Smartphone boon rocking digital industry
TOKYO — From heavy manufacturing to personal services, smartphones are making waves across a wide range of Japanese industries, shaking up long-established business models as well as consumer lifestyles.
The impact is so far-reaching that companies known for manufacturing cameras, car navigators, portable music players and other products are struggling to find their place in a digital landscape that now seems to revolve around smartphones.
About 10 employees of Casio Computer Co., including product planners, designers and sales representatives, met in early July in a 14th-floor room at the firm’s headquarters in Tokyo to discuss plans for next spring’s compact digital camera lineup.
The aim of the meeting was “to develop a camera that breaks through conventional wisdom,” according to one attendee.
Several ideas were thrown around, including the concept for a camera that would completely prevent camera shake, indicating the meeting’s participants were keenly aware that smartphones have been eating into their market share.
Casio has a long history of pioneering new markets with unique products, such as the world’s first digital camera equipped with a liquid crystal display and ultra-thin card-type cameras.
However, smartphones have chipped away at market sales, which declined to about 2 million units in fiscal 2012, one-third of the fiscal 2009 figure.
The market is shrinking fast, according to the Camera and Imaging Products Association. The industry’s global shipments of compact cameras were down an astonishing 48 percent in the first half of 2013 compared to the same period last year.
“We want to make eye-catching products that smartphones would never be able to imitate,” said Takashi Niida, head of marketing at Casio’s planning office.
Casio is not alone in its struggle to navigate the new digital landscape.
Olympus Corp. has announced it will stop making digital cameras priced at 15,000 yen or less that cannot be easily distinguished from smartphones in terms of function.
Fujifilm Corp. is also cutting its lineup to focus on higher-priced products that do not overlap with smartphones. Meanwhile, Canon Inc. has revised the number of units in its digital camera sales plan as Vice President Toshizo Tanaka said July 24 that the firm “took into consideration the market environment we are facing.”
But the camera makers are not the only ones feeling the heat.
Smartphones can do more than just take pictures -- they are also equipped with Global Positioning Systems and music players, and allow users to download a wide range of useful applications from online stores. That multifunctionality is piling pressure on makers of single-function products.
Sales of car navigation systems are declining, especially for simple devices that are largely interchangeable with smartphone GPS, according to Yano Research Institute Ltd. In fact, sales for fiscal 2013 are expected to have shrunk to 19 billion, down about 12 percent from fiscal 2010.
Sony Corp. withdrew from the car navigation business last year.
At a press conference discussing the settlement of accounts on Aug. 6, Pioneer Corp. President Susumu Kotani announced the firm has revised down its earnings forecast for fiscal 2013, saying, “The domestic car navigation market has not recovered yet.”
Meanwhile, portable music player sales have logged two straight years of significant decline, falling 10 percent in fiscal 2011 from the year before, and 15 percent in 2012, according to survey firm BCN.
Other firms, including Toshiba Corp., have already left the business, and the industry is gradually being whittled down to Sony and Apple Inc. of the United States.
“Electronics makers need to decide which direction they’re going in. Will they create advanced products that smartphones can’t catch up to? Or will they sell their know-how in forging alliances with smartphone makers?” said Yasuo Nakane, a senior analyst at Deutsche Bank Group Japan.
The smartphone boom in Japan began in 2008, when SoftBank Corp. began offering Apple’s iPhone.
Consumers quickly jumped onto the convenience the devices offered -- large, high-quality LCD displays with personal computer-level image processing capacity, user-friendly touch screens and the ability to customize functionality through downloading apps. In 2010, NTT Docomo Inc. and KDDI Corp. also launched full-scale participation in the market.
According to U.S. survey firm IDC, global smartphone shipments overtook conventional cell phones for the first time on a quarterly basis in the January-March period this year. In Japan, smartphone shipments reached 70.5 percent of all cell phone shipments in 2012.
Smartphone contracts grew 21.4-fold from 1.2 million in fiscal 2008 to 25.68 million in fiscal 2011, according to MM Research Institute. The multifunctional devices are expected to surpass conventional cell phone contracts within fiscal 2014, and reach about 70 percent in five years, the institute added.