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On locked vs unlocked phones January 30, 2007

Posted by fukumimi in IT, Japan, Mobile.
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A rebuttal to Michael Parekh‘s analysis

From the CNET article cited in Michael’s piece:

In Asia, about 80 percent of cell phones are sold independently of a carrier. And in Europe, roughly 70 percent of cell phones are sold unlocked. But in the U.S., between 90 percent and 95 percent of cell phones are sold through a mobile service provider.

Michael’s analysis:

This of course has resulted in a market that offers far greater array of wireless software and services in overseas wireless markets as compared to ours.

The problem with the analysis?

Answer: Japan

In Japan, 99%+ of phones are locked to a carrier. (Nokia has started selling an unlocked phone recently)

Yet, Japan’s wireless services are as advanced as any overseas market. Devices, network speed, sites optimised for mobile phones. By any metric, Japan is a top tier cellular wireless market.

Software (apart from maybe games) for wireless devices isn’t a very big market, but that is due to the fact that most phones have closed operating systems.

The thing is, with an ubiquitous high speed network, the goal is towards web services/SaaS, as touted for the PC in the US. I think the Japanese mobile market is pretty much there already. For example, I only have a basic calendar application on my phone, but I never use it because at work we have a web based calendaring app, which also has optimised mobile phone access. Virtually all mobile internet services are accessible from any of the major carriers.

With 3/3.5G networks covering the whole nation, including all underground stations, I can’t think of many places where I would need wireless service but couldn’t get it, apart from vacations on mountains and ininhabited islands where I would actually rather not being a phone call away from work related stress.

One more thing. Japanese phones have moved from SMS to real email years ago. Isn’t it time everyone else did the same? That would be a real killer app.

I don’t mean to support the strategy of locking phones to carriers, rather I just want to point out that services innovation (at least of the kind which is useful to the masses) and locking phones to carriers are not linked in the way that some people think (or would like people to think).

Comments»

1. G-A.G (Daimaou) - January 30, 2007

This is the most stupid answer ever made regarding this matter… Hong-Kong a place I used to live offer nowadays AS MUCH AS services, but you can still use it on an unlocked device that you just bought. Carrier offer “package” to setup everything you need and EVEN send them by SMS. Now I am using Windows Mobile based phone (HTC Hermes, Universal, MTeor) I bought the X01HT from softbank and what do you find in this device? CAB files setting up everything for U… No the real reasons is that Operators (AU, SOFTBANK, DOCOMO) are still 10 years behind European, ASIAN countries when it comes to freedom of choice and services (related to consumer choice).

Look a simple example, SOFTBANK REFUSE to communicate their DATA setting (that you paid for) if you need to reinstall them on your device, this is a SIMPLE login and Password (the access point is already known), there are NO need to setup DNS or whatever techy stuff… just a simple Login and pass… They just want to control 100% of their service and clients needs, no freedom allowed.

It is important also to stop stressing that Japan is the leading country in telecommunication, Korea is now a Strong power and day by day I am AMAZED by what they are offering for their client with the FREEDOM to choose. For your reference, the DMB (1Seg) was 1 year ahead in Korea rather that Japan. As for Today it is still impossible to place a call in the subway in Tokyo, were in Hong-Kong you can, Fees are AMAZINGLY expensive in Japan compare to the same services in Korea, Hong-Kong and Europe… Japan was ahead for a long time but its now something of the past, Other Asian countries are catching up amazingly…

Regards

2. fukumimi - January 30, 2007

I made a point to say that Japan is _a_ top tier wireless service environment, not _the_ top tier wireless market.

Basically, your gripe seems to be that consumers cannot change carriers using the same phone, which is noted but ultimately irrelevant to the discussion here which was: “Is there a correlation between the strategy of locking phones and a lack of wireless software and services?”

As I said, I don’t necessarily agree with the policy of locking phones to carriers, but my point is that there is little correlation between that policy and lack of useful mobile internet services. If such a correlation existed, Japan would be back in the mobile stone ages with the US. But that clearly isn’t the situation.

I’m well aware that DMB launched in Korea a little earlier, but the fact that commercial ISDB is a reality here in Japan again proves that locked phones do not neccessarily mean lack of services. We should bear in mind that DMB was an attempt by the Koreans to capture the lucrative mobile digital TV market with a standard developed by them. It was imperative that they were first to market, so they could leverage this and get wins in other geographies. My bet is that is looking increasingly unlikely with most of Europe going with DVB-H, and with the Chinese coming into play with their own standard.

Regards pricing, I don’t think the phone tarrifs are really that expensive compared to other comparable markets. Sure there are markets where it is cheaper, but then most things are expensive in Japan.

The fact that phones are not useable on the underground trains is a policy decision, because most passengers get bloody annoyed by selfish people who think they have the right to gab on the phone in a train. You see plenty of people ignoring the requests not to use their phones to make calls on overland trains, and I personally am happy that it is impossible to make calls from the inside of subway trains as if it were possible, I’m sure we would be subjected to a similar disregard for people who are unfortunate enough to be in the same subway train carriage.

3. David - February 8, 2007

In my opinion, G-A.G’s comments are not relating to the issues mentioned in the post, and seem to be not much more than simple Japan-bashing.

In terms of cell phones, I am no expert in the field, and I am only a simpleton when it comes to knowledge about that industry. However, based on what I have seen/experienced, compared to the US and Canada, Japan’s cell phone industry is years and years ahead. In every way I can imagine.

4. SmugWimp - April 5, 2007

I’m not commenting on much of anything. My personal experience has been this: anticipating a move to Japan, while in the Philippines I purchased a Nokia E61. In Japan, I had to sign up with a carrier (in my case, vodaphone/softbank). I was required to get one of their phones. I got the cheapest (free) and upon activation, promptly moved my SIM to my E61, and everything (except GPRS) worked fine. The E61 I got in the philippines was about $250 less than “list” price, but with contract, I could have gotten the Japanese version for about the same price.


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