- Apple's new story in Japan. Softbank, the No. 3 mobile operator, will sell the coveted cell phone in Japan.
Softbank's June 4 announcement that it has signed up to sell Apple's (APPL) popular iPhone in Japan might seem like a major coup for the country's third-largest mobile operator. A new and improved iPhone, which Apple is widely expected to unveil at the Worldwide Developers' Conference (WWDC) in San Francisco next week , could help Softbank narrow the gap with the two largest wireless carriers, NTT DoCoMo (DCM) and KDDI. The buzz alone should boost Softbank's brand image with consumers and its standing with software developers and Internet content creators.
But the company's one-line statement that it plans to "bring the iPhone to Japan later this year" was revealing in its brevity. One issue that Softbank avoided mentioning was whether the deal with Apple is exclusive. That's unlikely to happen, industry executives say, because Apple has moved away from the type of exclusive deals with operators that it favored when the iPhone debuted last year. Earlier this month, Apple granted both Vodafone Group (VOD) and Telecom Italia (TI.A) the right to sell the iPhone in Italy.
Apple also won't want to limit itself to Softbank's 18.8 million subscribers. In recent months, Apple execs have held several meetings with officials from both Softbank and DoCoMo at Apple headquarters in Cupertino, Calif., according to industry executives. Apple's best shot at gaining a toehold in one of the most sophisticated mobile markets on the planet is to appeal to as many of Japan's 108 million mobile subscribers as possible. Success would help its chances in other markets. Another incentive: Japan accounts for nearly a quarter of the $105 billion in global cell-phone sales annually, according to Tokyo research firm Eurotechnology Japan.
Why greenlight Softbank first? Some telecom execs suspect Apple is trying to gain the upper hand in talks with DoCoMo. "DoCoMo is proud and it might say, 'we don't want the iPhone,'" says one telecom executive who spoke on condition of anonymity. "But it risks losing market share and a product that Softbank could use against DoCoMo." A DoCoMo spokesman would only say that further talks with Apple were possible.
DoCoMo might not cave to the pressure. Japan's dominant carrier is used to calling the shots when dealing with handset manufacturers. Apple's demands for 30% of airtime revenues from every iPhone user and permission to activate new subscribers through its iTunes online store could be a deal-breaker. And DoCoMo knows that if it gives in to Apple it will have a dozen or more other tech companies whose handsets connect to its network asking for similar concessions.
All the hype won't do much for Apple unless its new iPhone stands out from other feature-packed handsets in Japan. A touch screen, user-friendly software, and Internet connectivity are hardly novel. These days handsets in Japan double as credit cards and commuter passes, sport high-end cameras and bar code readers, boast Internet browsers over high-speed connections, record TV broadcasts, and do e-mail, and many come with customized Web-based services.
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