iPod Overseas Report: Tokyo, Japan 11/2006

Last year, we filed iPod-related reports from three countries in Asia (Japan, Singapore, Malaysia), providing snapshots of how Apple was doing in several different countries. This week, we’re returning to two of those countries to offer brief updates to those reports, starting with Japan.

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For iPod fans in the west, the news is mostly good: the iPod still appears to be a major success, at least as we’re currently seeing it in Tokyo; we’ll be in other cities over the next few days. When we first left from the airport for the hotel via rail, we saw what appeared to be evidence of a usage trend that’s been suggested elsewhere – few iPods, but lots of mobile phones being used with stereo headphones. But every single walk or ride we’ve taken since then has demonstrated otherwise: from district to district, it’s basically impossible to go somewhere without seeing multiple people carrying and listening to iPods, and what’s more, many people – not most, but many – are wearing newer Apple earbuds rather than the old ones, suggesting that they have purchased iPods (most likely not just the new earphones) over the past few months. We have seen more than a few people listening to iPods and using their cell phones for Internet/text messaging at the same time, a suggestion that an iPod convergence device would be popular here.


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When people do expose their iPods to public view, the mix of models is very interesting. Though we’ve occasionally seen older 4G models, the vast majority of people seem to be carrying minis and nanos, with lots of second-generation nanos being handheld or worn around the neck. They’re using simple cases rather than flashy ones; we’ve seen a couple of Power Support’s Silicone Jackets and other simple or clear cases for nanos out and about.


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Apple appears to be catering to the “small iPod” demand by supplying massive numbers of nanos to its Stores – we looked in the Ginza and Shibuya locations, and saw display shelves holding literally 510 of them in one place, with an extra 90 second-generation shuffles alongside. Granted, there were security guards right next to the display, but seeing 600 iPods just sitting out in the open at each store was pretty amazing, and there were more at the counter, on a table near the entrance, and so on. Our guess was that each store had between 800 and 1000 nanos just sitting around for sale, and business at each location was brisk.


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Most interestingly, Apple’s flagship Ginza store has now been outfitted with video pillars that explain what’s on each of the store’s floors. The tall (rather than wide) monitors play back floor-by-floor videos (right click to download properly) that are amongst the most wicked in-store demonstration videos we’ve ever seen – like something straight out of the movie Total Recall, only better. The smaller Shibuya store is sporting an iPod Bar in addition to its Genius Bar for Macs, paralleling what’s going to take place in updates to the U.S. stores over the next year.


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What has been somewhat surprising here is the lack of apparent interest in the fifth-generation iPod. We’ve seen zero being used on the streets, and though the stores are clearly putting them on display with cool video clips, we get the sense that size considerations are one reason that this model isn’t as popular here. Another reason might be the availability of content: Apple still isn’t selling a full range of video content (no movies, no TV shows) here, giving users little reason save capacity to prefer its larger models. The iPod Games store is open here, selling the same 9 titles available in the United States, but we haven’t seen anyone playing with an iPod in that way – even though some Japanese gamers are literally walking through the subways and playing PlayStation Portables or Nintendo DSes at the same time.


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On the accessories front, there’s not a lot to report – for a change, Japan feels somewhat like it’s stuck back in 2005 in this regard, lacking the more advanced video accessories and other items that have sprouted up in the United States throughout 2006. In other words, there would be a lot of opportunity for the newer video accessories here, assuming there was any way to get people interested in the iPods that support them.


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Massive electronics retailer Yodobashi Camera’s displays are all speaker-focused, with a display of the most popular four speakers – three by Logitech (AudioStation Express #1, mm32 #3, mm50 #4) and one a rebranded version of Logic3’s i-Station (#2) – alongside tons of other low-priced, relatively generic designs. Our biggest surprise discovery was a single set of silicone rubber cases from Hori for the second-generation iPod shuffle, not yet available at even Apple Stores, selling for the equivalent of around $6.


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Despite its success, we have a weird feeling that the iPod’s at a possible sliding point backwards here, and needs to make another big step in order to prevent post-holiday declines. Thanks to advanced phones, game consoles and ever-present video displays, Tokyo’s streets are becoming more visual and energetic than ever, and we get the impression that music-only iPod nanos are going to feel outdated by this time next year. Adding more iTunes Store video support is only part of what’s needed – new co-operative marketing like last year’s Bose and iPod collaborative posters is conspicuously absent this year, with Bose focusing solely on marketing its own in-ear headphones and other products on the streets. Big retailers have people lining up to buy and try new game consoles such as the PlayStation 3 – there was a queue at Yodobashi Camera at opening time on Saturday to snap up a new shipment of units, though we don’t think the system is doing anywhere near as well as it could/should be here – and the iPod displays aren’t booming with the same level of energy. Fashion, soft drink, and other accessory campaigns could really elevate the iPod’s mindshare here.


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One last little interesting note: there were reports some time ago that Apple had decided to collaborate with Japan’s SoftBank – owner of what was the Vodaphone cell phone company here – to develop the iPod phone that’s been long-discussed but not yet released. This would have been a natural choice given that Apple will need a Japanese partner to succeed in challenging the massively popular DoCoMo network over here, especially since SoftBank sells phones that are GSM-compatible, unlike the phones sold by other companies. Opening up a new SoftBank brochure here, we saw a big co-op iPod advertisement on the last page, where you buy a SoftBank phone and get a new nano at the same time. We’ll see how the next stage of that evolves in 2007… we have our suspicions.