Director, KDDI, Research, Inc.
Sobee Shinohara has been working for policy and regulation of telecommunications after his joining KDDI in 1996. He also has been in charge of research for policy issues of telecommunications in recent several years in KDDI Research, Inc. Prior to joining KDDI group, he served in the Ministry of Posts and Telecommunications (currently Ministry of Internal Affairs and Communications). He received B.E. from Tohoku University in 1988, M.E. from Graduate School of Tohoku University in 1990, Ph.D. from Graduate School of Applied Informatics, University of Hyogo in 2012 and Ph.D. from University of Tokyo in 2016. His special field in research is telecommunications policy, especially, (1) fixed and mobile broadband adoption, and (2) standardization of telecommunications equipment.
Research Topical Session 16: Innovation and Policy
Wednesday, 24 January 2018
The purpose of this paper is to analyze the “Galapagos Syndrome,” in which many Japanese mobile handset manufacturers left the market in smartphones era, by comparing with trilateral such as Europe, U.S. and Japan.
Kushida (2011) describes “Galapagos effect,” in which winning in an isolated domestic market led to losing in global markets.” This paper adds the viewpoints of analysis for the relationship in competition among mobile carriers located inside and outside one country.
This paper mainly focuses on the feature phones era and second generation (=2G) of mobile service launched in 1993 in Japan, whereas the smartphones launched in 2007, such as iPhone and Android, use 3G and 4G mobile services.
In 2G, EU launched new policy, as directive with legal basis, which enable the mobile user be convenient by defining only one standard and realize one mobile handset available in all EU member states. Unifying into only one standard of mobile system in 2G, if one incumbent mobile carrier outstandingly dominates the standard, all other mobile carriers would be dominated from the viewpoint of technology. In result, it is said not mobile carriers but the equipment manufacturer led standardization of mobile system (=GSM) in 2G, and mobile carriers accepted it without the dreadfulness of being acquired by other mobile carriers. It is categorized EU as “one standard in multiple incumbent mobile carriers in one country (=EU).”
There were several mobile incumbent carriers, including Baby Bells, in U.S.,
U.S. launched the policy of frequency assignment in up to 493 regions. All mobile carriers including incumbent need roaming with other mobile carriers to make services available in nationwide. To avoid the control and taking over bit by other mobile carrier, major mobile carriers voluntarily selected the GSM, led by equipment manufacturers. It is categorized U.S. as “one standard in multiple incumbent mobile carriers in one country.”
The condition in Japan was different. There was only one dominant mobile carrier, NTT DOCOMO, in Japan. And, Government of Japan (GOJ) requested only one standard in 2G. It is categorized Japan as “one standard in one incumbent mobile carrier in one country.” NTT DOCOMO and its families (=equipment manufacturers which had the closest relationship with DOCOMO) outstandingly led the standardization (Kushida (2011)), and they took enclosure strategy and launched fabulous services such as i-mode launched in 1999. After launch of smartphones, such as iPhone and Android after 2007, many Japanese equipment manufacturers could not leave the closest relationship with DOCOMO, and finally lost the market share in handset in smartphones era and left equipment market.
Result and discussion
This paper revealed why Japanese mobile services became “Galapagos,” by comparing trilateral.