Apple is the world’s largest and most innovative tech company. In 2020, Apple became the first publicly traded US company to cross 2 trillion USD in market value. As of November 2021, its value stands at 2.47 trillion dollars. Apple’s business strategy has evolved over the years from their first foray into personal computers back in 1976. The company now designs smartphones, laptops, wireless earbuds, smartwatches, each being the best-in-class in its respective category.
But Apple’s toughest competitor by far is Samsung, the company with the highest number of smartphone sales in the world and a vastly larger electronics catalog. According to Counterpoint, in the second quarter of 2021, Samsung controlled 18% of the global smartphone market, where Apple was behind at 15%. Apple is yet to catch up to Samsung in sheer scale and volume of production.
But there is a market where Apple blows Samsung out of the water with a mind-boggling 66.82% market share, where Samsung is barely holding on with a feeble 5.82%. We’re talking about Japan. Apple has had complete domination over the Japanese market for some time now. But how did an American company survive in the markets of one of the most hi-tech countries in the world? Let alone conquering it?
Japan has been a notoriously difficult market to crack for foreign companies. Japan is home to some of the largest consumer electronics brands in the world like Sony, Hitachi, Fujitsu, Panasonic, etc. The people of Japan always tend to choose their local brands over foreign competition, which makes establishing a foothold a very tall order. Brands like Samsung have always fallen behind native brands like Sony and Sharp in Japan, despite being the largest Asian smartphone brand. Samsung even resorted to removing their branding from their Galaxy smartphone line in Japan, in an effort to appeal to customers. So how did Apple, a Californian company, win big in one of Asia’s toughest markets?
Reasons Behind Apple’s Dominance in Japan
Design Philosophy Suited to Japanese Culture
Steve Jobs is undoubtedly one of the most influential figures in Apple’s story. His name is synonymous with Apple’s biggest successes like the iPod and the iPhone. However, his outlook may have been, privately Steve Jobs was a huge admirer of Japan and its culture. Jobs visited Japan throughout his life and was particularly fond of Kyoto, one of the ancient capitals of Japan. His love for Japan was reelected in many of the decisions he made during his time as the CEO of Apple. Jobs admired Sony for its innovations in consumer electronics and tried to convince them to run Apple’s Mac operating system on their premium Vaio laptops. In 2003, the first international Apple store was also opened in Tokyo. So Apple had an affinity for Japan, long before the iPhone even existed.
Brilliant Marketing Strategy
The next part of the story involves the launch of Apple’s most influential product, the iPhone in 2007. The iPhone revolutionized the smartphone industry and instantly made all its competitors obsolete. But disrupting the smartphone market in the United States is one thing, trying to take that success to Japan in another thing entirely. Japan already had a culture infatuated with attractive and feature-rich phones. It had some of the world’s leading phone manufacturers like Sony, Panasonic, and Sharp as well as many companies who made phones exclusively for the Japanese market.
Many dismissed the iPhone as it was seen as too big a departure from the button-packed feature phones that the Japanese public was used to. But this time, Apple’s ingenuity was not in the design of the product, but rather in the way they promoted it. Instead of going to the largest carrier that they could find, Apple partnered with Softbank. Softbank at the time was the smallest of the three major telecom carriers in Japan. So they pounced at the opportunity and offered the iPhone with outrageous promotions, even offering it for free with a two-year contract. This meant the technologically superior iPhone was now cheaper than the clunkier competition. The iPhone became a runaway success in Japan, and the competition never managed to catch up.
The secret behind the Japanese public being so accepting of the iPhone was that even though it lacked the appeal of a feature phone, it made up for it in something that the Japanese value over everything else, efficiency. The iPhone made everything from making calls and sending texts, to setting alarms and checking emails quicker and easier. The simple and minimalistic design and intuitive easy-to-use operating system, in contrast to the unrefined and convoluted options at the time, made the iPhone the better deal. By 2012, the iPhone took the top spot as the No.1 smartphone in Japan for the first time, beating all the domestic companies. It’s a position it still holds to this day.
Incorporating Japanese Technology
Apple’s prime directive as a tech company has always been to look into the future and anticipate what the consumers will want tomorrow and provide it today. Historically, this approach has always helped Apple to stay on top of its competition. And these innovations have also secured its position in the Japanese market. One such innovation is Apple Pay.
Apple Pay is a contactless payment service by Apple which allows for card-free transactions using iPhones and Apple watches. It primarily uses NFC technology to transfer information from your device securely to a reader at checkout, completing the transaction with no cards in sight. This technology is the result of Apple’s vision of a future where cash and credit cards are redundant, and all transactions are done securely through your phone.
But this technology is nothing new for Japan, they are the ones who invented NFC after all. The Japanese have been making contactless payments since 2004 when Sony implemented their super fast FeliCa standard for RFID smart cards. This technology was adopted by JR East, one of Japan’s largest Railway companies for their prepaid Suica travel cards. These Suica cards became immensely popular as they saved time and could be used at vending machines, restaurants, coffee shops, and departmental stores. According to JR East, as of 2020, there have been over 86 million Suica cards issues and over 250 million transactions made every month.
Apple introduced Suica support for Apple Pay in all its compatible devices in October 2016. This move meant Apple had now integrated the most popular cashless payment infrastructure in Japan directly into its ecosystem of products. Not only that, Apple went the extra mile and added the superfast Global FeliCa compatibility to its devices in 2017 with the launch of the iPhone 8 and iPhone X lineup. The addition of these market-specific features meant the popularity of the iPhone shot even higher in Japan. In the last quarter of 2020, Apple shipped 6.015 million iPhones in Japan, which made up 52.6% of all smartphones sales made.
Apple’s success story in Japan is unprecedented and undisputed. It is a testament to the company’s commitment to crafting the best possible experience for its users and its out-of-the-box thinking when it comes to market strategy. It’s through the merit of its products that convinced the Japanese to accept an outsider, leaving their local brands to whom they were fiercely loyal. Japan is now an Apple stronghold, and it’s quite reasonable to believe it’ll stay that way for a while.
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