Apple Inc. (AAPL), the world’s most-valuable company, is near a final agreement to offer its iPhone through the largest mobile carrier in Japan, NTT DoCoMo Inc. (9437), according to people familiar with the situation.
DoCoMo may begin offering the iPhone later this year, said the people, who asked not to be identified because the information is private. Apple will debut new iPhones at a Sept. 10 event at its headquarters in Cupertino, California, a person familiar with the matter has said.
For Apple, the agreement would eliminate one of the largest remaining holdouts for its smartphone, which has been overtaken in sales by Samsung Electronics Co. handsets. SoftBank Corp. (9984) and KDDI Corp. (9433), the next two largest mobile carriers in Japan, already offer the iPhone. Closing a deal with DoCoMo would leave China Mobile Ltd. as the last major Asian carrier that Apple doesn’t have an agreement with.
“That will promote the shift toward smartphones from feature phones in Japan,” Hitoshi Hayakawa, an analyst at Credit Suisse Group AG in Tokyo, said by phone today. “Smartphone penetration is still about 40 percent in Japan, and there is room for growth.”
Adding a provider that controls the largest share of Japan’s mobile-phone market is critical for Cupertino, California-based Apple as sales and profit growth have slowed and it seeks new customers to buy its handsets. Apple plans to open a store in Tokyo’s upscale Omotesando shopping district as early as March, adding its first outlet in the city since 2005, a person familiar with the plans said last month.
Apple shares have fallen about 30 percent from a September peak as investors fret about whether it can deliver another breakthrough product. The shares fell 0.7 percent to $495.27 as of the close in New York trading yesterday.
DoCoMo shares rose 0.6 percent to close at 160,500 yen in Tokyo. SoftBank, which offered the iPhone in Japan in 2008, slumped 2.2 percent to 6,380 yen. KDDI, which began offering the smartphone in 2011, dropped 0.2 percent to 4,895 yen.
The Nikkei news agency reported the talks earlier.
At next week’s event, Apple will unveil an update to the iPhone, as well as a new less-expensive model, a person familiar with the device has said. Japan accounted for $2.54 billion of Apple’s $35.3 billion in sales last quarter.
Natalie Kerris, a spokeswoman for Apple, declined to comment on talks with the Japanese provider. DoCoMo said in a statement, “we’re not the source of information and nothing has been decided at this point.”
DoCoMo has been adding fewer subscribers than KDDI and SoftBank, partly because it doesn’t offer the iPhone. DoCoMo added 43,000 users in August, compared with 209,200 at KDDI and 250,300 for SoftBank.
DoCoMo is reducing the number of phone models in its stores by as many as half as its focuses promotions on Sony Corp. (6758) and Samsung Electronics Co. handsets, Chief Financial Officer Kazuto Tsubouchi said in an interview last month.
The carrier would consider offering the iPhone if it could limit the smartphone’s share of sales to less than 30 percent of the company’s total, Tsubouchi said at the time. The Japanese carrier’s online store, called dmarket, offers music, videos and games, competing against Apple’s iTunes Store.
“It seems like DoCoMo’s decision came too late,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Holdings Inc. in Tokyo. “The company’s ability to give discounts on the iPhone is limited” because it needs to promote phones using Google Inc.’s Android operating system, he said.
DoCoMo forecast smartphone sales would rise 20 percent to 16 million units in the year ending March 31 from 13.3 million a year earlier, the company said in April.
The carrier’s so-called two-top strategy to promote Sony’s Xperia and Samsung’s Galaxy in its summer campaign is hurting sales for other suppliers. NEC Corp. said in July it ended development of smartphones, and Panasonic Corp. said Sept. 4 its smartphone operations will likely shrink due to falling sales.
To contact the reporters on this story: Takashi Amano in Tokyo at firstname.lastname@example.org; Naoko Fujimura in Tokyo at email@example.com; Adam Satariano in San Francisco at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Tighe at email@example.com