"We'll Give You the Tablet PC for (Almost) Free, But Sign a Long-Term Content Contract" Says NTT Docomo - The Nikkei Asks: Will NTT's Tablet PC Strategy Save Struggling Tablet PC Makers?

When mobile phones took off in the Japanese market to quickly become THE personal media device it is today, the market was flooded with 0 yen phones that came with two-year service contracts with mobile phone companies, during which time the consumer will not only pay for the phone in installments, but the retailer of the mobile phones would get a kick back from the mobile phone companies for a percentage of the phone bill. 

It seems NTT Docomo remembered their success through this strategy, and is going to try it again but this time with tablet PCs and video content contracts. 

NTT Docomo announced on 22 January 2013, that it will be releasing 12 new devices this spring: 9 smartphones, 2 tablet PCs, and one Wi-Fi router. Given that the INFOBAR, to be announced on 24 January, is the only model KDDI (au) is releasing, and Softbank has 3 models including the AQUOS PHONE Xx in the pipeline, NTT stands out with its breadth and width.In addition to the range of new models to be released, NTT Docomo will be promoting a "multi-devices for households" strategy featuring a low-priced tablet PC. If NTT Docomo succeeds in revving up demand for tablet PCs, it may become a very welcome blessing for the electronics manufacturers who are struggling to boost their tablet PC sales, says the Nikkei.

At the press conference announcing the new models, President and CEO of NTT Docomo, Kaoru Kato vouched for the Xperia Z by SONY Mobile Communications. 

From the Nikkei 24 January 2013 Edition, the Xperia Tablet Z (above) and Xperia Z

ＮＴＴドコモが発表した「Ｘｐｅｒｉａ　Ｔａｂｌｅｔ　Ｚ」（上）と「Ｘｐｅｒｉａ　Ｚ」

The Xperia Z is the domestic model of the very same Xperia Z presented in Las Vegas by SONY. Moving away from the curvaceous design of its predecessors, the Xperia Z is very linear. To give it a sophisticated look, it is made of glass on the back and the power button area is made of aluminum.

The Xperia Tablet Z sports a 10-inch screen and weighs only 495g. 10-inch tablets to date are not suitable for mobile use, but by reducing the weight to under 500g, it may become acceptable to be taken out of the house. 

The two Z models are designed with a similar look and feel, and SONY hopes to make a dent in the tablet PCs markets now dominated by Apple's iPad. 

Another model that stands out from the new products lists is NEC Casio Mobile Communications' MEDIAS W, which sports a double screen structure. By opening up the smartphone with the 4.3-inch display, two screens adding up to 5.6 inches can be used. Users can read emails on one screen while browsing on the other, for example. 

Double screen smartphones first came out at Mobile World Congress in Barcelona in February 2012. NEC Casio seems to have had ongoing discussions about them with the mobile phone service providers around the world since. 

However, at the time, there were few believers in the feasibility of such a phone. Many thought it is just a concept model and was still far from ready for practical use. Yet, NEC Casio managed to realize a practical model within a year of its debut as a concept. NEC Casio has always had a focus on making phones thinner, and it seems their efforts took shape in this double screen phone. 

Of course it is yet to be seen whether consumers would actually vote with their wallets in favor of such a phone. The double screen looks cool, but how useful can it be?

The Nikkei suggests that NTT Docomo is the only mobile phone service provider who can take such gambles, as both Softbank and KDDI (au) are too focused on the iPhone to be adventurous in the Android market. 

The Nikkei says that for a while, NEC Casio looked to be lost in its quest to secure business, especially when it released a collaboration model with popular animated film, ONE PIECE.

The double-screen smartphone, MEDIAS W by NEC Casio; excerpt from the Nikkei 24 January 2013

ＮＴＴドコモが発表した２画面のスマートフォン「ＭＥＤＩＡＳ　Ｗ」

But now that it has the standard model MEDIAS X and the very conceptual MEDIAS W (double screen phone), suddenly NEC Casio seems to have all bases covered - something basic to secure volume, something that appeals to youths, and something that will tickle geeks. 

Another point to be highlighted from the product announcement by NTT Docomo is its focus on a multi-devices strategy. It is obvious that NTT aims to expand its video broadcasting service through not just smartphones, but via other devices (a new tablet PC and a new terminal for TVs). 

The tablet PC dtab is Wi-Fi only and sports a 10-inch screen, but will be retailed at 9,975yen during the promotional campaign. The tablet PC market is still dominated by Apple's iPad, but Google's Nexus 7 and Amazon's Kindle Fire HD are 7-inch screen devices priced uner 20,000 yen. NTT Docomo is crashing that party with a product priced at under 10,000yen. 

The Nikkei says that this is proof that the tablet PC market is not at all one where hardware alone can bring in any form of success. Google wraps it up with its advertising business, and Amazon is focusing on contents and e-commerce via the hardware. The market is in a state where one must be able to widely spread use of the hardware quickly as a means to get consumers to access contents or shop through them to even get into the game. 

NTT Docomo is realizing this competitive price in exchange for a long-term contract to use its video contents service. In other words, NTT Docomo is focusing on securing volume fast to take in profits later through their contents business. 

To hit this price point, NTT Docomo chose Huawei Technoloogies of China as their manufacturing supplier. As Huawei was already producing 10-inch tablets, NTT's product had a short time to market. 

In the event a consumer opts not to enter the long-term video service contract, the device can be purchased at 25,725 yen. 

NTT Docomo's new tablet PCs (below) and smartphones. The tablet on the left is dtab. Excerpt from the Nikkei, 24 January 2013

ＮＴＴドコモが発表した新型のタブレット端末(下)とスマートフォン。左のタブレットがｄｔａｂ

The Nikkei anticipates that if domestic manufacturers agree to the enhancement of promoting Docomo contents, Fujitsu, Sharp, SONY, Panasonic, and any other domestic manufacturer who is struggling to boost tablet PC sales may be able to sell such lower priced Wi-Fi only models through NTT Docomo. 

But will domestic manufacturers be able to hit the low price point, even if they revise their tablet PCs as Wi-Fi only models? Since NTT Docomo can buy large volumes, it may become possible. 

When asked whether NTT Docomo would consider having a Japanese supplier provide them with dtabs, Kato said, "We would like to consider it for the next generation models."

While NTT has mentioned the "i" word a few times, since iPhones and iPads are not in NTT Docomo's lineup or pipe line as we speak, they will need to continue to work closely with Japanese, Korean, and Chinese manufacturers to compete in the market where such American businesses as Apple, Google, and Amazon are dominating. 

The Nikkei says the lower priced, high volume strategy to disseminate NTT Docomo tablet PCs is the quick fix. 

### CarpediemJapan Comments and Observations ###

CarpediemJapan believes that the Japanese market may remain a predominantly smartphone and keitai market for the foreseeable future due to the nature of the way people commute/travel - using public transport. 

In addition, the fact that "everything that can be done on an iPad can be done on the iPad mini" is probably not reason enough for people to jump on the iPad mini. But it has increased the appeal of the iPad (mini or not) for non-iPhone users. But they are still looking at the iPod Touch as well, as part of their options. 

On the other hand, iPhone users probably feel that they can do everything they need to do in transit on their iPhones and it is much more convenient to carry around than either an iPad or iPad Mini. 

Unlike the US and other markets, Japanese consumers have one seg TV, and are used to watching TV and videos on their keitai phones, so the smaller screen is already widely accepted. And given that "privacy screens" - adhesive polarized film that is placed on the screens to secure some "privacy" in public places when checking one's phone - are a popular product, using larger screen products in public may not prove as popular as even NTT Docomo hopes. 

Today, PC use is not mandatory in most schools, including universities, but that is changing. When learning through tablet PCs in schools become a norm, both e-books (in the form of e-text books) and using tablet PCs will probably become more mainstream. 

Reference:

The Nikkei:
国内メーカーの活路になるか　ドコモが打ち出すタブレット戦略　　：日本経済新聞