Japan may wait before saying 'iDo' to iPad

May 26, 2010 by Kimiko de Freytas-Tamura
A man is reflected on his iPad as he shows the device to journalists in front of an Apple store on May 12. Thanks to the media buzz surrounding the iPhone, in which entire magazines are devoted to help people use it, "resistance is fading and the Japanese mindset is ripening for the iPad", said MMRI analyst Eimei Yokota.

Many thought the iPhone would underwhelm Japan, where for years people have used ultra-advanced handsets to send emails, watch live television, feed pets and run talking bathtubs at the touch of a button.

But the tide of opinion on Apple's tactile technology may have turned ahead of the launch of iPhone's bulkier cousin the iPad on Friday, winning over a market that has seen rivals Nokia and Samsung all but pull out.

A recent survey by Tokyo-based MM Research Institute Ltd (MMRI) said the accounted for 72 percent of all smartphones sold in Japan in the fiscal year ended March.

While that only represented about five percent of all mobile phones sold in Japan, analysts say it bodes well for the iPad, despite initial misgivings as to what one can do with an oversized iPhone that cannot make phone calls.

"I have already seen Japanese guys showing off iPads they had bought in the US at parties to impress girls," said Gerhard Fasol, high-tech entrepreneur and founder of Tokyo-based IT consulting firm Eurotechnology Japan.

"That's kind of the ultimate test in some ways," he added. "Although I don't know whether an iPad is enough to attract a charming lady to a boring guy."

Thanks to the media buzz surrounding the iPhone, in which entire magazines are devoted to help people use it, "resistance is fading and the Japanese mindset is ripening for the iPad", said MMRI analyst Eimei Yokota.

Apple boasts that it has already sold more than one million units in the United States and that customers have downloaded over 12 million software applications from its online store.

However, Japan poses unique challenges that the cool thin slab of 21st Century computing may struggle to overcome.

With popular credit card and train ticket functions unavailable on the iPhone -- not to mention connections to pet-feeding machines -- many users also carry a Japanese phone made by the likes of overall leader Sharp or Toshiba.

This means they may not contemplate juggling a third, larger device on crammed subway trains, analysts say.

But others see Apple's app-driven vision, crucial to the iPad's success, as the future force replacing NTT's decade-old but comparatively cumbersome i-mode service in Japan, which enabled phones to serve as train tickets and small TVs.

"The iPhone came in and offered a machine where you could use your personal computer's capacity and applications. This certainly was a novelty," said Iichiro Yamaguchi, telecom analyst at Daiwa Capital Markets.

What content will be available for the iPad to make it big in Japan is another issue as domestic news media takes a wait-and-see approach to the device, contrary to their US peers.

"Newspapers are strong in Japan, and have been very late to adopt web-based business models," said Fasol.

Circulation remains robust, falling only six percent to 50.3 million sales daily between 1999 and 2009, the Japan Newspaper Publishers & Editors Association said, much better than how peers in the United States are faring.

The robust performance can be explained by strong subscriptions and a reporting culture that runs late into the night to nab exclusives.

The "yomawari" reporters doorstep senior figures until the early hours to generate fresh headlines for their morning editions, meaning that Japan's old guard is less likely to run stories that appeared the day before online. However, magazine circulation in Japan slumped by a third over the decade.

"Publishers in Japan have seen how the iPod changed the music industry and so their industry is right behind," said Yokota, pointing to the potential for popular manga cartoons and travel applications on the iPad.

With many Tokyo commuters facing hour-long journey times, "the iPhone and iTouch screens are too small to substitute books. That's what will appeal to users," about the iPad, he added.

Japan will also be the only country where shoppers are locked into one 3G network when the device goes on sale, with service provider Softbank chosen as Apple's exclusive partner, to the chagrin of competitors and consumers.

But wireless Internet services are jumping onto the iPad bandwagon, as competing providers slash fees and expand coverage to restaurants, subway stations and bullet trains in anticipation of stronger demand.

The will also take aim at the gaming industry with developers having already dabbled with titles formatted for the iPhone.

But some remain unimpressed. Nintendo has shrugged off the iPad's potential to displace its popular DS machine.

"It is just a bigger iPod Touch," CEO Satoru Iwata said dismissively in February. "There were no surprises for me."

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