TOKYO-Matsushita Communications Industrial, the leading cellular vendor in Japan, is putting the final touches on its new third-generation (3G) mobile terminals for NTT DoCoMo. NTT DoCoMo, Japan’s leading mobile carrier, is scheduled to launch its 3G services by the end of May, earlier than any other carrier in the world.
Matsushita Communications, the mobile business unit of the world’s largest consumer electronics manufacturer Matsushita Electric Industrial, plans to provide three types of handsets for DoCoMo-a basic terminal the firm calls an advanced version of current i-mode terminals, a video phone with a tiny camera and a wide screen, and a card-type terminal that is inserted into a PC card slot for data communications only. Like other Matsushita terminals, the 3G phones are light and small, weighing less than 100 grams and measuring about 100 cubic centimeters. Like most European mobile phones, they are equipped with a user identify module (UIM) card and can transmit data at up to 384 kilobits per second (kbps).
According to Eiichi Kamayama, manager of planning and administration for Matsushita, the firm already submitted an application to TELEC, a Japanese certification organization, to get approval for field tests using Matsushita handsets. Once the phones pass the series of field tests, they will be selling under NTT DoCoMo’s FOMA brand, the new brand for DoCoMo’s 3G services.
But Matsushita does not see big demand for FOMA terminals at least initially, because NTT DoCoMo will initially limit its 3G services in central Tokyo, Kawasaki and Yokohama.
Kamayama said the number of 3G subscribers during the first year will be less than 1 million, including both NTT DoCoMo and J-Phone subscribers. J-Phone, a mobile unit of Japan Telecom, plans to launch 3G services in December 2001 in Tokyo, Nagoya and Osaka.
NTT DoCoMo submitted an even more conservative market forecast of 150,000 3G subscribers during the first year.
Due to the strictly limited market, Kamayama said its production cost for 3G terminals per unit will be tripled compared with current PDC and cdmaOne terminals.
Today, Matsushita wholesales its browser phones with color screens for 30,000 to 40,000 yen (US$257 to US$343) per unit to carriers. In Japan, mobile terminal vendors sell their terminals to carriers, and end users purchase terminals from carriers under the carrier’s brand. The wholesale prices are set by negotiation; so even if the production cost is tripled, wholesale prices will not necessarily be tripled. But Kamayama said he hopes NTT DoCoMo will understand the circumstances of vendors and agree to increase wholesale prices.
Matsushita already has won an order from J-Phone for 3G phone supplies. And the vendor is going to develop cdma2000-based terminals, such as 1X and High Data Rate (HDR) devices. It is currently too busy to develop devices based on wideband-CDMA (W-CDMA), although Matsushita believes W-CDMA to be the mainstream of 3G standards.
“In order to achieve our target to win 10-percent world market share by 2003, we have to do cdmaOne/cdma2000 business, too,” Kamayama said.
European mistakes
Several pessimistic reports about Matsushita’s terminal business surfaced after Matsushita Communications released gloomy business results in February, especially related to unsatisfied business achievement in the European market. Matsushita phones are marketed under the Panasonic brand.
Kamayama admitted the firm failed to anticipate the market trends in Europe. In the European market, inexpensive prepaid handsets sold well earlier this year. According to Kamayama, these inexpensive handsets occupied about 80 percent of the total sales in Europe. However, Matsushita had emphasized higher-end handsets in Europe and misread the market. The company also attributed its poor results to the slow take-up of Wireless Application Protocol (WAP) services in Europe.
Takashi Kawada, president of Matsushita Communications, declared the firm will aim to recapture the European market by releasing lower-grade terminals in the second quarter of 2001. Matsushita will also emphasize WAP and General Packet Radio Service (GPRS) terminals in Europe.
As part of its effort to gear up its sales efforts in Europe, Matsushita Communications is constructing a new mobile terminal factory in the Czech Republic, which is scheduled to launch operations in the second quarter. The new factory will start with several million units per year production but eventually will increase production capacity to 20 million units per year.
