Softbank faces potential setback in Japan

Softbank is expected to continue selling the iPhone5 when it is released in October in a new non-exclusive partnership.

KDDI is expected to commence sales of the unit at its branded outlets from November. While the move would appear to be a setback for Softbank, reactions have been mixed.

Philip Rubel, president and chief executive of Saatchi & Saatchi Fallon (SSF) in Tokyo, said the impact on Softbank would depend on KDDI’s pricing and service strategy, which initial reports indicate will be similar to that of its rival.

“Considering that Softbank will have an approximate two-month head start selling the new iPhone, impact in the short term may be negligible,” Rubel said, predicting that Softbank would be likely to drop its prices upon KDDI’s launch of the handset to maintain share.

However, Takashi Takeda, president and chief executive of DDB Japan, said the potential impact on Softbank could be more serious. He noted that Softbank had “a clear disadvantage in coverage and service” against KDDI, particularly in non-urban areas.

While the iPhone is popular among young urban users, Takeda pointed out that non-urban consumers represented the biggest growth opportunity and would be more likely to opt for KDDI than Softbank.

He noted that KDDI had a clear advantage with regard to new contract acquisition, and suggested that Softbank would also need a well-thought-out strategy to retain its existing customers.

The iPhone commands around 40 per cent of Japan’s smartphone market. Japan remains a prime growth market for the segment: a recent study by Google into smartphone usage revealed that Japan had the lowest penetration out of 11 regional markets.