| TOKYO, July 5
TOKYO, July 5 NTT DoCoMo Inc, Japan's
largest mobile provider and a pioneer of the mobile Internet, is
one of just a few holdouts among the world's big mobile carriers
not offering Apple Inc's iPhone to its 60 million
It is paying heavily for that obstinacy - with a net 3.2
million users jumping ship to its two domestic rivals over the
last 4-1/2 years - but is determined to protect the walled
garden of services it has built around its own smartphones.
"We're trying to develop a lifestyle system," NTT DoCoMo CEO
Kaoru Kato told Reuters in an interview this week.
While customers and even some executives increasingly
clamour for it to relent and sign an iPhone deal, DoCoMo is
showing no signs of softening towards Apple.
"The biggest problem is the impact on the services that we
offer," Kato said.
DoCoMo's broad offering of exclusive features, however, is
no longer attracting what has become the iPhone generation. It
is expected eventually to either reach a deal with Apple or risk
losing its crown at the top of its industry.
"Unit sales are doing quite well this year but they're still
losing customers to other networks," said Hiroshi Yamashina,
senior telecoms analyst at BNP Paribas. "If that's the case then
they really have no choice but to go for the iPhone."
Japanese consumers favoured DoCoMo's mode of integrated
system back when it launched the world's first large-scale
mobile web access service and introduced streamed TV to
cellphone users. But its wide array of features - while
retaining its share of fans - is not considered sufficient to
counter the appeal of the iPhone.
"Its photo service, for example, is very difficult to use
and I'm not sure anyone still bothers in the age of Instagram
and Flickr," said Yamashina.
DoCoMo's resistance contrasts with holdouts in other markets
that are giving in this year to the demand for iPhones.
T-Mobile US Inc's CEO said its April release of the
iPhone filled a "huge void" in its line-up.
China Mobile Ltd, the world's largest mobile
carrier by number of subscribers, is moving to upgrade its
service with 4G technology to allow the 10 million of its
customers who already own the iPhone to connect to its network,
rather than being restricted to WiFi.
DoCoMo's stubbornness is particularly noteworthy in Japan,
where the iPhone not only has established itself as the kingpin
in the smartphone market, with a 42 percent share in the last
three months of 2012, but is fending off Samsung Electronics Co
Ltd's Galaxy series, which has found popularity in
other major global markets. Samsung has 46 percent of Western
Europe's smartphone market, but has reached only one-fifth of
iPhone's sales in Japan.
DoCoMo's stance may also reflect strict contractual
obligations imposed by Apple. While negotiations between the two
have been a strictly guarded secret, Kato's predecessor made
comments at a shareholder meeting last year suggesting the U.S.
company was demanding iPhones make up half of its handset sales.
DoCoMo's requirement that its company logo be imprinted on
all its devices also conflicts with style-conscious Apple's
insistence that its products be left as manufactured.
For now, DoCoMo hopes to retain customers with smartphones
running Google Inc's more flexible Android operating
system. Its marketing efforts this summer are focused on Sony
Corp's Xperia A and Samsung Electronics' Galaxy S4.
DoCoMo has moved 830,000 Xperia A handsets since their
mid-May launch, already close to its target of 1 million by
autumn, but the S4 is lagging with less than half of Xperia's
But DoCoMo is still haemorrhaging customers to its rivals,
with monthly data on Friday showing a net loss of 146,900
existing users to other carriers in June, the 53rd consecutive
month of such losses.
But with DoCoMo's total subscriber numbers up 630,000 in the
first six months, as it gets a lift from overall smartphone
demand even without the iPhone, and with its profits strong, it
may opt for a waiting game with Apple.
There are no signs the iPhone's popularity might soon wane
in Japan, while the breadth and reliability of DoCoMo's network
could be a selling point.
"At some point, SoftBank and KDDI will
reach a saturation point for iPhone sales," said an executive at
a rival mobile carrier. "Apple may have no choice but to look to
DoCoMo to sell more iPhones. Perhaps DoCoMo is just waiting."