones in the U.S. and Europe.
After Japan?s success selling cameras and television sets
overseas, Japanese cellphone makers are betting they will be
able to use their experience at home to achieve dominance
abroad. Among the large electronics companies planning to do
battle in the West: Toshiba Corp., NEC Corp., Mitsubishi
Electric Corp. and Matsushita, maker of Panasonic products.
Sanyo rolled out its color phone last month, while the mobile
unit of British Telecommunications PLC announced plans to
offer phones from Japan?s Sharp Corp. that have built-in
cameras and can connect to the Internet. In addition, South
Korea?s Samsung Electronics Co. is expanding its world
market share.
The Asian offensive signals a major shift in the
mobile-phone industry. To date, incompatible technologies
have made it difficult for a single handset maker to compete
across the world. The U.S uses four cellular technologies,
making it very expensive to make cellphones for every network
operator. And Japan has had its own mobile-network
technology, which has made it difficult for non-Japanese
makers to compete there, while hobbling Japanese makers
outside of Japan.
For now, the Japanese are trying to bridge the standards
gap by boosting investment in phones that run on GSM, or the
Global System for Mobile Communications, which is used
throughout Europe and in parts of Asia and North America,
including the U.S.
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But starting this year, a new standard of third-generation,
or 3G, wireless networks is expected to begin dotting the
world, making a less fragmented market possible. The
networks will provide high-speed access to the Internet,
permitting wireless videoconferencing and a host of other
applications. NTT DoCoMo, Japan?s dominant cellular
operator, will roll out the world?s first commercial 3G service
next month, a year before European operators and perhaps
several years ahead of U.S. networks. But there is uncertainty
in the U.S. and Europe over when ? or even if ? 3G will take off,
especially in the current economic climate.
Meanwhile, operators in Europe are rolling out General
Packet Radio Service, or GPRS, networks, which will allow
faster wireless data transfer than current GSM networks and
may push back the arrival of 3G even further. A delay could
also give European cellphone makers and Motorola plenty of
time to develop their own 3G handsets.
Still, Japanese handset makers believe that their lead,
combined with access to crucial made-in-Japan components
like screens and tiny cameras, will give them an edge in rolling
out 3G phones overseas.
Matsushita says it has invested about $500 million in
3G-product development ? though company executives say
privately that the figure is far above that. Since October, it has
set up new facilities in China, the Czech Republic and the
United Kingdom, and it is beefing up research in the U.S. and
Canada. Matsushita executives say that within three years
they are shooting for around 10 percent of the global market for
phones, up from 5 percent today.
Sooner or later, it will have to tangle with market leader
Nokia Corp., which controls 30 percent of the global market for
mobile phones. The Finnish titan has good relations with
operators and commands vast economies of scale, having
expanded its sales to 127 million handsets last year from
roughly 25 million five years ago. It has also forged a global
brand by making snazzy products, running glitzy ads and
sponsoring cameo appearances of its phones in movies like
?The Matrix.?
?We don?t feel the least bit threatened by what?s out
there right now,? says Nokia Chairman Jorma Ollila. ?For
the next two years we think we?ll dominate the market.?
Copyright © 2001 Dow Jones & Company, Inc.
All Rights Reserved.
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And after two years, Ollila? - DPR |
