Live Issue... Japanese mobile titans look to global markets

In a saturated domestic market, Japanese mobile players are facing up to the necessity of outside expansion in order to remain afloat. NEC, Casio and Hitachi recently announced plans to pool their mobile handset technology in a merger that will be finalised next April. The resulting entity will be the largest mobile manufacturer after Sharp, and will look to markets such as China and the US for growth.

But while Japanese mobile firms are known for their innovation, success outside of Japan is far from guaranteed. Post-iPhone, it is late in the day to be contemplating international development.

“Japanese manufacturers have focused so heavily on the internal market in terms of unique functionality, they have not looked at all at the requirements from the rest of the world,” observes Gregory Birge, managing director of F5 Digital Consulting.

As a result, they face the challenge of filling a gap in an already crowded market. Birge states that it would be naïve simply to make compatible and export existing handsets to Asian and Western markets. Increasingly, as Euromonitor’s global head of consumer electronics research Wee Teck Loo points out, the emphasis within the mobile industry is on packaging, ease of use and connection with consumers, rather than on pure product benefits. With this in mind, Japanese brands are currently poorly positioned for an international push.

“Reputation and consumer perception take time to change,” Loo says. “Japanese mobile phones are always feature-rich, but the consumer electronics world is not only about features and functions. They are generally considered well-featured but difficult to navigate.”

That view is echoed by Blair Currie, CEO for Japan and Korea at Aegis Media. Currie says the only viable option is for Japanese brands to aim to “out-Apple Apple” and offer premium products along with an even more satisfying user experience, identifying “things that people are already using their phones for but do it better.” Currie adds that, for the Japanese, “it’s a mindset issue to move from simply producing great quality products to great quality experiences.” Although Japan is typically recognised for its high level of service, Currie says that aside from mobile provider Softbank, which has emulated Apple to an extent in its branding, overall user experience has not been a priority for the technology industry.

High-quality applications are critical to attaining initial credibility, according to Loo. Matthias Kunze, regional MD of Yahoo Mobile, adds that the more of these that can be pre-installed, following the domestic model, the better.

There are areas of potential growth. Rohit Dadwal, regional MD of the Mobile Marketing Association (MMA), points to mobile commerce, gaming, coupons and barcode technology. “Japan knows what it takes to make these things successful,” he says. “Other markets are just starting to learn.” However, Dadwal cautions that under-developed markets may present a stumbling block due to lack of infrastructure.

Dadwal adds that Japanese brands should build partnerships in target markets. As well as being important from a marketing perspective, he claims this will be important in adapting to market dynamics and in gaining a solid footing. “There’s every likelihood that things can be fast-tracked through local partnerships.”

In this case, fast-tracking is more of an essential than a luxury. “It took the aggressive LG and Samsung a while to find their feet and create a slick-looking, simple-to- navigate user interface,” says Loo. “Unfortunately, time is a luxury manufacturers cannot afford in the world of consumer electronics.”

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This article was originally published in 8 October 2009 issue of Media.