Management of Technology and Innovation in Japan

150 M. Yasumoto and T. Fujimoto
Meanwhile, the competition between more than 10 manufacturers is harsh in
the Japanese market. As is the case of the suppliers in Japanese automobile industry
(Nobeoka 1996), the manufacturers compete for the orders of the handsets
from the providers 7 , and thus need to impress the handset model development projects
on the providers. As a result, Japanese manufacturers provide new handset
models for the customer providers every 6 to 8 months in Japan – except other
minor model changes. The manufacturers have pursued product novelty and distinguished
features for each of customer providers, so that the manufacturers build
close relationships with the customer providers.
Also there are relatively stable interfirm relationships in the US (e.g., AT&T
Wireless and Motorola). Mobile service providers in the US also provide sales
subsidies 8 . There are several large vendors, AT&T Wireless & Cingular Wireless,
Verizon Wireless, Sprint PCS and Nextel, Voice Stream (T-Mobile), and more
small vendors. As the competition between the providers is harsh, the providers
are also encouraged to provide new handsets with reasonable prices in order to attract
subscribers.
However, the basic designs of handsets are usually not customized for each of
the providers in the US. Major manufacturers in the US market have their own
handset development policies, product lineups, and development cycles (Funk
2002). The local providers are not involved in the planning of handset models and
platforms 9 .
Different from the case in Japan, the interfirm relationship is not expected to
include the collaborative product/technology planning between manufacturers and
providers. The sales subsidy in the US is not intended to cover the development
costs for customizing handsets/technologies for specific providers, but to make up
for the handset manufacturing costs in order to simply lower the sales prices.
handset development, NTT DoCoMo had provided six manufacturers 650 million dollars
for 4 years.
7 In the handset selection process of Japanese providers, manufacturers, as OEM manufacturers,
usually need to compete against each other. NEC and Panasonic have competed
for the top position of NTT DoCoMo handset vendors. Sharp, a new entrant has
drastically increased the handset share for NTT DoCoMo in the early 2000s.
8 Chicago Tribune, Dec, 4, 2002. Providers have provided about $100 per handset on average.
For instance, AT&T Wireless has subsidized more than $100 for each of the
handsets of Motorola, which is one of the AT&T Wireless’s largest handset vendors.
9 The platform of handsets is defined as a set of units of base band and RF (radio frequency)
band, which consist of integrated circuits and discrete components mounted on
printed on circuit boards (Funk, 2002). However, a basic platform is not necessarily defined
by Japanese manufacturers, and it may vary according to who manufactures it.
Several manufacturers also include digital signal processing chips /units in their platforms.