April 28, 2017

Why Japan’s Exploding Smartphone Sales Will Drive NFC

Not long ago, Japan scoffed at the Western market fixation with the iPhone and smartphones in general. After all, for years Japanese feature phones have been able to do everything a smart phone could: take hi-res photos, play music, stream video, mail and surf the net, and they could even be used to buy tickets and food at convenience stores.

But since last year, the smartphone boom has been sweeping Japan at a furious pace and the widespread implications for the industry are only beginning to be understood. Last month, NTT DOCOMO’s CEO Yamada Ryuji held a press conference about how the smartphone is starting to change the landscape for Japan’s biggest operator. Just like the old days of i-mode, female customers are playing a big part, making up 35-40% of new smartphone customers, with users over 50 accounting for 15%, and high school students looking to drive a major spike in demand this spring.

Japan is already swimming in a tide of new devices, with DoCoMo alone set to release between 40-50 new models in the winter/spring season, mixing both traditional “feature phones” with smart phones. The transition is causing a major rethink of DOCOMO’s current main Prime, Style, Smart and Pro lines of feature phones, especially since Yamada expects nearly 50% of phone sales in 2011 to be smartphone devices.

This is bound to have a big impact on Docomo’s mobile wallet strategy and its approach to NFC in Japan. DOCOMO is not just the biggest Japanese operator, it is also a first-mover in Japanese mobile wallet phones, which feature FeliCa contactless chips that let customers use phones to charge up their phones and make purchases.
DOCOMO currently has over 40 million customers with FeliCa “mobile wallet” phones, and 50 million compatible reader-writers in the market. If half of the new phones are NFC-enabled smartphones, Docomo is going to make sure in the future that the new phones and reader infrastructure can support all standards, including Type A, Type B, and a SIM-embedded NFC solution.