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What happened to Docomo? Market share plummeted under its own weight to below 50%

4, 21. 2008

   The market share of the leading mobile phone company NTT DoCoMo has reportedly dipped below 50% for the first time in 11 years. Many new companies have joined in the mobile phone industry, and the "tycoon" DoCoMo has been cornered as the new companies have introduced a wide variety of payment plans for their customers.

   DoCoMo declined to make any comment on the report and taking a wait-and-see attitude, and the company has not shown any decisive measures to regain the lost market share.

"905i Series" sold well but did not have impact

“905i Series” sold well, but…
“905i Series” sold well, but…

   According to the number of users of mobile phones (including PHS) in Japan in fiscal 2007 announced by the Telecommunications Carriers Association (TCA) on April 7, 2008, the number of users of DoCoMo phones had increased by a net 173,700 as of the end of March 2008 to an accumulated 53,387,700. There are 107,339,800 users of mobile phones and PHS altogether in the country. The market share of the company dipped below 50% at 49.7%. Its market share was 52.2% at the end of March 2007. The decline in the market share was due in part to the fact that the company withdrew from the PHS service in January 2008. It was the first time in 11 years that the market share of the company went below the 50% mark.

   As reported by J-Cast News in December 2007 that DoCoMo was going out of its own "lonely" business stagnation as its "905i" was doing well with a 60% rise in sale, 1 million units of the "905i" mobile phones were sold in less than three weeks after they were introduced to the market in late November 2007. But the brisk sales did not seem to have contributed enough to the company's business results for the whole year.

   In the meantime, the market shares at the end of the fiscal 2007 rose 0.4 percentage point over a year earlier to 29.5% for KDDI, which was ranked second to follow DoCoMo, (with its au brand and two-colour brand phones), and rose 1.8 percentage points to 18.1% for SoftBank Mobile, ranked third. The market share of iMobile, which entered into the mobile phone industry in March 2007, was 0.4%.

   Of the two companies which are closely catching up with DoCoMo, SoftBank Mobile is conspicuously going ahead with offering "free services ." In January 2007, SoftBank introduced the "White Plan" service in which calls made between the phones sold by the company were free of charge. The company then offered free calls between the members of the same family. In 2008, the company further introduced the "white discount rate for students" in which students do not have to pay the basic charge for contracting for the use of the company's phone service. As a result, the company marked net increase of 543,900 in the number of the users of the company's phones. The company maintained the top place in the net monthly increase rate consecutively for 11 months.

   KDDI introduced a free call service for calls between the members of the same family in March 2008 and the number of the users of its phones increased by 505,000. The company is racing neck and neck with SoftBank Mobile.

Though DoCoMo's infrastructure is the best of all…

   DoCoMo seems to be narrowing the increase rates of the number of its clients by itself, and other companies are closely catching up with it in terms of the market shares. Some experts in the industry coolly comment, however, that it has been unnatural for a single company to occupy a market share of more than 50%. Yuichi Kogure, an expert on mobile phones and author of the "Phone rate, are you not overpaying? Mobile phone evolution 10 years from now" and other books, says:

   "Since the 1990's, the number of mobile phone users has kept going up, and, today, the market is in the state of maturity with every person having a mobile phone or two. The mobile phone companies are vying to obtain the limited number of customers now, and DoCoMo, which currently holds the largest market share, is easy to become the target for attack by other companies in the industry."

   About the reason for the decrease in DoCoMo's market share, he noted the line up of the designs of the phones the company provide the market with by saying:

   "SoftBank offers various types of phones for different concepts, such as those for 'watching TV' or those for 'taking pictures,' but the phones offered by DoCoMo, no matter which one of them a customer may choose, all have the same set of functions. All of the DoCoMo phones are the same without any uniqueness."

   DoCoMo was asked if it had any measures to regain the market share. On the report on the market shares, it simply said that it had no comment. But itadded:

"We offer free-of-charge calls among the members of the same family for 24 hours a day from April 1. We will emphasize this new ser vice for the first thing to do. At the same time, we plan to make all-out efforts to keep our customers whom we serve now."

   But the company may not be able to avoid such comment that it is only following the footsteps of SoftBank.

   Kogure said that what he had said did not mean DoCoMo is no good. And he added:

"In the mobile phone industry, the importance of services tends to be stressed. In reality, however, the most important thing must be the quality of the network and other infrastructures. In this respect, DoCoMo should unquestionably be the best of all. It seems that the company is unable to make full use of the advantage."

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