Wednesday, March 25, 2009

Meanwhile in Japan - KDDI rolls out HTC Smartphone

Jason Lackey

In a Press Release here, KDDI announced their rollout of the HTC made E30HT, a phone largely identical to the HTC Raphael aka the HTC Touch Pro T7272. This really is a gorgeous looking device with a 2.8 inch vga (640x480) screen.

The picture does not really do the phone justice and they are selling it with a feature called "Walking Hotspot" - a feature which allows up to five different machines to connect to the E30HT as a WiFi base station. Very cool indeed.

However, all this goodness comes at a price. The Japan market is unique and challenging in many ways, particularly for those in the wireless space. Consumers in Japan have grown accustomed to hypersophisticated featurephones - featurephones with very powerful hardware and a rather lengthy list of features and goodies. Good stuff if you are a consumer, a real challenge if you have to support open OS smartphones.

We have seen that smartphones usually end up costing about 4 times as much to support as featurephones. We have also seen that many of the more interesting things that smartphones can do are harder for most subscribers and tend to generate more calls for help, things like better quickstart guides and the like have not really helped and there is a danger that the rise of the smartphone will cause support costs to grow faster than revenue. It is likely that Japan is one of the places where this is most likely to happen, as they have a large subscriber base already used to actually using a wide and sophisticated featureset and they also tend to have little tolerance and understanding of things that don't work. Just like network operators, the average Japanese consumer is very "fussy" and intolerant of flawed products, even if the flaw is relatively minor.

With these things in mind, we suspect that the rise of the smartphone in Japan will be a disruptive event - a previously insular market dominated by domestic players will increasingly accomodate new players from Taiwan and Korea and proprietary RTOS devices will be displaced to some degree by open OS devices and the support load per subscriber will likely go up. Of course, for companies like InnoPath, this is not an entirely bad thing, as InnoPath specializes in providing network operators like KDDI with solutions that enable better support with less effort. Sometime one person's challenge is another's opportunity ;-)

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