Having finally made the journey back to America after a three year stint living in Japan, I'm really surprised to see the widespread proliferation of the iPhone. Even I have one now (courtesy of my own birthday). The iPhone is, no question, not just a fantastically powerful gadget, and a capable phone that does not compromise aesthetics or function for the other. It even has a stable of games and applications that would make almost anyone scream in delight. The DS and PSP continue to dominate the hearts and minds of Japanese gamers. As people become busier and spend more time outside of their homes, handheld gaming system popularity increases. 

Why is it that the iPhone just has not taken off in Japan then? Apple has stated that sales have been lower than expected, and despite no concrete numbers, warning signs have begun to appear. Exclusive iPhone provider Softbank cut the price of the phone and the accompanying data plan recently, making the 8GB model free, and the 16GB half its original price. They additionally cut roughly ￥1000 off the monthly data plan for both existing and new customers.

The Sample

Here in America, journalists everywhere are singing the praises of the iPhone as a true contender in the portable gaming space. In Japan, the platform is barely on the radar. To illustrate my point, I took a random sample from my friends in Japan, and split them into two equal groups: foreigners, and Japan-born natives. I would not purport that this experiment is entirely controlled, but for the purpose of proving my point, you will just have to suspend your disbelief. The sample specifically was nine people: five Americans, and four Japanese. For the sake of simplifying the experiment, I tried to make sure that all nine of the participants had similar spending habits and buying power, and also made sure that all of them were either gamers, or at least had a passing interest in playing games. Out of the five Americans, two already owned iPhones. The other three were either interested in iPhones, but either could not afford the device at the present time, or were not interested in switching from their current phone provider. All three of them purchased and iPod Touch instead. Of the four native Japanese friends, none owned an iPhone, two had absolutely no interest in getting one (or an iPod Touch), one thought it was really amazing but "unattainable", and one did not want to switch from their cell phone service provider, and already owned a Sony Walkman mp3 player. Like the astonishing market penetration of the MiniDisc format in Japan, the iPhone's lack of popularity is a total mystery. There are a number of factors that might be the cause, but the following is merely semi-intelligent speculation, weighed largely on observed cultural trends and anecdotal evidence.

Country of Origin

This is not meant to be an inflammatory argument about the insular cultural bias of the common Japanese person in the least. In fact, I would list this as a strong similarity to America. Less based on national pride and more based on availability of information, Japanese people tend to trust companies they know. Companies like Casio, Panasonic, and Fujitsu are household names that carry a lot of weight, especially because of their longstanding history. People know about their long history as a trustworthy company, and many of these companies began as family businesses; something that is held in high regard in Japan. Apple just does not have the same reputation. They are considered the American luxury electronics store (especially now that Apple stores have begun to spring up all over the country).

The Luxury Factor

The average Japanese consumer does not know much about Apple's past. The geeky and down-to-earth Apple Computers of the 70's and 80's and its transition to the sophisticated and classy Apple of today is maybe not common knowledge, but most consumers know that Apple made computers before it made the iPod. In Japan, Apple is a luxury electronics company. It has its own stores, and the locations of these stores are usually in the shopping districts of major cities: Apple's Osaka store is in Shinsaibashi, across from Nike, Dolce & Gabana, Coach and Gucci. Meanwhile, Apple stores in America have, in the last 3 years, sprung up in virtually every thriving shopping mall and village, next to reasonably priced women's clothing stores and book stores. For Americans, we view the iPod and the iPhone has aesthetically pleasing and surprisingly functional gadgets. I found many of my Japanese friends viewed Apple's electronics as unattainable rich man's toys.

The Price Tag

There is no question that the luxury image is strengthened by Apple's pricing structure in Japan. My Macbook Pro was nearly $1000 more in Japan than it was in the US, and the iPhone is no different. Before Softbank slashed the price on the iPhone in February, the 8GB model was roughly $235, making it almost 25% more expensive than its American clone. The iPod Touch is no different. While the 16GB model in America sells for $299 (which is already pretty expensive for what it is), the Japanese Apple store sells the exact same model for ￥35800, approximately $354. Essentially, in addition to the well-known "Apple tax" Americans have gotten used to, Japanese consumers are paying an additional $30-$50 for no real apparent reason.

Digital Distro

While Sony has been flirting with digital distribution for all future PSP releases in America, SCE Japan still clings to its boxes, manuals and UMD releases. No matter how dismal UMD adoption has been, Sony knows that Japan is still not ready for full digital distribution. Japanese hospitals and businesses still use paper primarily to keep records, Japanese music lovers still buy CDs regularly, and modern gaming is still predominantly disc-based. Japanese companies looking to push digitally distributed games tend to focus on games that would interest the Western market, because they know fully well that those countries will be the biggest money makers. Perhaps this could be Apple's folly. The iPhone has an incredible and expansive app store and thousands of fantastic games and programs, yet coverage of iPhone titles never ends up in Japanese gaming magazines. Maybe the iPhone is a little too ahead of its time for Japan; the country is just not ready for an entirely online game store, devoid of discs, manuals and tangible boxes. Despite all of these factors, Japanese companies like Square Enix and Hudson seem to be hopping on board to create titles for the platform, though it seems fairly obvious their effort to make compelling products pales in comparison to that of small independent developers and American publishers. 2009 is not yet over, though, and there's still time for Apple to gain ground in the new fiscal year.