Sony Gets Top Japan Billing as DoCoMo Shuns IPhone

NTT DoCoMo Inc. (9437) will order more Sony Corp. (6758) smartphones as Japan’s largest wireless carrier keeps Apple Inc. (AAPL)’s iPhone off its shelves because the iTunes Store competes with its own e-commerce business.

Sales of Sony’s Xperia A handset could reach 2 million by Sept. 30 after going on sale in May as DoCoMo focuses on a smaller range of devices, Chief Financial Officer Kazuto Tsubouchi said in an interview at company headquarters in Tokyo yesterday.

DoCoMo is trying to spark growth with discounts as it adds users at a slower pace than SoftBank Corp. (9984) and KDDI Corp. (9433), which both sell the iPhone. DoCoMo is reducing the number of models in its stores by as much as half as its focuses promotions on Sony and Samsung Electronics Co. (005930) handsets, Tsubouchi said.

“To win against the iPhone, we have to offer a model which is generally easy to use,” Tsubouchi said. “Sony’s brand and Xperia’s image are just as good as the iPhone.”

DoCoMo may consider altering its stance on the iPhone if it can limit the smartphone’s share of sales to less than 30 percent of the company’s total, he said. The Japanese carrier’s online store, called dmarket, offers music, videos and games.

Photographer: Tomohiro Ohsumi/Bloomberg

A model displays a Xperia A smartphone manufactured by Sony Mobile Communications during the unveiling of NTT DoCoMo Inc. new smartphones in Tokyo. Close

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A model displays a Xperia A smartphone manufactured by Sony Mobile Communications during the unveiling of NTT DoCoMo Inc. new smartphones in Tokyo.

DoCoMo’s sales of the Xperia A reached about 1.24 million units as of Aug. 4, and its sales of Samsung’s Galaxy S4 totaled about 630,000, the company said.

User Growth

The carrier is “fighting back” after restarting cash-back campaigns to win customers, Nathan Ramler, an analyst at Macquarie Group Ltd. in Tokyo, said in a note yesterday. The company’s promotional campaign “continues to sell handsets.”

Sony fell 1.3 percent to 1,927 yen at the close in Tokyo trading. The stock has more than doubled this year, compared with a 33 percent gain by Japan’s benchmark Topix index. DoCoMo shares fell 1.8 percent.

“We will respond to the needs of the market,” Yu Tominaga, a spokesman for Sony in Tokyo, said by phone. The company is targeting a wide range of customers including those upgrading from feature phones, he said.

Sony posted a quarterly profit in the smartphone business after losing money a year earlier, the company said Aug. 1. Smartphone shipments in the three months ending June rose to 9.6 million from 7.4 million a year earlier. Sony expects to sell 42 million smartphones this year.

Adding Subscribers

Reviving earnings growth will depend on DoCoMo’s ability to add new users as it plans to cut costs by 110 billion yen ($1.1 billion) in the 12 months ending March, the CFO said. While the company has 45 percent of the Japanese market, compared to 28 percent for second-ranked KDDI, it has the slowest growth among the top three in adding new users.

Photographer: Tomohiro Ohsumi/Bloomberg

A member of the media takes a photograph of a Samsung Electronics Co. Galaxy S4 smartphone for NTT DoCoMo Inc. displayed during the Galaxy S4 World Tour 2013 Tokyo event in Tokyo. Close

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A member of the media takes a photograph of a Samsung Electronics Co. Galaxy S4 smartphone for NTT DoCoMo Inc. displayed during the Galaxy S4 World Tour 2013 Tokyo event in Tokyo.

NTT DoCoMo added 172,500 users in July, compared with 225,200 at KDDI and 254,500 for third-ranked SoftBank.

The carrier fell 1.7 percent to 154,400 yen in Tokyo trading yesterday, paring this year’s gain to 25 percent. SoftBank has more than doubled this year while KDDI has surged 75 percent.

DoCoMo said July 26 that operating profit fell 5.8 percent to 247.5 billion yen in the three months ended June 30.

DoCoMo, which has more than 60 million subscribers in a nation of 127 million people, forecasts a 3.9 percent increase in net income to 510 billion yen this fiscal year and 3.8 percent growth in sales, the company said in a July 26 statement on its website. The carrier plans to boost handset sales to 24.5 million from 23.55 million in the year ended March 31, it said.

The company has no plan to withdraw from India, DoCoMo President Kaoru Kato said in July. The company has a stake in Tata Teleservices Maharashtra Ltd. (TTLS) in India.

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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