Vodafone Struggles In Japan
By Carlo Longino, Fri May 14 15:15:00 GMT 2004

The world's biggest carrier made a big move into Japan three years ago, and while Vodafone has spread technology it acquired throughout the world, its Japanese unit is having a rough time.

Vodafone KK, formerly J-Phone, has struggled in the hyper-competitive Japanese market by failing to offer customers attractive handsets and making surprise price increases, resulting in lagging growth to its 3G networks -- developments many analysts put down to Vodafone's focus on its global strategy rather than a strong domestic policy at its Japanese unit.

J-Phone was hot when Vodafone bought in thanks to Sha-Mail, the first picture messaging service in the world. Its popularity gave J-Phone a strong competitive advantage for several months before other carriers could respond. The carrier has been unable to sustain that momentum, with the renamed Vodafone KK adding less than 25,000 new subscribers in April, 88 percent less than in the same month the previous year, lagging both KDDI and NTT DoCoMo.

A large part of Vodafone's interest in buying J-Phone was access to its technology and its relationships with Japanese vendors for advanced handsets. The successful Vodafone Live! service was based on J-Phone technology (presumably its J-Sky service), and the company has made models from Sharp its flagship carrier-branded devices. including Europe's first megapixel-camera phone. It likely couldn't have made these advances without J-Phone.

But the focus on the rest of the world seems to be diverting attention from Japan. Vodafone only offers three 3G handsets there, echoing DoCoMo's problems with its FOMA service, when the choice of handsets paled in comparison to KDDI, giving the number-two carrier a massive advantage. Vodafone is releasing a number of advanced 2G handsets that have been received well (as was DoCoMo's 505i line, which gave it a big boost).

It doesn't look like things are going to get any easier for the carrier, though. NTT today named Masao Nakamura the new president of DoCoMo, a move expected to intensify the company's efforts in its home market.

The reign of outgoing DoCoMo president Keiji Tachikawa was marked by a number of moves to bolster the carrier's overseas presence, most of which have been unsuccessful and resulted in huge write-offs for the company. Rival KDDI has also seized market momentum from DoCoMo, adding more new users in the last 12 months after DoCoMo's well-publicized missteps with its 3G offering.