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DoCoMo’s market share falls below 50% - mobile fragrance service to help revival?

April 8, 2008
By Ken Worsley


According to data released by the Telecommunications Carriers Association, NTT DoCoMO’s market share of Japan’s mobile phone users has fallen below 50% for the first time since December 1998. In March, the number of mobile and PHS contracts at DoCoMo fell by 2.5%, giving the firm 49.7% of the market, or about 53.4 million of Japan’s 107.4 million subscribers. Meanwhile, KDDI’s AU brand picked up a 0.4% rise in contracts to pull a 29.5% market share, while the number of contracts at Softbank Mobile increased by 1.7% to reach 18.1% of market share.

When PHS is pulled out of the equation, DoCoMo still holds about a 52% market share on mobile contracts, though the number of DoCoMo mobile contracts fell by 2.4% in March. DoCoMo is in the process of pulling out of the PHS market.

In fiscal 2007, Softbank saw the greatest net number of new subscribers, with 2.67 million users added to its network. AU had 2.15 million new users while DoCoMo’s net gain registered a lagging 766,000.

Softbank’s strength in FY2007 depended partly on its pricing plans and its push for consumers to buy one-seg television enabled phones. We also shouldn’t forget Softbank’s marketing, which has included television commercials with Cameron Diaz and Brad Pitt, as well as the series with the White Plan family, starring none other than Aya Ueto:

Of course, DoCoMo, AU and KDDI all use the same firm for their advertising solutions: Dentsu.

Why is DoCoMo in trouble? Marketing is only one of many problems. Softbank has issued an out-and-out price war, the goal of which is obviously to gain market share. With the lowest market share of the three major mobile telephony operators, Softbank is in the perfect position to challenge the other two.

So how is DoCoMo fighting back? On the price front, it is now offering free calls between family members, although this comes years after AU started providing the same service. It has also rolled out a new line of phones this month, in a move that is meant to distract more by eye candy than by functionality. However, DoCoMo’s strangest move might be the announcement of its intention to go ahead with a trial service that will emit scents an aroma generator built into its handsets. According to Market Watch, “The handheld device is designed to work together with music and video downloads, whereby scents are combined according to a fragrance playlist linked to audiovisual content.

Never mind that DoCoMo’s 2005 attempt to sell desktop PC “Fragrance Communication” hardware was a flop. Let’s think (a tad sarcastically) about the cultural code involved in the marketing of an aroma-emitting mobile phone:

Fragrance phone = Bathroom freshener

This might be useful, but it’s hardly sexy. From there, it’s not much of a jump to:

Fragrance phone = Bad hygiene

There’s only one reason for emitting good smells, right?

Fragrance phone = annoyance

These phones are bound to be used at inappropriate times in inappropriate places. It’s hard to tell exactly what DoCoMo is thinking with this project. There have to be better ways of spending R&D yen to get back into market share growth territory.

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Comments

9 Responses to “DoCoMo’s market share falls below 50% - mobile fragrance service to help revival?”

  1. Mike on April 9th, 2008 10:09 am

    These phones are bound to be used at inappropriate times in inappropriate places.

    Like on the train? I can just imagine arguments and problems with already stressed-out people on the train. It could be helpful to tag chikan with a scent.

  2. PLG on April 11th, 2008 11:45 am

    This seems more like PR than anything else. I guess the system really needs to be built and working, but it’s doubtful that they take this seriously as a growth sector. It did, however, get a lot of media attention.

  3. Kraig on April 11th, 2008 4:58 pm

    One has to wonder if DoCoMo was really ready for anything other than being a monopoly. There’s simply no way they can hold onto greater than 50% market share with number portability and the level of price/handset competition. I remember you calling that Vodafone’s exit meant the end of DoCoMo’s reign was coming a few years ago. Did you think it would take this long?

    I think the ’second phone’ market might be somewhere worth pushing for some growth.

  4. Ken Worsley on April 11th, 2008 11:11 pm

    Kraig, It happened faster than I expected. At the time, I thought DoCoMo would dip below 50% market share in 2010. There were three reasons for this then, and hindsight is interesting. First, I didn’t think Softbank would do well so soon. It was hard to tell if they had learned their lesson from the Yahoo BB fiasco. They have papered it over with some very effective (albeit occasionally illegal) marketing.

    Second, I thought number portability would kick in a bit later, due to chaos at the Ministry of Posts and Telecommunications - they were quite focused on the ‘posts’ side of things at that time.

    Finally, I thought that the presence of a new, aggressive domestic player would waken the sleeping giant at DoCoMo. That’s still not impossible, though as time goes by I think the odds get further stacked against them. This latest plan for smelly-phones is not very encouraging.

  5. WG on April 12th, 2008 5:46 pm

    DoCoMo’s 3G has been a nightmare, and I’m surprised you haven’t mentioned that. Packet fees have been bad enough to drive people to any other provider that promises decent rates.

  6. Saag on April 13th, 2008 12:58 pm

    I don’t think any of the big 3 have done much to differentiate themselves in terms of handsets. No one’s really put out something memorable or exciting, and they don’t seem to promote them that way. The iPhone is going to shake things up.

  7. Palenta on April 17th, 2008 9:06 am

    I don’t know about the iPhone. It might have a big effect without being very popular. Like Japan’s mobile Edsel. It’s too slow coming to market.

    If this is actually the best way for docomo to get press these days, something is wrong. This doesn’t compare to one-seg or being able to pay/get on a train with your phone.

    What problem does this scent-emitting phone solve?

  8. DoCoMo has a new logo; increased market share to follow? Japan Economy News & Blog - Business, Economy, Marketing and Economic Reports on April 21st, 2008 10:50 am

    […] and aggressive advertising and pricing campaigns from rivals AU and Softbank have driven DoCoMo’s market share under 50% for the first time since late 1998, the firm is at a crossroads. It has attempted to reassert itself as an innovator by launching a […]

  9. A tale of two businesses: NTT and McDonald’s release results Japan Economy News & Blog - Business, Economy, Real Estate, Marketing and Economic Reports on August 5th, 2009 10:53 pm

    […] billion yen. It is now obvious that DoCoMo is becoming a burden on the NTT group. In March 2008, DoCoMo’s share of Japan’s mobile phone market fell below 50% for the first time since 1998, as rivals AU and Softbank have chipped away at their customer base. […]

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