The recent explosive growth in popularity for tablet computing devices in Japan shows these devices are attracting more and more interest in both Japan’s business and consumer markets. Although the penetration rate for tablet devices within the overall mobile device segment in Japan is still relatively low, unit sales in 2011 reached 1.42 million units, nearly triple the number sold the previous year. Some local industry researchers are even predicting tablet devices will totally replace notebook computers in Japan by 2015. There is also increasing demand for tablet devices within the Japanese e-book market. For U.S. firms interested in the Japanese tablet device market, market-proven entertainment, education and business applications for such devices are in particularly high demand.
According to the market research firm IDC Japan, tablet device shipments in Japan totaled 500,000 units in 2010 but are expected to increase to 1.42 million units (see chart 1) in 2011, a nearly threefold increase in just one year. The Japanese mobile device market is led by smartphone devices but tablet devices are attracting ever increasing industry attention. The market share for tablet devices is still relatively small within the Japan mobile device market; however, if a greater variety of attractive tablet applications and models become available, this would provide an impetus for the growth of the overall tablet device market in Japan.
About 80 percent of current Japanese tablet users are consumers, according to a November 2010 survey conducted by the Mobile Computing Promotion Council in Japan. The rise of the mobile device market, including tablet devices, is also driving growth in Japan’s e-book market. Impress R&D, a local research company, estimates that the e-book market in Japan grew 13.2 percent to 65 billion yen ($813 million USD) in fiscal 2010 and is expected to really begin taking off after fiscal 2013 as more content becomes available and standardization of distribution platforms progresses. This market is projected to expand further to 200 billion yen ($2.5 billion USD) in fiscal 2015 (see Chart 2 in the following section). Online sites offering e-book downloads are springing up to service the growing number of people who own smartphone and tablet devices. Several leading traditional Japanese publishing companies are also digitizing all their new book title releases. In fiscal 2010, nearly 90 percent of Japan's e-book market consisted of comics and other content delivered to standard cell phones, while content for smartphone and tablet devices accounted for less than 4 percent of the market. By fiscal 2015, however, the content for smartphone and tablet devices is expected to comprise 80 percent of the market. Major traditional publishers are losing money from existing business models. A total of 189 magazines were discontinued by major publishers in Japan during 2009, the second worst year in history for this sector. Factors behind this decline included the recent rise of companies like Amazon (which started in Japan in 2000) and Rakuten whose home delivery of publications ordered online poses a threat to traditional book stores. Traditional publishers are therefore now trying to exploit new revenue sources in digital publishing.
(Note: Exchange rate used in this section:80 yen/1 US dollar)
For U.S. firms interested in the Japanese tablet device market, market-proven applications for entertainment, education, and business are in high demand. Demand is high not only for such applications, but also for new business models that employ tablet devices.
Regarding platforms for tablet devices, Microsoft, RIM, HP and others are struggling for supremacy in the smartphone and tablet device markets, but as with smartphones, Apple and Google are currently leading the market for tablet platforms (see Chart 3 below).
As the number of tablet business users increases, however, the demand for the Windows platform is expected to increase. Japan’s mobile phone household penetration rate totaled over 90 percent in 2008 according to the Japanese Government so Japan is a good market for devices and device applications that enable computing formerly done at the office on desktop computers to be done anywhere on mobile devices such as tablets.
There are three key elements to launching mobile device applications into the Japanese market: (1) localization — localization includes Japanese translation, testing, and customization. Application suppliers are required to provide not only translations but to consider Japanese business customs and culture to meet local client needs; (2) support capability - Japanese language support is mandatory; and (3) product quality — quality control is one of the most important considerations for Japanese users.
Many American exporters use agents or distributors to pursue business in the Japanese market. However, finding prospective partners takes a long time. Japanese firms are always seeking new technologies from the United States but building long term relationships and trust are key factors to opening a partnership in Japan. Prospective exporters to Japan should be aware that competition is strong and that buyers expect a high level of after sales support. It is also important for U.S. companies to regularly visit their representatives in Japan and maintain a good relationship with them.