September 6, 2005
Japanese makers endure handset hell
An interesting article from the FT on the Japanese cell phone market.
"The domestic mobile phone market is no longer rising. That is a clear fact, so each company is suffering," Ben Nakamura, who heads NEC's mobile phone business, says. "Japanese handset makers face a shake-out."
The handset market is crowded with more than 10 manufacturers, ranging from heavyweights such as NEC and Matsushita, number one and two in the market respectively, to smaller competitors such as Casio.
But few companies are able to generate profits from a business where research and development costs are high, product shelf-life short and competition fierce.
"Mobile phones are not a profitable business," concedes Toshinori Hoshi, director of the mobile terminal division of Matsushita's Panasonic Mobile Communications.
Mobile phone penetration is about 70 per cent in Japan and manufacturers have had to introduce ranges of slightly different models to lure buyers.
And with Japanese consumers so keen to get the latest fads, manufacturers have had to provide the most advanced features to remain competitive, Mr Hoshi points out.
Consequently, manufacturers have seen volume sales of each model decline while development costs have remained high because of the demands of consumers."
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