DoCoMo to offer PDA-type handsets for 3G service
TOKYO, July 9 (Reuters) - Japan's dominant mobile phone operator, NTT DoCoMo Inc (Tokyo:9437.T - News), said on Tuesday it would offer from this month handsets in the form of personal digital assistants (PDA) for its third-generation (3G) mobile services.
The keyboard-equipped handset, which comes with a separate cigar-shaped wireless terminal that can receive and make calls, is manufactured by Sharp Corp (Tokyo:6753.T - News) and is set to hit the stores on July 16.
This will be the first time DoCoMo offers PDA-type handsets for its 3G services.
DoCoMo became the world's first 3G operator last October, offering video conferencing and speedy download from the Internet. But it has been struggling to attract subscribers due to short battery duration and limited coverage area.
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ANALYSIS-DoCoMo dominance faces challenges in Japan
By Kiyoshi Takenaka
TOKYO, July 9 (Reuters) - NTT DoCoMo Inc (Tokyo:9437.T - News) won back the top spot for new Japanese cellphone subscriptions in June, but a slide in its market share is spelling the end of its position as unassailable mobile leader in Japan, analysts say.
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DoCoMo saw its customer numbers grow by 267,000 in the month, easily surpassing rival KDDI Corp (Tokyo:9433.T - News) and J-Phone Corp and battling its way back from the third place it occupied for the first time ever in May.
But, with other firms promoting third-generation (3G) services and camera-phones hard, DoCoMo's market share fell for the fifth straight month in June to 58.6 percent, a far cry from the days when users swamped its "i-mode" Internet-capable phones.
"The days when 'i-mode' was synonymous with wireless Internet access are gone," said Jiro Yokoyama, an analyst at Tokyo Mitsubishi Securities.
"DoCoMo is unlikely to be topped. But it would be difficult for the company to maintain its 60 percent share".
After watching competitors, J-Phone in particular, gain on its dominant position with camera-mounted phones, DoCoMo had to scramble last month to offer its own version.
And although it became the world's first 3G operator last October, offering video conferencing and speedy download from the Internet, its performance has been less than impressive.
As of the end of June, it had just 114,500 subscribers, or fewer than one tenth the number won by KDDI, which started its own 3G service in April.
J-Phone, operated by Japan Telecom Co Ltd (Tokyo:9434.T - News) and its parent Vodafone Group (London:VOD.L - News), is set to launch its 3G service in December.
3G STRUGGLE
DoCoMo has struggled to attract subscribers due to the short duration of its 3G phone batteries and limited area of coverage.
Unlike DoCoMo, which must build a costly, new network, KDDI can offer 3G mobile services at a relatively low cost by simply upgrading its existing network.
"DoCoMo's stranglehold over the Japanese market is starting to loosen...This year is a great opportunity for KDDI and J-Phone to increase their market share," Bruce Kirk, senior analyst at Commerzbank Securities, said.
"DoCoMo has gone from being the market leader in wireless communications to being a market follower."
It is crucial for Japanese wireless carriers, who are facing slowing subscriber growth, to boost revenues per user through the smooth introduction of 3G services, which carriers hope will prompt subscribers to use data communication functions heavily.
Japan's domestic shipments of mobile handsets fell in May for a 12th consecutive month year-on-year but posted a 4.1 percent gain from the previous month since users are gradually shifting to 3G services, the Japan Electronics and Information Technology Industries Association said on Tuesday.
BETTER OFF WITH SLOW GROWTH?
In a bid to boost 3G subscription rates, DoCoMo plans to offer handsets with a longer battery life later this year and to broaden its service area to 90 percent of the nation by next March, up from the current 60 percent.
But analysts say it will not be easy for DoCoMo to catch up with KDDI's 'au' in the number of 3G users.
"DoCoMo offers its 3G as a totally different service. But 'au' treats its 3G service as just an improved version of the existing one," Tokyo Mitsubishi Securities' Yokoyama said.
"DoCoMo users have to think long and hard about switching services to 3G, while 'au' subscribers are using 3G without even knowing it," Yokoyama said.
Some analysts say that DoCoMo may be better off with slower subscriber growth since that means smaller sales commissions for handset retailers and greater profit margins in a short term.
Japanese mobile carriers often sell handsets to retailers at a loss when sales commissions are taken into account, intending to recover the loss with monthly phone charges from users.
"If you look at the short-term picture, no new subscribers and no commission pay-out would lead to bigger profits," said Motoharu Sone, senior analyst at UFJ Tsubasa Research Institute.
Sone was quick to point out, however, that DoCoMo should focus on long-term growth rather than short-term profit as Japan's mobile market was still expanding.
"The market is nearing maturity, but some 500,000 subscribers are still signing up every month. Falling behind overall market growth at this point would do no good to its operations."
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