While Japan has never been among Apple Inc. (NASDAQ:AAPL)‘s most important geographical segments, especially compared with other Asian countries like China. The “Greater China” segment has become so important to the Mac maker’s results that it just recently broke it out into a separate reportable segment. Japan was just 7% of revenue last quarter, far below Greater China’s 19% contribution.
That’s not to say that Apple Inc. (NASDAQ:AAPL) doesn’t have opportunities there, but rather that the country isn’t at the top of its priority list. Apple has never inked a deal with Japan’s largest wireless carrier, NTT Docomo Inc (ADR) (NYSE:DCM) , either. The top carrier currently has 61.6 million subscribers. Japan is actually one of the few countries where iOS has Android beat in market share. Kantar Worldpanel Comtech’s first-quarter estimates peg iOS at 49.2%, with Android at 45.8%.
In fact, NTT Docomo Inc (ADR) (NYSE:DCM) has been aggressively marketing two rival handsets to fend off the iPhone that’s offered at smaller carriers Softbank and KDDI. The company is pushing the Samsung Galaxy S4 and Sony Xperia A as its flagship devices.
“I think the iPhone with its own OS is like Disneyland”
In a recent interview with The Wall Street Journal, NTT Docomo Inc (ADR) (NYSE:DCM) exec Kazuto Tsubouchi sheds some light on why it has never offered Apple Inc. (NASDAQ:AAPL)’s device.
The exec notes that NTT Docomo Inc (ADR) (NYSE:DCM) isn’t necessarily averse to selling the iPhone, but rather the benefits may not outweigh the costs. Tsubouchi mentions the “procurement cost” and “obligations” associated with the iPhone, obvious references to the hefty subsidies and minimum purchase commitments that Apple Inc. (NASDAQ:AAPL) is known for extracting and imposing on carrier partners.
The iPhone would undoubtedly strengthen NTT DoCoMo’s device lineup, and some of the carrier’s customers want the device, but NTT Docomo Inc (ADR) (NYSE:DCM) feels confident that it can hold its own without it. That’s because Google Inc (NASDAQ:GOOG) Android devices have become much more competitive over the past year, in Tsubouchi’s view, which is why the company is focusing so heavily on the platform.
Like most carriers, NTT Docomo Inc (ADR) (NYSE:DCM) also prefers to add software customizations to Android, which it can’t do on the iPhone. Tsubouchi goes as far as say, “I think the iPhone with its own OS is like Disneyland,” describing iOS as a proprietary walled garden. You can buy only Disney products inside Disneyland, according to the simile. NTT DoCoMo wants greater influence.
Softbank and KDDI have been using the iPhone to poach subscribers, and NTT Docomo Inc (ADR) (NYSE:DCM) knows it. The carrier considers these customer defections, which could be mitigated by offering the device. If it ever started selling the iPhone, NTT DoCoMo would also have to try to win back those iPhone users by pitching its network, something that Verizon was able to do with some success from AT&T in 2011.
Tsubouchi’s comments corroborate other reports that Apple’s strict requirements are hindering its ability to expand carrier partnerships. With Android posing a greater competitive threat than ever, carriers also have less need to agree to Apple Inc. (NASDAQ:AAPL)’s terms.
Scoring NTT Docomo Inc (ADR) (NYSE:DCM) would certainly be a boon for Apple, but it doesn’t look like it’s happening anytime soon.
The article How the iPhone Is Like DisneyLand originally appeared on Fool.com.
Fool contributor Evan Niu, CFA, owns shares of Apple, Verizon Communications, and Walt Disney. The Motley Fool recommends and owns shares of Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), and Walt Disney.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
