New Apple Pay Suica ads

Google Pay Suica has been getting most of the JR East Suica marketing love these past few months but Apple Pay Suica is not down and out. JR East posted some new Apple Pay Suica ads on their website refresh which hopefully means that posters and train wrappers are coming soon.

In light of the coming changes in the Japanese mobile market, Apple is smart to market strengths, like Apple Pay Suica, instead of covering weaknesses, like iPhone XR pricing, with cool. Cool works best when you can rush out and impulse buy.

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Apple Maps Japan in-app restaurant reservations

Kagaku.com Inc. subsidiary Tabelog is one of the restaurant data suppliers for Apple Maps Japan. The recent Tabelog v6 app update added Apple Map third party extension support for restaurant reservations. Reservations are straightforward and similar to what OpenTable does in America.

After you install the Tabelog app it will show up in the Settings>Maps. When you tap on a restaurant that supports Tabelog reservations Apple Maps will display a reservation button.

Tap reservations and you can set the date, time and number of people.

Once you set the reservation and tap “Continue in Tabelog” you’ll get the inevitable ‘Sign in with Facebook, Google ID, Yahoo Japan ID, etc.’ This is where it falls down for me because you still have to enter name and telephone number after login with a Yahoo JAPAN ID. I have not tested the other login methods, it may be a smoother experience with a Kagaku.com ID that has a name and phone number attached.

It’s a nice exercise but I doubt many people will actually use it: restaurant search results in Apple Maps do not indicate which restaurants accept Tabelog reservations. It’s much easier to search in the Tabelog app which has a handy in-app map that displays a Google Map with Tabelog pin overlays indicating nearby restaurants that take reservations and vacancy. Chalk up another miss for Apple Maps.

Google Maps in Tabelog
Google Maps in Tabelog indicates restaurants that take reservations and vacancy

Holding onto iPhone sales in Japan

note: this post has been incorporated in a separate summary post

The iPhone XS Japan launch was muted with none of the lines of the 2017 iPhone X launch. But as of last weekend the local Docomo store was completely out of iPhone XS stock, this weekend was the same. The store doesn’t list iPhone XR stock. It’s all you need to know which iPhone model is selling: people who want to upgrade their iPhone are choosing iPhone XS. iPhone XR is nice but the price is not nice enough to drive iPhone upgrades for people on the fence. If the WSJ iPhone XS price cut in Japan story is correct we should start seeing iPhone XR specials from Docomo, au and SoftBank this week.

I suspect there are lots of iPhone users on the fence, a XS price cut for JP carriers makes sense but as outlined earlier it won’t be enough. The Japanese government is pushing for market changes and Apple needs to change with it and do more if they want to hang onto iPhone market share. In order of importance these are:

  • Issue a iPhone X Suica problem repair program
    This is essential. As I have written many times before Apple really damaged their reputation in the Japanese market by sweeping defective NFC iPhone X production under the carpet. Apple can repair some of the damage by replacing iPhone X Suica problem devices and agressively fixing iOS 12 Suica Express Card performance issues.
  • Extend Apple Pay Japan and lower transaction fees
    Include important missing pre-paid cards that are on Osaifu-Keitai and Google Pay: nanaco (7 Eleven), WAON (AEON), Edy (Rakuten). Nanaco and WAON are particularly important in areas rural outside of the JR transit hubs. It’s said that Apple Pay Suica transaction fees are 3.75% while Google Pay Suica is 3.25%. The Japanese government pushing for a card transaction fee cap of 3.25% plus contactless payment incentives as part of the sales tax increase in 2019. Apple would be smart to lower Apple Pay transaction fees inline with proposals now instead of later.
  • Add TV content and improve Apple Music services
    Japan is the 2nd largest music market after the United States. Japanese TV content is missing on the Apple content platform that everybody else has (Amazon, Netflix, Hulu, etc) and can bundle, Apple cannot. If Apple waits for their subscription service rollout, it may be too late. With big bad Dentsu, the Imperial Death Star of Japanese media as the power driving Spotify in Japan, Apple Music also has to work overtime to keep up: hire the best Japanese music curators, create some cool J-Pop Beats 1 programs instead tired old UK content and fix the iCloud Music Library Japanese music metadata mess so Apple can sell HomePod.
  • Fix Apple Maps and Siri
    This is a given that has been covered before: the total experience needs to greater than the sum of the parts.

There isn’t much time, the 10% Japanese sales tax is due to start October 1, 2019.

Tweet of the Day

Line Pay QR Codes can now be used with, some, vending machines. It is just 3 easy steps and 1 minute of your time. Gotta love the gadget geeks who test this stuff. File under: #what’s the point

For reference here is Apple Pay Suica:

Farewell to the first golden era: iPhone XR price cut and the end of Japanese carrier subsidies

The Wall Street Journal piece Not So Big in Japan: Apple Cuts Price of iPhone XR to Boost Sales outlined iPhone XR prices cuts in Japan along with iPhone X production starting up again. It made a small ripples in the tech blog sphere but the news was not particularly surprising or interesting. Back in September I wrote:

The more important question for the Japanese market however is not the top-tier models but the iPhone 7 replacement aka iPhone SE 2 as tweeted by Guilherme Rambo. SE 2 should have Global FeliCa as well and will make a great entry-level Apple Pay Suica device, not only for Japanese students on a budget but older Japanese who don’t need or want the latest bells and whistles. An entry level Global FeliCa iPhone has been missing from the JP lineup and will certainly help Apple hold onto Japanese market share.

The SE 2 didn’t appear so iPhone 8 is holding up the lower end because:

  • the 64GB entry point is a sweet spot that iPhone 7 doesn’t fill
  • iPhone 8 is the highest spec Touch ID iPhone available in a market where lots of people use face masks that don’t work with Face ID iPhones

Cutting iPhone XR prices just before the Japanese winter bonus season starts makes sense but won’t be enough: the long festering iPhone X Suica problem is still corroding Apple’s reputation in the Japan market and the market itself is about to change drastically. Things are hanging on a precipice.

The end of carrier subsidies
Apple was already under pressure from the Japanese government Fair Trade Commission for the 2 year subsidized contact model upon which Apple built their iPhone 50% market share. On November 26 the Ministry of Internal Affairs and Communications (MIC) held a public hearing on the competitiveness of the mobile market with the participation of the Japanese carriers: Docomo, KDDI au and SoftBank. The MIC made it very clear that:

  • mobile pricing must be uncoupled from 2 year carrier contracts and be drastically simplified
  • subsidies must end

At the same time JP carriers are under pressure from the government to reduce data pricing across the board.

The writing is on the wall: carrier subsidized iPhone contracts are ending and Apple has to come up with a whole new sales strategy for Japan in less than a year before the Japanese sales tax hike comes into play (October 1, 2019) which will add a whole other layer of market FUD. If the MIC holds the course, carriers will start rolling out new unsubsidized contacts and plans in the 2019 March/April graduation season/new fiscal year season. That’s very little time.


The Docomo iPhone XR price cut

Just 4 days after the WSJ story ran, Docomo announced new discount options for iPhone XR starting November 26. Calculating the new ‘price cut’ is the old style nonsense of finding out what discount campaign goes with what contract, exactly what the MIC is putting an end to.

IT Mobile says it boils down to a measly ¥8,424 discount and calls it a cheap trick. Abema Times calculates the least expensive Docomo iPhone XR price with a new/MNP contract and discounts added is ¥25,920:

Docomo iPhone XR New/MNP
iPhone XR/64GB ¥25,920 (previously ¥98,496)
iPhone XR/128GB ¥32,400 (¥104,976)
iPhone XR/256GB ¥44,064 (¥116, 640)

Docomo iPhone XR Upgrade
iPhone XR/64GB ¥93,312
iPhone XR/128GB ¥99,792
iPhone XR/256GB ¥111,456

The new/MNP carrier migration pricing is attractive for new Docomo customers but the reality is that most users are upgrading not changing carriers. At best they would only see a ¥8,000 discount. Docomo has not said if the new discounts retroactively apply to customers who already bought an iPhone XR but people are already asking on Twitter.

Meanwhile in other news iPhone XS fell out of the top 10 BCN sales rankings this week and iPhone 8 remains the best selling iPhone model in Japan. Market conditions are morphing and will only become more challenging and complex. There are a few things Apple can do other than price to hang onto iPhone market share. In order of importance these are:

  • Issue a iPhone X Suica problem repair program
    This is essential. As I have written many times before, Apple damaged their reputation in the Japanese market by sweeping defective NFC iPhone X production under the carpet. Apple can repair some of the damage by replacing iPhone X Suica problem devices in addition to the already announced iPhone X Display Module Replacement Program, and by aggressively fixing iOS 12 Suica Express Card performance issues.
  • Extend Apple Pay Japan and lower transaction fees
    Apple Pay has been a big success but needs to extended to include important missing pre-paid cards that are on Android Osaifu-Keitai and Google Pay: nanaco (7 Eleven), WAON (AEON), Edy (Rakuten). Nanaco and WAON are particularly important in areas rural outside of the JR transit hubs. The Japanese government pushing for a card transaction fee cap of 3.25% on the merchant side plus contactless payment incentives on the consumer side as part of the sales tax increase in 2019. For example Suica transaction fees are 3.75% but Google Pay Suica transaction fees are said to be 3.25%. Apple would be smart to work with payment networks to lower merchant transaction fees inline with government proposals now instead of later, and also work to get the major reward cards into Wallet like the recently added Ponta.
  • Add TV content and improve Apple Music services
    Japan is the 2nd largest music market after the United States. Japanese TV content is missing on the Apple content platform that everybody else has (Amazon, Netflix, Hulu, etc) and can bundle, Apple cannot. If Apple waits for their subscription service rollout, it may be too late. With big bad Dentsu, the Imperial Death Star of Japanese media as the power driving Spotify in Japan, Apple Music also has to work overtime to keep up: hire the best Japanese music curators, create some cool J-Pop Beats 1 programs instead tired old UK content and fix the iCloud Music Library Japanese music metadata mess so Apple can sell HomePod.
  • Fix Apple Maps and Siri
    This is a given that has been covered before: the total experience needs to greater than the sum of the parts.

Update: I consolidated iPhone XR price cut and end of carrier subsidy news here