Saturday, June 29, 2013

Fad-Loving Japan May Derail a Sony Smartphone

The Xperia Z has not even hit the United States market yet: T-Mobile says the model will make its debut on its network in the coming weeks.

But it is already a has-been in Japan. DoCoMo has turned its attention to a new phone, the Sony Xperia A — a model with fewer features that has not won the stellar praise showered on the Z.

“It’s time for a new model,” said Mai Kariya, a DoCoMo representative in Tokyo. “We’re finished with the Xperia Z, and now focusing on the Xperia A.”

As Sony banks on smartphones to turn around its struggling electronics business, it faces an increasingly bothersome obstacle at home: the demands of Japan’s powerful cellphone carriers, which remain obsessed with constant model updates.

For years, Japan’s three largest mobile network companies have pressed phone makers here to update their handsets every three or four months, providing Japanese consumers a dazzling array of newfangled phones and features each season. Phones with digital TV broadcast receivers were once all the rage; a phone without it was never going to sell. Then it was thumbprint scans; you’d be hard pressed to find those on many phones today. The same is true of swiveling screens, and to a lesser extent, electronic wallets.

The fast-paced cycle is commonplace in Japanese marketing. Manufacturers deliver short runs of seasonal products to create buzz, analysts say. Pepsi Japan, for example, brings out limited-edition drinks each year: Salty Watermelon Pepsi or Pepsi Ice Cucumber. Nestle’s KitKat candy bar has cycled through an eye-popping array of limited editions in Japan: green tea, pumpkin, strawberry cheesecake, wasabi and soybean to name only a few.

Even Japan’s best-selling pop group, AKB48, rotates through a cast of 67 members and on New Year’s Day released 16 versions of new and repackaged records.

“This is the worst of Japanese companies’ excessive obsession with the new,” said Yuichi Kogure, an associate professor in information technology policy at Aomori Public University and the author of several books on Japan’s cellphone industry. “But now the mobile phone makers are exhausted.”

Sony’s Xperia Z got caught in this marketing buzz saw. DoCoMo started selling the Xperia Z in Japan on Feb. 9 as part of the carrier’s spring 2013 collection, replacing the Xperia AX of the winter 2012 collection. A month later, on March 15, DoCoMo announced its summer collection of 11 new phones, with the Xperia Z replaced by the Xperia A, which went on sale last month.

The constant feature roulette has helped carriers lure customers away from rival networks. But it taxes the research and development resources of Japan’s phone makers, who must meet the constant demands from carriers for new high-end features and frequent handset renewals.

Phone manufacturers here have found it impossible to achieve the economies of scale that would justify the high development costs and the slim profit margins. Because separate teams of designers at each handset maker race to build handsets from the ground up for each separate carrier, few phone makers have been able to develop a coherent global product strategy, analysts say.

The unique pace of the Japanese cellphone market largely cuts it off from the rest of the world, making it difficult for one manufacturer to make and market phones for both the Japanese and global markets, said Kenji E. Kushida, an expert on Japan’s information and communications technologies at Stanford.

“The Japanese market became somewhat like the Gal├ípagos Islands. It had great biodiversity, but was so weak to outside species,” Mr. Kushida said.

He points to Vodafone, which moved into the Japanese cellphone market in the early 2000s. The British network operator tried to synchronize its Japanese product lineup to match its “global standard” handsets sold in other markets. But Japanese consumers were unimpressed by what struck them then as overly simple handsets that appeared to take a step back in functionality.

Vodafone’s Japanese market share started to slide, and in 2006, it sold its operations to SoftBank.

Not every maker succumbs to this whirligig and, not surprisingly, those that don’t aren’t Japanese. Apple has announced a new iPhone model roughly once a year. Its iPhone 5 came out in September, and the company is not expected to introduce a new model until the fall. Samsung Electronics is focusing its resources on its sleek Galaxy S4 smartphone, which went on sale in April, a full year after its predecessor the Galaxy S3.

This article has been revised to reflect the following correction:

Correction: June 28, 2013

An article on Thursday about cellphone makers’ difficulty in satisfying Japanese consumers’ desire for constantly updated devices described incorrectly Vodafone, which struggled to sell phones in the Japanese market. It is a wireless network operator, not a phone maker.

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