Softbank will try to break the stranglehold on the Japanese mobile phone market exerted by leaders NTT DoCoMo and KDDI, with an Y11bn ($100m) joint venture to develop cutting edge handsets and software with Vodafone.
The move marks a bid by Softbank to boost its research and development clout in a market in which consumers are notoriously fussy and demanding, and its larger rivals are spending huge amounts of money on product development.
The joint venture also shows Vodafone’s determination to retain its global competitive advantage by continuing to tap into Japanese mobile expertise. Arun Sarin, chief executive of Vodafone, said Japan was “a very innovation-centric market”, and “we don’t want to lose the window of innovation”.
The 50-50 venture between the two companies follows Vodafone’s Y1,750bn sale of its Japanese arm to Softbank this spring.
Vodafone has been a poor third in Japan’s mobile market. Analysts criticised its erstwhile philosophy that the world’s mobile markets were in essence the same, and could therefore be won using the same global products.
News of the joint venture immediately drew concern that Softbank might be making the same mistake as Vodafone. Some suggested the joint venture’s innovations might end up not being tailored enough to the Japanese market.
But Masayoshi Son, president of Softbank, dismissed the idea that the joint venture might tie his company to Vodafone’s earlier “one size fits all” approach to global markets.
In comments that could worry his rivals, Mr Son indicated he would stick to his tried and tested method in other markets of aggressive price-cutting to win market share.
Mr Son said the joint venture would make possible “cost-cutting measures” if Softbank moved to third-generation handsets.
The joint venture would also look at buying content. Bill Murrow, former head of Vodafone Japan and chief executive of the new joint venture, suggested sport was becoming “more and more global”, creating opportunities for joint procurement.
In addition, the joint venture would consider buying films and dramas. Mr Murrow acknowledged that people would still want to watch them on television but said they might want to catch up on a missed episode on their phones while on the move. Mr Son will be president of the joint venture.
Mr Son also used the occasion to launch a new handset made by Sharp, which allows users to keep watching television on their phones while making phone calls and sending messages. This would be a world first, according to Mr Son.