It's hard to believe, considering its former status as tech innovation capital of the world, that Japan isn't a leader in mobile tech. In fact, they're not just failing to lead, but completely behind fellow Asian rivals like South Korea and China.
Sony is just about the only major Japanese company with a smartphone line that's available worldwide, and they've sold so poorly for so many years that the company's chief executive is considering pulling Sony out of the smartphone game completely (Sony's mobile division lost $480 million last year).
It's a truly surreal state of affairs for a country that brought the world so much tech innovation in the 80s and 90s: the Walkman, countless video game innovations, LCD TVs, humanoid robots, etc.
But while Japan is no longer leading the pack in consumer tech advances, its culture of hardwork and its reputation for superb craftsmanship and product quality are still highly acknowledged and respected around the world.
And so an upstart mobile company named Freetel is hoping to use that reputation, combine with wiser business decisions and strategies, to put Japanese smartphones back on the global map.
The company, established in 2012 and began selling its first batch of smartphones a year later, is currently the market share leader (30%, or about 3.5 million) in Japan's low price, contract-free phone market.
Now it's looking to expand. Last week, Freetel hit the North American market with the release of two smartphones: a new first-generation flagship with a 6-inch screen named the Kiwami, and a budget 4.5-inch handset, the Priori 3.
Freetel's flagship phone, the Kiwami.
Freetel is hoping to win over buyers with two factors: Japanese craftsmanship and design; and a very attractive price.
The Kiwami ticks almost all the boxes for a 2016 flagship (6-inch quad HD display, 21 megapixel rear camera, fast fingerprint scanner, 2GHz octacore processor) for just US$399; and the low spec Priori is selling at just US$99.
But why would Freetel enter the already overcrowded Android market? And is selling phones at such a cheap price a feasible strategy, especially when the Android price-wars have gotten so steep that most Android manufacturers not named Samsung are losing money per handset sold?
Freetel's budget line, the Priori 3, which sells for US$99.
Freetel's global president, Ian Chapman-Banks, is well aware of these obstacles.
"I know that it's very, very difficult to make money on [smartphone] hardware," says Chapman-Banks, who started Freetel with partners after more than a decade of leading Dell, Motorola, and Microsoft's consumer tech branches in Asia. "With Freetel we're taking a long-term, big-picture approach. We have a 10 to 15 year strategy."
Here's the plan in a nutshell: forget profiting from hardware; work on pushing the Freetel brand and getting its phones in people's hands, then let software content, app services, mobile data optimization, and other partnerships generate revenue.
"We want to build services and applications for our phones," says Chapman-Banks, adding that Freetel has already begun in Japan with online manga, prepaid credit card and tourist data sim cards.
Chapman-Banks knows that Apple/Samsung dominate the US market, obviously, and his goals for Freetel's stateside expansion this year are in his words "modest." But the company's phones are already available on Amazon, with Best Buy to come soon. Freetel also expects to strike a partnership with "one of the big four US carriers" before the end of this year.
He only expects to move about "a few thousand units" in the US this year -- but he's aiming to pump that number up to three million units in 2017 and 10 million by 2018.
Chapman-Banks also concedes that the most of the sales this year will be for the Priori (and not the flagship), because he believes "there's a market for budget phones in the US."
There's definitely a market for budget phones in emerging, less-developed markets like Southeast Asia and Latin America -- worldwide phone sales grew nearly 10% last year, mostly thanks to emerging markets' desire to purchase cheap phones -- so of course Freetel has set its sights on those markets as well.
The company has already launched its phones in Cambodia, Chile and Peru, with other similar markets like Vietnam, Dubai and Middle East to come either later this year or early next year.
Freetel, however, has no plans to tackle the Chinese and European market anytime soon, Chapman-Banks says.
"Having lived in China and ran Motorola's business there, I understand the effort it requires to build a brand there," he says. "We have realistic aspirations, so we are not focusing on China right now."
Though Freetel plays up its Japanese heritage a big deal, the phones currently are still manufactured in China. But Chapman-Banks is keen to point out that the entire hardware design and procurement of parts are done in Japan -- it's just that these parts are then put together in a Shenzhen factory, where Freetel's own Japanese engineers oversee production.
According to Chapman-Banks, Freetel is "a year away from being 100% manufactured in Japan."
For a small company to voluntarily increase its own production cost is unheard of, but Chapman-Banks argues the difference between manufacturing in China and Japan is not as high as people might think.
"First, the Japanese government is very supportive of us [bringing production back to Japan]," he says. "Second, labor cost in China is not that much cheaper than Japan these days. There's an excess of talent in Japan right now since Panasonic closed down factories."
Plus, to be able to say they're 100% made in Japan is worth the bump in production costs. This is, afterall, a company that is proud to flaunt its Japanese heritage. And the Japanese didn't become a world tech power in the 20th century without ambition and big dreams.
