Apple's iPhone Faces First Test in Fickle Japan Market

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In many countries the latest version of the iPhone represents the epitome of high-technology but the picture is different in Japan, which gets its first-ever taste of the iPhone with the Friday launch. Consumers here are used to advanced handsets that handle digital TV, e-money and replace their subway and rail cards for travel, so the reaction the iPhone -- which does none of these -- will get in Japan is being watched with interest.

The original iPhone never went on sale here because the country doesn't use the GSM (Global System for Mobile Communications) standard on which it was based. But with the new phone's embrace of the WCDMA (Wideband Code Division Multiple Access) standard, it's been snapped up for sale by Softbank, Japan's number three carrier with about 19 million subscribers.

Buzz is building ahead of the launch.

"When the iPhone was announced, I watched Steve Jobs' keynote and thought it looked like a great product and I've wanted one ever since," said Hiroyuki Sano, a student from Nagoya in central Japan.

After travelling for five hours to Tokyo, he set up camp outside the Softbank shop in the trendy Harajuku district at around 6a.m. on Tuesday, three days before the launch. Softbank's announcement that it will begin selling handsets from 7a.m. on Friday prompted about 20 people as of Wednesday lunchtime to queue outside the shop in the hope of securing an iPhone.

It has long been a challenge for foreign companies to penetrate the discriminating Japanese market, but Apple has proven its mettle with the iPod, which became the top music player in Japan upon its release there in 2006. Japan remains Apple's top international market.

As a loyal Apple user, the arrival of the iPhone 3G sits well with 35-year-old Ryusuke Hiratsuka. "The interface and style are unbeatable, plus I don't have to carry my iPod anymore -- everything is integrated," he said.

The biggest deterrent for him isn't the hardware but the hassle of switching carriers and losing discounts he has built up with his current carrier, KDDI. "The amount of money I'd spend monthly for owning an iPhone is equivalent to the phone bill of my wife and I," he said.

At ¥23,040 (US$216) for the 8G-byte version the phone is affordable for most Japanese who are used to paying at least this much for a new cell phone. The price alone can definitely result in sales to about a million units in the first year, Deutsche Bank analyst Kenichi Nishimura recently told Bloomberg TV.

The launch timing works in Softbank's favor as well because it coincides with Japan's summer season, when most Japanese workers receive a bonus equivalent to several weeks' pay. Apart from travel and leisure, electronics is typically a top-choice for how Japanese spend that bonus, according to consumer research company MMRI.

The iPhone, with all its hype, also has its share of detractors.

"I originally wanted to buy the iPhone but I think by using plastic, they sacrificed the design in this model. I'm a bit disappointed about that," said John Hsu, a graduate student.

IDC analyst Michito Kimura thinks Apple might have to add Japan-only features, such as the IC-chip payment system and "One-seg" digital TV technology, to ensure continued sales beyond the launch phase.

"While the iPhone is attractive, its lack of functions unique to the Japanese market may lead to a loss in sales opportunity," he said.

For many early buyers, these "minuses" will be minor details.

"Just the interface itself is enough reason for me to buy the iPhone, but the best thing about it is that I can get a full web surfing experience -- something I've wanted for a long time," said Andrew Shuttleworth, a smartphone aficionado who runs the Web site. A long time Windows Mobile user, he is convinced that the Apple's iPhone is his ideal smartphone.

"Internet on Japanese mobile phones have been following the i-mode system ever since. It has hardly improved even when smart phones arrived in 2005, but I think the iPhone can change that," Shuttleworth said.

Whether or not the iPhone will be a success, or be brushed off as just another model released in the extremely competitive Japanese mobile phone market, its entry marks a changing tide. "At the very least the iPhone will open eyes of the consumers that there is something better out there," Shuttleworth said.

However, for some, the iPhone's specifications and capabilities aren't the only deciding factor. "I definitely want one, but I still have to ask my wife," Hiratsuka said.

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