Japanese mobile players unite to drive global expansion

IT company NEC is set to be the dominant partner of the merged venture, called NEC Casio Mobile Communications, with a 66 per cent stake. NEC is expected to steer the venture's products aggressively into global markets, such as China and the US, according to reports.

According to Kei Shimada, the founder and CEO of Japanese mobile research, consulting and development firm Infinita Inc., the merger has taken place in an effort to reinvigorate Japan's struggling mobile handset market, which has faced setbacks as foreign handset models become increasingly popular and the domestic market reaches saturation.   

"It's an obvious move for Japanese manufacturers trying hard to survive in the harsh environment that the domestic market is currently facing," he said. “Mobile penetration is already close to 90 per cent; handset shipment for the 2008 fiscal year dipped below 40 million to approximately 34 million, a level equal to that of nine years ago; and handset development costs are as expensive as ever at around ¥3 billion (US$33 million) per model, with companies producing seven to eight models a year.”

To offset these environmental disadvantages, the venture has set a goal to sell 12 million handsets globally, comprised of seven million sold in Japan and five million marketed abroad, by March 2013, and also looks to garner 23 per cent domestic market share by that time.

Henri Servomaa, director of Japanese mobile software developer Mobalean, said NEC Casio Mobile Communications may look to accomplish this by looking at popular trends among global handset providers, such as applications.

“The focus will likely shift towards software, where the iPhone and Android platforms really shine as proven by the tens of thousands of applications that exist,” Servomaa said. “It is also likely that mobile online services will continue to converge towards fewer de facto 'standards' instead of the current multitude.”

Shimada added that NEC Casio Mobile Communications will additionally be able to operate via all three domestic mobile carriers - Docomo, KDDI and Softbank.

“But even with the upsides, there is much more the companies have to do to remain players in the mobile industry," Shimada noted.

“Competitors like Sharp, which is the largest in the domestic mobile market, and Panasonic, presently second, are already on all three major carriers, which allows them to sell more volumes and keep their mobile businesses afloat. But they too have already announced that they will look outwards to enter or re-enter foreign markets with their mobile handsets to look for more upsides to their mobile handset revenues.”