Stop Singing The Sad Song Of Saturation

Yes, I too believe that much of the Asian wireless market (Japan at least) is nearing the point of saturation. For the consumer, however, this may not be a bad thing at all. See, when things get crowded, companies are forced to lower prices and innovate in order to survive. If there is a company that cannot do this, then they are simply out of luck at that point.

About 70% of people in Japan now own mobile phones, which is leading to plenty of worries about saturation. This isn’t the first time (and certainly won’t be the last) that this fear is showing up, but what will be interesting is seeing how the various operators deal with this issue. It appears that some view saturated markets as dead markets, but that’s far from the truth. Already, reports that look at the Asian mobile market are excluding Japan, on the assumption that growth numbers will look much smaller with a saturated Japan included. All around the world, operators are apparently spending their CAPEX on capacity rather than coverage, as they realize that it’s all about the usage now, rather than just users.

This, of course, is just part of the reason why mobile operators around the world have been pushing data instead of voice over the past few years. Data opens up a new world of opportunities to build revenue, without having to simply sign up more users. With that in mind, the fact that Vodafone KK in Japan only signed up a net of 900 new customers (yes, that’s 900, not 900,000) is both better and worse than it sounds. The details show that Vodafone lost 68,600 2G customers, but gained 69,500 3G customers — meaning that, at the very least, it’s shifting its users to a platform that should allow for more usage. That makes it sound better. Still, it’s hardly the type of step the company needs to take if it’s really serious about challenging KDDI for market share. Both KDDI and DoCoMo continued to add plenty of users — making the 900 number look much worse.

Either way, all of this activity, and the obvious realization that Japan is reaching some form of saturation, suggest that Vodafone is taking the wrong strategy in Japan. By just offering a “me too” solution, then it all becomes a question of stealing customers from the other operators. With Softbank, and its love of incredibly cheap deals to subscribers trying to enter the market, this only becomes tougher. Instead of fighting it out on the same turf, there’s another way of dealing with saturation: reinventing the market.