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Vodafone Quitting Japan
dimension6 writes "Reuters is reporting that Vodafone, the world's largest mobile phone operator, is quitting business in Japan. Vodafone has been having a difficult time since they entered the Japanese market, a result of many blunders such as introducing Nokia brick phones where flip-phones are the norm and being slow to adopt 3G technology widely used by its competitors. Vodafone claimed that being part of the most advanced mobile phone market helped boost their sales elsewhere, but few Japanese-market phones have made it to other countries. The Japanese Vodafone division is likely to be bought by Softbank, the largest ISP in Japan."
They recently decided to pull out of Sweden too. Margins have become razor thin after voice prices fell to a few cents per minute (/$).
introducing Nokia brick phones where flip-phones are the norm
I believe the term is "candybar" phones. Bricks are from the early 90's. Oh, and while I'm getting all technical on the names, the summary more than likely refers to "clamshell" phones, where the flip portion opens on the top like a clamshell. A "flip" phone is a phone where the mouthpiece flips down, like the oldschool motorola's from the mid 90's.
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I agree - however part of the problem is that Western Companies generally don't understand the demographic of their customers, instead they pretend Asia is just like the West eg:
It will be interesting to see how XBOX360 fares in Japan when the promised new RPG's come out. At the moment, Gamecube outsells it.
Western companies need to learn that the entire attitude of "Customers will buy what we tell them to" just wont cut it in Asia. Consumers are generally more savvy and wont tolerate crap. As a former unsatisfied vodafone customer - I must say that I delight in seeing this failure of theirs.
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Japanese mobile tech is at least 3 years ahead of everyone else. Vodafone just didn't get it.
:)
I had a beautiful clamshell 3G set light as a feather with media player, camera and imode 3-4 years ago. Snapping a picture of myself eating udon and mailing it to friends and family back then got me alot of ooos and ahhs
Vodafone coming to market with the most ugly brick phones ever, the likes which we've never seen before in Japan, didn't help.
Then there was them spending time and money on the pre-paid market. Basically, there is no pre-paid market there and there's a reason for that, nobody wants one. They came in thinking small, gunning for the niche market.
Then there was the reputation of the network. Vodaphone bought out an old network, can't remember the name, but it was on the brink of going bust because the quality sucked major. People knew Vodaphone as the one that bought out the sucky network.
to better themselves. In terms of gadgets, Japan is a tough market with lots of competitors, but like fighting any tough opponent, it would have made them better.
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It looks like they kept trying to push themselves onto the Japanese instead of adapting themselves, what with not adopting 3G and using a brickphone profile for their phones. How dumb is that? Was it a result of purely top-down leadership without some bottom-up feedback? I don't know but it looks that way if they are pulling out of Sweden too. Many companies try to do that when entering a foreign market, but they are usually spanked early on for their mistakes. I believe McDonalds serves lamb in India and wherever they go conform their menu to the locality.
But the idea that an American company can't do well in Japan is false, look at Apple:
http://www.businessweek.com/globalbiz/content/mar
I currently live in Japan and use Vodafone. It seems to me that they hold over a 30% market share among the hundred-odd phone numbers in my cell. In general, the four major companies (docomo at the high end, vodafone and au in the middle, tsuka at the bottom) seem about equally popular.
I don't think this sale is due to failure. Rather, it is just one business selling off a decent little piece to another corporation who wants it more. It happens all the time.
Btw, to whoever said "Japanese cells are 3 years ahead of everyone else", I would respectfully disagree. I'd rather have an American cell. Why? Because I hardly ever use the billion and one stupid bells and whistles in my Japanese phone. What I want to do is be able to talk on my cell phone, which is absurdly expensive in Japan. For nearly $40/month, you only get ninety minutes (and your billion and two text messages and emails eat into this time)! Nor do I find the reception better in Japan than in comparable areas of the US. Reception here is near universal in the major cities unless you are underground, gets a little spotty as you move into the burbs (especially indoors), and fails quite often in the countryside unless you happen to be at a high elevation. Same is true in the states, except we have less area that is city and more that is burb and countryside.
Japanese cells aren't better. Rather, Japanese spend lots more money on them and buy all the bells and whistles that 90% of Western users just don't care about.
Quite an interesting and unexpected turn of events...
Vodafone has been going steadily downhill since their foray in to the market here. Their entry point was by buying out J-Phone and rebranding it as Vodafone K.K.. J-Phone was originally a division of JR, the national rail company. An interesting side effect of their original ownership was that in the early days of cell-access their networks first expanded along the railway networks giving them quite effective penetration even though their coverage was in fact quite spotty. J-Phone never quite reached the market-size of DoCoMo (the cellular division of NTT - the national telco), but was effectively their main competition with a reputation for innovation, which had cornered the younger "cooler" demographic. They were one of the first here to provide Java enabled phones and as the original originators of the camera-phone they have made their mark worldwide. In fact one of the last phones they brought to market before the buyout was the first phone to crack the 1 megapixel mark.
No wonder Vodaphone wanted a piece.
Some vodaphone insiders here have speculated that the main reason for the company's gradual descent has been the resistance of "old-Japan" upper management to outside pressures, almost more on principle than on particular merit, although some of those outside ideas have seemed to lack local market knowledge, amongst other things. Vodafone stagnated at a crucial point unfortunately - they were technologically ahead of the pack - their stall allowed competitors to take up the slack and old behemoth Docomo to pull ahead as many customers returned to DoCoMo for the newest gimmicks while vodaphone coasted...
Its not hard to still spot J-phone branded phones around which speaks volumes about the strength of the original company in this "new and shiny" crazed market. I actually think this is a good thing - if Vodafone was only as commited as a three year ownership and doesn't have the kahoonas to turn things around, its only their loss. Hopefully this is the begining of a return to their former glory and I'll finally be able to rid myself of this stupid AU phone...
I live in Japan too. The subscription base in Japan is far from equal. As of end of Jan, Vodafone has 16.7%, AU including Tu-ka 27.8% and the rest 55.9%. Check this site.
http://www.wirelesswatch.jp/index.php
Vodafone is tryig to force the western business model in Japan and they have failied quite badly. The first batch of 3G phones that it introduced were taken from the Western world (Nokia 6650, SE V800, 2 models from Motorola, etc). That was the month they had the worst loss of customers (abt 60,000). Unfortuntely, the Japanese market user base is driven by handsets. If you do not have a good line up, they will be gone the next month. Japanese users are not afraid to change numbers (number portability will come later this year).
You are a typical Vodafone customers whose main use of mobile phone is voice. Japanese mobile martket have moved pass the voice stage where income from data and other broadband services are higher then voice. Vodafone Live! is not as good compared to i-mode and ezweb. They lost a lot of high ARPU customers to the other 2 mobile operators. It is hard for Vodafone to operate successfully in Japan with their global business model that they try to apply to all markets. Top management has changed 2 times last year. They are now having some limited recovery after re-intruducing Japanese specific handsets from Sharp and Toshiba. Expats like yourself are too small in numbers to sustain Vodafone in Japan.
I most certainly hope that Vodafone doesn't quit right now. Their biggest advantage is that they are attracting sales from people who want to unlock their phones to use in America/Asia/Europe/wherever else besides Japan and from foreigners in Japan. If a domestic company takes over, we might not see phones that can be unlocked in America (see DoCoMo's only 3G/GSM/GPRS phone) anymore, which means a loss in handset sales, and a drop in subscriptions from foreigners. A friend of mine from Nara says that she and her company use Vodafone, and while that may be personal narrative, she sounded genuinely satisfied with it, and Vodafone will be my next service provider as soon as I move out of China to Japan. That, or someone finds out a way to unlock a DoCoMo 3G phone to at least use in UMTS-enabled areas like Hong Kong. Disclaimer- it's late in China where I'm posting from, so this might not be entirely coherent, but I try.
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Cred and disclaimer - I've lived in Tokyo for the last five years. Japanese phones are generally prettier, faster, and more stable than Euro/American phones. Those same phones are also extremely stupid, as opposed to smart, as in "smart phone." I am not a keitai expert and may be wrong but I believe that Vodafone Japan was the first to introduce a smart type phone with the Nokia 6210 (702NK). It is a brick and the screen is ugly, but it runs an OS that has a LOT of software available for it. This was quite a change from the proprietary, useless, custom OS' installed by everyone else. The Nokia 6210, despite its flaws, seemed to be a pretty big hit. In fact, about a year later, Willcom (which has some connection to Docomo, I think) introduced that Sharp PDA/smartphone running Windows Mobile(model number escapes me). And now, in the second half of 2006, Docomo Japan is finally going to bring out a smart phone running Windows Mobile. And as someone who likes to have the option of doing more than on thing with device, I am happy to see it and will likely buy one. Vodafone's move with the 6210 was likely desparate (they've had service issues) but I am glad they made the move and paved the way for alternate models to finally be made available in a very stagnant phone market.
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DoCoMo has a loyal and strong customer base. Despite being more expensive than the other two networks, it is popular amongst the middle-aged and business customers who rarely switch networks. Furthermore these customers are less likely to upgrade their handsets on a regular basis, bringing a long-term return on the heavily subsidised phone the customer bought way back when. DoCoMo don't need to work to hard to maintain their position.
KDDI (AU) on the other hand has gone from arguably being the third-best service offering to the biggest innovator in the space of just a few years. AU has introduced attractive service plans, and intelligently captured a large share of the student market by offering an across the board 50% discount to anyone in full time education. This has reaped dividends several years later as those students are now graduating and converting to full price customers. Additionally they have invested very heavily in their 3G network, with a significantly higher proportion of their customers transferring to 3G services than either of their competitors. My own AU phone is capable of data transfer of 2.4Mbps (faster than most peoples landline based broadband in a lot of countries!) The other two networks are way behind on this count. AU has also capitalized on the i-pod craze by making virtually all handsets mp3 capable and introducing their own mobile version of i-tunes, which has access to a lot of Japanese artists unavailable on other online stores. I'd take issue with the guy moaning about smartphones. The AU OS is perfectly functional and offers a catalogue of hundreds if not thousands of downloadable JAVA applications. My phone can also handle Word, Excel, Powerpoint and PDF files and has a full featured web browser. Perfectly smart enough for my needs, and no Windows in sight.
And what has Vodafone done in this time? Well to be honest, not very much. They were late to the table with their 3G offering, which works only in mainly urban reception areas. Most importantly, they haven't done anything to really differentiate themselves or their service which is where AU have really scored big points. I don't know the statistics, but I'd say that Vodafone have struggled, not so much because they have failed to win customers, but because both they and DoCoMo have lost market share to AU.
The one comment I'd seriously disagree with is the "brick phone" suggestion in the original story. This is just bullshit. Walk into any Vodafone store and you'll see upwards of 20 handsets, maybe 2 of which are brick phones, and the rest are clamshells. I hardly think this is the cause of their failure, especially when DoCoMo and AU both offer bricks of their own.