NTT DoCoMo Inc. (9437), the only major Japanese carrier not selling Apple Inc. (AAPL)’s iPhone, is trying to stem market-share losses by using its own voice-recognition app to woo the nation’s fastest-growing demographic: the elderly.
Japan’s biggest mobile-phone company is counting on software and handsets tailored for older subscribers to regain customers from Softbank Corp. in the $110 billion wireless market after consumers flocked to the iPhone. Two million users have downloaded DoCoMo’s app called Shabette Concier, which, like Apple’s Siri, lets users control their phone by voice -- a selling point among elderly consumers who struggle with keypads.
DoCoMo is targeting older customers for growth as Japan ages faster than any other developed society, with 23 percent of the population 65 or older, according to government figures. About 6 percent of Japanese consumers in their 60s had a smartphone as of February, compared with 51 percent of people between 20 and 29, according to research by D2C Inc. in Tokyo.
“Growth for a consumer business in the coming decade relies on cultivating the elderly market,” said Toshihiro Nagahama, chief economist at Dai-Ichi Life Insurance Research Institute in Tokyo. “They tend to be affluent and loose on their purse strings.”
Elderly Japanese kept spending money last year while younger people pulled back in the aftermath of the earthquake and tsunami. Spending by those older than 69 gained 0.4 percent in 2011 while spending by all other age groups declined, the Ministry of Internal Affairs and Communication said in February.
DoCoMo’s share of the 125 million mobile-phone subscriptions for Japan’s three biggest carriers fell to 48 percent as of May 31 from 52 percent four years ago, while Softbank (9984) jumped to 24 percent from 18 percent, according to the Telecommunications Carriers Association in Tokyo.
KDDI Corp. (9433), which began selling the iPhone 4S in October, had about 28 percent of the market, little changed from 2008.
Softbank has added more than 10 million subscribers since first offering iPhones in July 2008, compared with 6.6 million for DoCoMo, according to the association. Softbank’s shares climbed 32 percent in Tokyo trading in the same period, while DoCoMo dropped 22 percent and KDDI fell 18 percent.
“DoCoMo has been struggling because of the expansion of iPhones in Japan,” said Shinji Moriyuki, an analyst at SMBC Nikko in Tokyo. “Introducing handsets targeted at the elderly will probably help DoCoMo win back market share.”
To stimulate demand among the growing demographic, DoCoMo is holding seminars and offering discounts on models targeting elderly users. The company held 1,100 training sessions in the year ended March 31, said Saori Yoshimatsu, a spokeswoman.
As early as next month, DoCoMo plans to offer a smartphone version of Fujitsu Ltd. (6702)’s hit handsets series called Raku Raku, or “Easy Easy,” which has won more than 21 million users with simplified functions and larger fonts.
The carrier’s voice app, whose name translates as “Talk to Me, Concierge,” was introduced March 1 and is available for 38 handset models using Google Inc.’s Android software. They include Sony Corp.’s Xperia acro HD, which was Japan’s best- selling smartphone model for April and May, according to research company BCN Inc.
“I’ve been planning to get a smartphone and try the voice app since I saw it on TV,” said Kazuko Ohara, 81, who lives in central Tokyo and plans to visit a mobile-phone store this month to choose a handset model. “My eyesight is weak because I had a cataract operation.”
Ohara, who doesn’t own a personal computer, has a KDDI mobile phone and doesn’t mind switching carriers, she said.
“The voice app might help me write e-mails, and I want to use the map function to go places,” she said.
Apple in Japan
Apple’s Siri voice-control app has been available in Japanese for the iPhone 4S since March. Japan accounts for 5 percent of Apple’s revenue, according to data compiled by Bloomberg. Globally, sales of voice-recognition software for wireless devices may rise to $21.3 billion by 2018 from $3.5 billion last year, according to WinterGreen Research.
People 60 or older account for 24 percent of DoCoMo’s customers, Yoshimatsu said. The carrier is ahead of rivals in terms of marketing to the elderly, Moriyuki said.
“The other two carriers will probably follow DoCoMo,” he said. “It’s a big business opportunity.”
Softbank doesn’t offer handset models or services targeted specifically at the elderly, said Natsuko Kameda, a spokeswoman for the Tokyo-based company.
Elderly users are among KDDI’s priorities, said Keiichi Sakurai, a spokesman for the company. “We’re trying to lure elderly customers from the NTT group by offering discount rates for those who use both our group’s fixed-phone and mobile-phone services.”
Softbank and KDDI don’t disclose their users’ age demographics, Sakurai and Kameda said.
DoCoMo plans to raise its total share of smartphone subscriptions back to at least 50 percent in the fiscal year that started April 1, Chief Financial Officer Kazuto Tsubouchi said in a May 18 interview.
The carrier expects to boost smartphone sales to 13 million units this fiscal year from 8.82 million a year earlier, with net additions rising to 2.8 million from 2.28 million, it said April 27.
‘Young in Spirit’
While the iPhone initially eroded DoCoMo’s market share, Apple’s dominance is weakening as new Android models are introduced several times a year, Moriyuki said. DoCoMo is releasing 16 smartphone models between June and August, including Samsung Electronics Co.’s Galaxy S III and Sony’s Xperia GX, the company said May 16.
“Each of the new models can compete with iPhones, with improved memory capacity, speed or touch-panel sensitivity,” Tsubouchi said in May. “The market isn’t driven solely by iPhones any longer.”
Handsets using Android accounted for 58 percent of smartphones in Japan as of Dec. 31, while Apple’s iOS-based devices made up 37 percent, according to estimates by MM Research Institute. Nine months earlier, in March 2011, iPhones controlled 50 percent of the market and Android phones 40 percent.
DoCoMo’s net income in the year started April 1 may rise 20 percent to 557 billion yen ($7 billion) as sales increase 5 percent to 4.45 trillion yen, the company forecast in April, citing higher data-transmission fees and handset sales.
“You can see possibilities of handsets tailored for old people stimulating demand,” Dai-Ichi’s Nagahama said. “Japan’s elderly are young in spirit.”
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