TELECOM Digest OnLine - Sorted: A Major Backfire in Japan Deflates Vodafone's One-Size-Fits-All

A Major Backfire in Japan Deflates Vodafone's One-Size-Fits-All

Monty Solomon (
Mon, 5 Sep 2005 12:06:06 -0400

September 5, 2005

TOKYO - Yoko Yakushiji's biggest complaint with her Vodafone cellphone
was not just the lack of functions, the expensive bills or the poor
signal. It was not even the delays in receiving text messages.

What annoyed her most was feeling like a social outcast, cut off from
the instantaneous electronic world of Japan's tech-savvy youth. The
21-year-old university student says she often missed friends' calls
and messages with invitations to meals, parties and even class

In April, she switched providers -- something she had resisted because
she had to change her phone number and phone-based e-mail address.

"My friends used to treat me differently. They'd say things like, 'Oh,
you can't reach Yoko. She's got Vodafone,' " said Ms. Yakushiji, a
junior in international finance at Meiji Gakuin University in
Tokyo. "I just couldn't take it anymore."

Ms. Yakushiji was not the only one, as Vodafone, the world's largest
cellphone carrier, is finding out. Service problems, a botched rollout
of its third-generation phone network and a skimpy lineup of new
handsets have driven away Japanese customers in droves. The exodus has
turned into an embarrassing and costly setback for Vodafone -- and one
it is now struggling to overcome.

Vodafone, which is based in London and also owns 45 percent of Verizon
Wireless in the United States, now must win back customers if it is to
revive what was once one of its most profitable units and a cash cow
for its global operations. Though the performance of its subsidiary in
Japan has shown some signs of improving, it has fallen far behind its
two larger rivals here, NTT DoCoMo and KDDI.

Vodafone's woes in Japan are a lesson in how global corporations can
stumble if they try to push a sales agenda across many national
markets without heeding local quirks. The company admits that its
biggest misstep was a decision to focus its lineup in Japan on what it
calls "converged handsets" -- mobile phones that Vodafone released in
December in 13 countries simultaneously. By offering the same phones
to many of its 165 million worldwide subscribers, Vodafone hoped to
drive down handset prices.

But the one-size-fits-all approach backfired in Japan. Features that
were acceptable in Europe or the United States appeared primitive and
clunky in Japan. Consumers here are used to getting new technologies
like high-resolution color screens, two-megapixel cameras and full
Internet access a year or two before the rest of the world.

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