IPhone 5S Demand Oustripping Supply as NTT Docomo Carries Phone for First Time

Long lines of customers greeted the arrival of the iPhone 5S at NTT Docomo stores on Sept. 20 and demand hasn’t let up, forcing the carrier to take reservations despite not fully knowing there will be enough supply, Ori said. NTT Docomo rivals KDDI and SoftBank have long carried the iPhone.

While Sony Xperia and Samsung Galaxy smartphones have been NTT Docomo’s top-sellers in the past, “the Japanese like the iPhone and it has a lot of momentum right now,” said Ori, declining to disclose iPhone sales results. Sony’s newest Xperia A SO-04E and Samsung’s Galaxy S4 SC-04E smartphones had sold 1.1 million and 550,000 units as of July 23, following their launches in Japan on May 17 and May 23, NTT Docomo said. The iPhone “hopefully won’t” cut into NTT Docomo’s sales of Xperia and Galaxy models, but Apple has been “very popular” with customers so far, Ori said.

The addition of the iPhone also follows NTT Docomo reporting a decline in net subscriber additions to 87,000 in fiscal Q1 ended July 23 from 266,000 a year earlier as monthly churn rose to 0.86 percent from 0.74 percent, the company said. The iPhone could help NTT Docomo fill gaps in its smartphone lineup left by Panasonic’s and NEC’s recent departures from the category in Japan, NTT Docomo officials have said. NTT Docomo plans to continue working with both companies in carrying their networking gear, Ori said. Panasonic and NEC were “struggling” in smartphones and their lineups were “pretty small,” Ori said.

NTT Docomo, which is Japan’s largest cellphone service with 62 million subscribers, had held out against carrying the iPhone amid concerns that its services wouldn’t be included in the iOS platform and that the carrier wouldn’t have enough supply, Ori said. But NTT Docomo was able to reach agreement with Apple to make its services available on the iPhone 5S, starting with the dMarket e-commerce and dMenu third-party application portals as well as sp-mode email, he said. DMarket had seven million subscribers to its three e-commerce stores by July 23, including 4.46 million for its dvideo service, the company said. NTT Docomo also plans to launch its free automatic voice translation app Hanashite Hon'yaku, which has gotten two million downloads since being released in October 2012, on iOS this fall, Ori said. Hanashite Hon'yaku can translate 10 languages, with the most demand being for English, he said.

NTT Docomo is moving to expand its Xi LTE service, which has 16 million subscribers, up from 6 million a year ago and 14.2 million July 23, Ori said. LTE subscriptions start at a $54-$58 monthly fee for a voice/data package, he said. NTT Docomo forecast having 50,000 LTE base stations installed by March when it will have 98 percent coverage in Japan, up from 30,000 in June and 9,800 in June 2012, when it had 32 percent coverage. NTT Docomo claims average 25 Mbps download speeds and it has 25,000 base stations capable of 75 Mbps, the company has said. It has 112.5 Mbps service available in 150 cities and plans to launch with 150 Mbps in “limited” markets late this month, company officials have said. NTT Docomo sold 5.39 million cellphones in fiscal Q1, including 3.35 million smartphones that accounted for 62.2 percent of total sales, the company said. About 50 percent of the smartphones sold replaced feature phones, NTT Docomo said. A year earlier, NTT Docomo sold 5.17 million cellphones, including 2.49 million smartphones, the company said.

NTT Docomo continues to expand its digital mobile terrestrial broadcasting service that launched in March 2012 using the 207.5-222 MHz band freed up by the shutdown of analog transmissions in August 2011. The broadcast frequency is being used for NTT Docomo’s NotTV Internet video streaming service that charges a $4 monthly fee and had 1.3 million subscribers as of July 23, up from 700,000 as of April 8 and 140,000 in August 2012. It had targeted having one million subscribers within a year of launch on April 1, 2012, 10 million in the long term. NotTV, which is being developed by NTT Docomo affiliate Multimedia Broadcasting Corp., has three channels and the service covers more than 60 percent of Japan with a goal of reaching 90 percent by March 2015, the company has said. There are more than two million devices compatible with the service. NotTV will air Netflix’s 13-episode House of Cards on Oct. 5.

Among NTT Docomo’s other services, Osusume Pack and Anshin had 1.1 million and 1.8 million subscribers as of July 23, 70 days after their launch, NTT Docomo said. Osusume was introduced with a $5.38 monthly fee in offering a package of 100 titles derived from selecting 3-4 titles across several categories including news and movies, NTT Docomo has said. Anshin is a mobile phone security service with a $6.46 monthly fee, it said.