Small Fish, Big Pond

Besides the “Google phone” and the Iranian Twitter hack it seems that the iPhone sales news in Japan is blowing up all over the place.

The news is that iPhone now makes up 46% of the Japanese smartphone market.

This sounds amazing considering that Japan is so phone centric that Apple could dominate the market in just a couple years. The problem is that the sample was only taken by what Impress considers “smartphones.” The ubiquitous Japanese keitai that EVERYBODY in Japan has wasn’t factored in.

So really the article heading should be that the iPhone makes up 46% of 5% of the Japanese phone market, hardly a market dominator.

“But it’s 46% of smartphones, not Dumbphones.” Keep in mind that the “Dumbphones” that weren’t included in the above percentage have features such as:
-Mobile Web
-Email
-REAL Cameras
-Turn by Turn GPS directions
-2D Barcode scanning
-RFID payment systems
-2 way video calling
-HDTV receivers
-SMS
-MMS (the iPhone still doesn’t have that!)

In reality it should be the other way around, the iPhone has 46% of the dumbphone market. But that’s nothing to blow off, it means it’s got a good chunk of the market over Windows mobile, Android, Palm, and RIM. Pretty decent. But instead of looking at these skewed numbers lets look at the big picture.

46% of the smartphone market is 3 million phones. Pretty good for a year an a half.

But as of 2 weeks ago there are 110 million phones in Japan.

That means the iPhone makes up 2.7 of the phones in Japan. If you gather 50 random phone users in Japan ONE of them will have an iPhone.

This is really just another case of not seeing the forest for the trees; a problem that is common if you’re deeply entrenched in the tech news world (to be fair not all blogs got hung up on the 46%). For all the news we hear about the iPhone it’s only been out (in the US) for a couple years. Most non-tech people hold onto their for long than that so as rabidly popular the iPhone is it’s still not a market dominator.

The same thing happened yesterday when news came out that iPhone had just recently passed Windows Mobile in the number of smartphones in use. People were amazed that this hadn’t happened a year ago. It’s not shocking at all, RIM and Windows Mobile (and quickly Android) are on many handsets and all carriers. Plus RIM and WM have been on sale for more than twice as long as the iPhone. Joe Wilcox has a good breakdown of that data.

So as in most things before you freak out when somebody put out amazing numbers like “It’s over 46(9000)%!!!” take it with a grain of salt and look at it from the perspective the average person and not the tech blog angle.

Both Engadget and Gizmodo weighed in on the NYT article about why Japanese Cellphones suck (they don’t really, unless you’re an iPhone fanboy).

Engadget mostly posted a concise version of the NYT article, both the NYT and Gizmodo basically come down on the Japanese cell market, the main reason they don’t like the phones: too many features…

Before I expand on this, I’m really shortening what they said, and there is a lot of logic behind the idea that you can make a device too complex; so much so that it is less useable than a more simple device. Sony suffered this problem in the PDA market 6-7 years ago when they made amazing devices that were so chock-full of features people had a hard time learning how to use all of them.

The reason behind this is that collectively the Japanese are gadget fiends; they love tons of buttons that have all kinds of extra features. Compare a US automobile to a Japanese import; there are buttons all over the place for added features. Me and a friend were comparing my ’93 Pathfinder to his ’90 Blazer and he loved all the cool switches that turned on a “Power Mode” for the fuel injection, or the “Auto” setting on the AC. The Blazer had a steering wheel, pedals, stick-shift and almost no electronics. So you have to realize that Japanese tech culture loves to sink neck deep into features that confuse and disorient Americans that just want something simple and just gets the job done.

Back to the phones, the NYT is pretty fair looking at the business of the Japanese cellphone market and how they don’t have any teeth outside the Japanese market (where they are also suffering economic woes like everybody else)

But John Herrman of Gizmodo is basically reading the NYT article and using its limited explanation of Japanese cellphones as a reason to kick around anything not iPhone related (and commenter’s aren’t letting him get away with it). Here’s a shortened quote to give you the gist:

an assortment of barriers…are keeping them from leaving the island. But for the first time in recent history, this is a good thing. Japanese cellphones, as they are, sound absolutely fucking terrible.

Sound absolutely terrible. My advice to John, don’t knock it till you tried it. When I was in Japan I got to see, use, and have demonstrated to me by a native user (the tech loving guys mentioned above) all the amazing things a smartphone can do. Let’s break it down point/counter-point to John.

“Over-the-air mobile TV is interesting, but can—and will—be replaced by internet-based video services”

This is a bad thing. Streaming is exploding the data rate usage on cell networks; as a WAN tech I can expertly say this is very bad, WAN tech and wireless in particular are dry up really quick when you get more people on the network as anybody at SXSW can attest. Don’t believe me? Japanese are already fighting this demon on their cell networks (further proof they are ahead of us in smartphone tech). Besides I’d love it if my phone picked up HDTV broadcasts the way it does FM radio.

”and cellphone payment systems, though great, are by no means impossible here—in fact, they’re on their way.”

They’re always “on their way” but they have it NOW, and have had it for the past 3-4 years. “Osaifu-Keitai” is one of my favorite features on Japanese phones and I can’t wait till we have the same thing here. I’ve seen a lot of “express pay” terminals around and putting a chip compatible with our local credit cards would be cake. The tech is there, American business just isn’t taking advantage.

”Scanning the article for other futuristic features I’d like, I come up dry: Barcode scanning? Any phone with a decent camera and an appropriate app can do that.”

True, this is more of a failure of businesses to use 2D barcodes to enrich and connect print and digital media. This is the holy grail of marketing and all it needs is an official standard on the phones to excite businesses into using it. I don’t see how anybody in tech can’t see the amazing benefits of being able to seamlessly connect print, broadcast, and digital media (I think this shows that John is just a little ignorant on the subject).

Waterproofing and solar power? For most these are gimmicks. Facial recognition unlocking? Please, no.

Ok, I agree with John here. You can go too far.
Let me rephrase that. It’s good to go too far with amazing features like this so long as you have a cheaper model for people who aren’t super gadget hounds. I might want waterproofing, solar power, and facial recognition, but it should be a limited edition of the phone so I have an option to go without for cheaper.

The NYT article and especially John Herrman’s interpretation of it remind me of when I was explaining all the amazing features of my smartphone to people 3 years ago. When I told them that my phone could check email, surf the net, watch youtube, IM friends, or connect to my computer their response was the same as Johns, “Why would I need all those features that I can do with other devices?”
2 years later the same people were raving to me how great their iPhone was and in my head I was screaming, “I was telling you this exact same thing 2 years ago!!!”

Japanese cell phones are the same situation. In two years (hopefully) Americans will be bragging how their phones can watch HDTV, pay for gas at the local 7-11, or scan a code in a magazine to jump to an online video related to the article; and John will be raving about how it’s so great the Apple invented the technology to make it happen.

Edit to Add:
Sorry, reading through that it seems I’m really coming down on John, I think he just hasn’t experience these features firsthand and would be a convert in a second the minute he saw how it all comes together (but shame on him for assuming the NYT knew what they were talking about when it comes to tech!).

It’s understandable due to how little these great ideas are moving across the Pacific. The answer to the NYT article about why Japanese phone tech hasn’t caught on here is that it’s the service providers are holding us back. All these features are provided by the Japanese phone carriers as added features, it requires additional work on their end to provide the service, agreement across the industry to have standards that all phones can use, and it needs to be done in an affordable way. All three of those things are impossible over here.

Our phone carriers drag their feet increasing data bandwidth, let alone increasing features; we still think MMS and video recording are great new features, the Japanese phones have dual cameras to work as true video phones! And just try getting the main carriers to agree on any standardization for barcode scanning or wireless purchases. And if they charge a $20-$50 premium to tether the same data plan, how much extra will they charge for HDTV tuners, barcode scanning, and phone payment systems?

I still think it would be great to have my phone double as a Credit or wallet. I bought a Suica card just so I could tap-on, tap-off the subways, and buy drinks out of the vending machine without carrying change while I was in Japan on vacation.

At $20 is was a small convenience charge.