May 28 (Bloomberg) -- As Ichiro Suzuki steps up to the plate for Japan in the 10th inning of the World Baseball Classic final with the score tied, Yuki Yamaguchi is among the spectators -- watching the action on her mobile phone.

The 35-year-old clerical worker and 108 million other subscribers to services such as NTT DoCoMo Inc.’s i-mode can surf the Web, download movies and pay bills on their handsets, something that’s been possible for years before such services were common in the West. The advanced state of Japan’s mobile- phone system will make it harder for Google Inc. to win converts to its Android system, which will be released in the country as early as June, said telecommunications analyst Neil Mawston.

“Handsets in Japan have been smart for a number of years,” said Mawston at Strategy Analytics Ltd. in Milton Keynes, England. “The West is playing catch-up rather than showing anything new.”

Google’s Android, which allows for services such as navigation with street-level views, will run HTC Corp.’s Magic handset, due to go on sale in Japan in June or July for as low as 25,000 yen ($262), according to DoCoMo, the country’s largest mobile-phone operator. It follows Apple Inc.’s iPhone in seeking to achieve what global leaders Nokia Oyj and Samsung Electronics Co. couldn’t: challenge Japan’s phone makers.

Nokia Quits Japan

Nokia, the world’s largest maker of mobile phones, said on Nov. 27 it was quitting the Japanese mass market. Japan’s top six mobile-phone vendors accounted for 81 percent of handsets sold in the country in the year ended March, according to Tokyo- based MM Research Institute Ltd.

“We expect the HTC Magic to struggle just as the iPhone has,” said Mawston.

Yoshito Funabashi, a Tokyo-based Google spokeswoman, declined to comment. Cupertino, California-based Apple doesn’t disclose its iPhone sales in Japan. “We are very happy with the consumer response to iPhone in Japan,” Natalie Harrison, an Apple spokeswoman, said in an e-mail. Fumihiro Ito, a spokesman at Softbank Corp., the sole wireless carrier that offers the iPhone in Japan, declined to comment.

“We are aware of some shortfalls in the iPhone’s sales in Japan, so we made quite an effort to localize our phone to fit the market and its language input system,” said David Kou, head of HTC’s sales and marketing in Japan. “We are positive about the sales prospects.”

Japan Was First

In 2001, Japan became the first country to start so-called third-generation wireless operations commercially, spurring demand for data services such as downloads of videos. The U.S. introduced 3G technology commercially in October 2003.

Mountain View, California-based Google started Android in 2007 to create a free software system for phones. Taoyuan, Taiwan-based HTC became the first provider of a handset with Android when it began selling the G1 model in October.

Within three months, U.S. and U.K. consumers bought more than 1 million G1 phones, according to HTC. Japan’s first Google-phone may sell about 100,000 units by year-end, said Suguru Kagawa, a researcher at Tokyo-based Yano Research Institute Ltd. He estimates about 800,000 iPhones were shipped in the country since its introduction in July through March 31.

“Just because it sells overseas doesn’t necessarily mean Japanese consumers will take to it,” said Michito Kimura, a Tokyo-based analyst at researcher IDC. “It’s unlikely that Android will become an instant hit, but the platform has a lot of potential three to five years down the road.”

Google rose $4.12 to $409.68 at 9:49 a.m. New York time in Nasdaq Stock Market trading. The shares had gained 32 percent this year before today.

Unlikely ‘Instant Hit’

Global shipments of smart phones -- handsets with computer- like functions such as the iPhone or Research in Motion Ltd.’s BlackBerry -- will more than double to 449 million units in the five years ending in 2013, according to El Segundo, California- based researcher ISuppli Corp.

Smart phones are likely to account for only one in ten of handsets sold in Japan in the next five years, Yano’s Kagawa said.

“Over the past 10 years, the Japanese mobile-phone business has grown to provide ubiquitous access to the Internet, a coherent payment system and an impressive array of content combined with ease of use,” Kagawa said. Although Google is popular in Japan, “it’s difficult to see what will drive the sales” of Android phones, he said.

Millions Use I-mode

More than 21 million i-mode users paid for Web services at the end of March, DoCoMo company spokeswoman Naoko Minobe said. About 33 million DoCoMo customers can use their phones to pay for train fares and convenience-store purchases, 18 million have access to satellite navigation and more than 16.6 million can watch digital TV, according to company data.

Apple’s iPhone 3G left Japanese users underwhelmed, which may bode ill for Android’s prospects, said Kenji Nishimura, a Tokyo-based analyst at Deutsche Bank AG.

Softbank, which released the iPhone in Japan to a media blitz last July, in February offered the 8 gigabyte model free for customers signing a two-year contract and slashed the 16- gigabyte model’s price 67 percent to attract buyers.

“The iPhone was innovative in the U.S. market because it met a pent-up demand for mobile Internet, while in Japan sending emails and surfing the web on a handset are nothing new,” Nishimura said. “The iPhone’s hardware and content are interesting, but hardly groundbreaking.”

Thanks to her NEC Corp. handset, Yamaguchi was able to savor Japan defeating Korea 5-3 in the baseball final in March.

“I’m not a heavy user, but i-mode is just so convenient,” said Yamaguchi, who’s from the southern island of Kyushu. “I can’t imagine getting through a day without it.”

To contact the reporters on this story:
Pavel Alpeyev in Tokyo at 
palpeyev@bloomberg.net;
Yoshinori Eki in Tokyo at 
yeki@bloomberg.net

Last Updated: May 28, 2009 09:53 EDT