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Saturday, September 27, 2008, 08:15 am PT (11:15 am ET)

Japanese iPhone 3G sales better than reported

Despite a widely publicized report that suggested iPhone sales in Japan were less than half of initial expectations, independent data shows that sales are right in line with expectations in a market that is often difficult for Western companies to enter.

An online post published by the Wall Street Journal indicated that Apple was set to fall far short of an expected million unit goal, that Japanese users would avoid the App Store out of a fear of online commerce, and that the iPhone 3G is priced too high for the Japanese market.

The report was not based on actual sales reports from the tight lipped Softbank, Apple's exclusive iPhone 3G partner in Japan, but rather numbers from MM Research Institute, which estimated that 200,000 units were sold over the first two months. The original article also cited unnamed analysts who set minimum expectations of a million units, and predicted actual shipments would only hit half that by the end of the year.

iPhone 3G shipments in line with expectations

However, an independent market research cited in The Australian indicated that iPhone sales were on track. “Gerhard Fasol, of telecoms consultancy Eurotechnology Japan, estimates they [Softbank] shifted between 75,000 and 125,000 units in July. At that rate, he thinks 2008 sales could total between 645,000 and 1 million."

Additionally, the Journal itself presented that the 16GB iPhone 3G in Japan was within $25 of its US price, and that unit and service fees were also in the same range as competing models.

While the iPhone does lack some features common to the Japanese market, Takeshi Natsuno, the inventor of Japan’s i-mode mobile web service and former Senior Vice President NTT DoCoMo, stated in an interview, “I believe the iPhone is closer to the mobile phone of the future, compared with the latest Japanese mobile phones.”

As for Japanese interest in the iPhone App Store, mobile developer Smule has posted usage data that shows half of the top ten cities using the company's 'virtual lighter software' are located in Japan.

Hard market to crack

The fact that the iPhone is well represented in Japan is notable considering the difficulty Apple and other Western companies have had in entering the market. For years, Apple reported disappointing Mac sales in the country, where many users rely on smartphones in place of desktop computers. However, in its latest financial reports this summer, Apple noted that Mac sales have taken off and that the company was seeing growth four to five times faster than the overall market.

Japanese smartphone sales are particularly difficult to crack into because of long term contracts and steep fees to transfer mobile numbers between operators; world leader Nokia has taken less than 1% market share in the country. However, Softbank reported right from the beginning a surge in new activations transferred in from rivals, about which company representatives said, "We believe our large net growth was an iPhone effect."