Softbank moves could prompt U.S. price war and talking dogs
The Japanese company already offers cheaper prices at home than potential partner Sprint in the U.S., despite the strong yen
IDG News Service - If Japan's Softbank barges its way into the U.S. mobile market, expect contract prices to fall.
The company, mostly unknown outside of Japan, is in negotiations to acquire a large chunk in U.S. operator Sprint Nextel, and possible the smaller MetroPCS Wireless. If successful it is likely to pursue two strategies that have worked well at home: undercutting rivals, and oddball advertising.
When Softbank cut into the Japanese mobile market in 2006, it was also a newcomer to the business, but went on the offensive immediately with a host of new plans under a "Beyond Expectations" slogan, and a promise to offer the lowest prices in the industry. When rivals responded by dropping their prices, Softbank often responded within hours with a cheaper option.
"Softbank is likely to drop prices, as it has in the past" if a deal goes through, said Hideyuki Yokoya, a mobile analyst at MM Research Institute in Tokyo. "It is then good at communicating with consumers in a way that is easy to understand."
The company has a reputation in Japan for over-the-top advertising. It hired Brad Pitt and Cameron Diaz to star in commercials announcing its arrival as a mobile operator and used talking cats to explain its early pricing options. The company's current, long-running campaign features a mostly Japanese human family whose father is somehow a surly white dog, now a minor celebrity in the country.
Softbank Mobile, its cellular arm, already offers prices in Japan that are lower than those at Sprint. A 16GB iPhone 5 on an unlimited-data, two-year contract costs a total of about $2,200 over the length of the contract at Sprint, compared to about US$2,000 at Softbank, though voice prices vary. This is despite the yen hovering at near-record highs against the dollar, which inflates Japan prices as viewed from the U.S.: The newest iPad is about 10 percent more expensive in Japan in dollar terms.
In Japan, main rivals NTT DoCoMo and KDDI have often had no recourse but to match Softbank. The company's no-frills "White Plan" offered basic services for 980 yen (US$12.50) in 2007, a then-unheard-of price in the industry, and 10 million subscribers had signed up less than a year later. Now all three carriers offer 980-yen plans.
"The company finds a few specific points to focus on and engages competitors on those, including price," said Hironori Amano.
In fashion-conscious Japan phones are often seen as accessories, and many operators have long sold their handsets in a variety of colors. Not to be outdone, Softbank once launched a mobile phone in 20 different colors at the same time.
- Silicon Valley's 19 Coolest Places to Work
- Is Windows 8 Development Worth the Trouble?
- 8 Books Every IT Leader Should Read This Year
- 10 Hot Hadoop Startups to Watch
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Logicalis eBook: SAP HANA: The Need for Speed Without timely business insights, organizations today can suffer logistical, manufacturing, and even financial disaster in a matter of minutes
- Neustar 2014 DDoS Attacks and Impact Report For the third consecutive year, Neustar surveyed hundreds of companies on distributed denial of service (DDoS) attacks. The survey reveals evidence that the...
- Acxiom Case Study This case study, which focuses on Acxiom, explores how the company was able to secure employee data, reduce migration costs and boost productivity...
- Windows® XP Migration: Protect and Secure Critical Data With the end of the Microsoft Windows XP operating system's lifecycle on April 8, 2014, businesses are faced with the decision to migrate...
- Top 4 Digital Signage Fails Join RMG Networks for a look at four of the most common reasons digital signage fails in corporate businesses. Learn about strategies to...
- Building Tomorrow's Infrastructure Listen to this podcast to discover how Crider Foods worked with PC Connection to update their IT infrastructure, while maintaining compliance and control. All Wireless Carriers White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!