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In early-2008,
market leader in the Japanese mobile market, NTT DoCoMo, Inc. (DoCoMo), saw its
market share in the country drop below 50 percent.
Analysts pointed out that the company, which had dominated the Japanese market
for more than a decade, had been consistently losing market share since late
2006. The decline in DoCoMo's market share was attributed to the aggressive
strategies adopted by low-cost competitors, particularly Tokyo-based SoftBank
Mobile Corp (SoftBank).
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DoCoMo had managed to keep a stranglehold on the
Japanese mobile market ever since its inception in 1991. It had
accounted for more than half of the mobile market in Japan since the
late 1990s.
In the mid-2000s, it was the dominant player in this mature mobile
market, with around 54 percent of the market. The other notable players
were the Tokyo-based KDDI Corp. (KDDI) and Vodafone Japan (the Japanese
operations of the world's largest telecom company by revenue, Vodafone
Group Plc).
The growing challenges in this mature market and the stiff competition
from strong local players forced Vodafone to exit the market in 2006.
SoftBank, which was Japan's largest Internet service provider, bought
Vodafone's Japanese operations and entered the Japanese mobile market.
SoftBank soon sparked a price war in the market. This, coupled with a
change in rule in Japan in 2006 that enabled consumers to retain their
phone numbers while opting for another service provider, led to many of
DoCoMo's customers defecting to its rivals. The second-ranked mobile
operator in Japan, KDDI, which marketed its services under the 'au'
brand, too saw its customers moving to SoftBank.
According to figures released by the Telecommunication Carriers
Association3, by the end of March
2008, DoCoMo's market share had dropped to 49.7 percent with 53.39
million subscribers. KDDI and SoftBank had 30.34 million subscribers and
18.59 million subscribers respectively.4
Some analysts felt that the drop in the company's market share was more
pronounced in the first quarter of 2008 as the company had discontinued
its PHS (Personal Handyphone Service) network business.5
DoCoMo was also lagging behind its main rivals KDDI and SoftBank in terms of new customer acquisition.
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1] Jonathan Soble, "DoCoMo Files SoftBank Action,"
www.ft.com, March 18, 2008.
2] "Japan's NTT DoCoMo End-March Market Share Falls
below 50 Percent - Association," http://money.cnn.com, April 7, 2008.
3] The Telecommunications Carriers Association is a
trade association dedicated to the industry for information and communication
technology in Japan. It was established in 1987 and as of early 2008 had around
90 companies as members.
4] "Japan's NTT DoCoMo End-March Market Share Falls
below 50 Percent - Association," http://money.cnn.com, April 7, 2008.
5] DoCoMo started the PHS network business in the
late1990s as a cost-effective alternative to cellular service. The service was
readily accepted by the market at first but its appeal petered out as the
regular cellular calls got cheaper. |