Japanese Mobile Market Forecast 2003-2010

The introduction of Mobile Number Portability (MNP) was the most important issue in the Japanese mobile market during the second half of 2006. However, it had a limited influence on the overall mobile market because mobile operators maintained a relatively low subscriber churn rate by offering attractive handsets, services, and tariff plans. The subscriber churn increased slightly in November, as some users wanted to change their operators and had waited until the implementation of MNP. However, the majority of mobile users did not pay that much attention to the MNP policy.

Another notable change in the Japanese mobile market was the emergence of SoftBank Mobile, created by the merger between SoftBank and Vodafone Japan. Vodafone had presented a disappointing business performance over the past few years, and its migration to 3G networks had been slow. As the dominant player in the fixed-line communications industry by securing the largest market share and operating the popular Yahoo! Japan service, SoftBank turned its eyes to the mobile market. While preparing its mobile services as a newcomer, the company announced that it would take over Vodafone, creating a ripple effect in the industry. Since its launch in October 2006, SoftBank Mobile has strived to make full use of MNP with a strong handset line-up, attractive tariff plans and aggressive marketing in order to compete with the major mobile operators, such as NTT DoCoMo and au. However, it remains to be seen whether it will be able to make a huge success in the market.

As of the end of FY 2006 (which ends March 2007), the number of mobile subscribers increased to 96.718 million with 75.5% of penetration rate. ROA Group projects that mobile users will reach 99.346 million with recording 77.8% in terms of penetration rate by the end of FY 2007 (which ends March 2008). As the market is being saturated, the annual market growth rate will decrease year after year. But, Japan's mobile industry has room for further growth through the introduction of new value added services enabled by next generation network technologies, the entrance of new players in the industry and creation of new services targeting business users. In fact, Japan's mobile industry has posted a steady growth, even though the new subscriber addition has slowed since 2005, thanks to mobile operators' efforts to seek new user market. For example, simple handsets equipped with a user interface (UI) that is suitable for senior or child users have been released in the market, and GPS handsets are gaining popularity. On top of that, mobile operators focused on tapping the business user market with exclusive handsets and tariff plans in 2006. As a new service operator, e-Mobile, started its services in March 2007. In addition, 3.5G (HSDPA) networks are spreading and data services are expected to increase with an accelerating speed, providing another driving engine for market growth. Also, an increasing number of users will utilize more than one mobile handset according to their needs. All in all, Japan's mobile market is expected to expand further in the future.

Meanwhile, the PHS service provider, Willcom, which made a remarkable advancement in 2005 and 2006, recorded 16.3% annual growth rate at the end of 2006, dropping from 28.4% in 2005. It is expected that Willcom will face challenges over the next few years as SoftBank Mobile offers low priced services and e-Mobile is committed to secure market share with data services. But PHS will continue its growth albeit limited because it can be available within hospitals and it is appropriate for children's communication device equipped with GPS.

Considering the changes and current events in the Japanese mobile market, ROA Group projects that the number of Japan's mobile users will increase to 107.322 million by the end of 2010 with a CAGR of 3.93% during 2003 - 2010.

Research Scope

The report analyzes the trends and characteristics of Japanese mobile operators by categorizing important market changes and mobile operators' events which took place from June 2006 to December 2006. Together with an analysis on the development of the Japanese mobile market from 2000 to today, the report projects how the market will change by 2010, considering expected government policies, regulations, movements and strategies of players, and changes in user lifestyles.

Research Method

ROA Group utilized its independent analysis methods which focus on each category and company in order to project Japan's mobile market from 2006 to 2010. The projection is based on primary & secondary research on the mobile operators including the newcomer as well as ROA Group's accumulated information sources and research data base.