CIAJ Releases Report on the Study of Cellular Phone Use

<July 30, 2008>

CIAJ conducts an annual study of cellular phone use and announces the release of this year’s study as follows.

This year’s report strives to capture the most recent user trends by adding topics which might lead to growth in the cellular phone market. These include replacement trends after the implementation of the new handset purchasing plans, ownership of multiple handsets and interest in new services and functions, such as video use.

Summary

This study has been conducted since 1998 to capture on-going changes in the domestic mobile communications market.

CIAJ mailed questionnaires to 600 cellular phones users (male: 298, female: 302; by age group, under 20: 98, twenties: 101, thirties: 104, forties: 100, fifties: 98, sixties and above: 99) residing in the larger Tokyo and Osaka metropolitan areas from the end of March through April of this year.

With the findings of the “FY2007 Mid-Term Demand Forecast for Telecommunication Equipment” compiled by CIAJ’s Research and Statistics Committee, this year’s cellular phone use study integrates the demand forecast released by handset manufacturers, making references to shipment forecasts and demand trends to 2012 to forecast domestic demand.  For new trend factors, the study refers to the “Mobile Business Revitalization Plan” released by the Ministry of Internal Affairs and Communications. The study also seeks to forecast subscriber numbers and trends among mobile carriers in order to more accurately grasp the future direction and potential of the handset market.

The major findings of this year’s study are as follows:

(1)Actual Handsets Replacement Purchases and Intentions

>   62.2% have replaced their handsets in the past 10 months.
Although the replacement market continues to show robustness, this figure is slightly lower than the previous year.

-    Though not as strong as the previous year, healthy demand for new purchases has continued since the introduction of mobile number portability (MNP) in October 2006, with more choices of new models appearing on the market together with abundant payment plans, services and new purchasing plans.

>   When asked about the use of the new purchasing plan, 39.2% responded “yes, used the new plan,” while 60.8% responded “no.”

-   At the time of the survey, it had only been 18 months since Softbank had introduced the new purchasing plan, and only a few months since both NTT Docomo and au had introduced their plans, reflected in the figure at approximately 40% of all respondents.

-   With the new purchasing plan, there is a higher cost of buying the handset, the choice of paying for the handset in installments, restrictions in contract duration, and other conditions, leading respondents to be “more careful in making a selection” 47.0%, to feel it is “easier to purchase due to reduced financial burden at time of purchase” 21.2%, and to “purchase the handset of their choice even if they have to wait” 16.8%.

>  Asked if they were to take advantage of the two-year new purchasing plan, 31.7% said they would “immediately purchase a new handset at the end of two years,” 13.1% said they would “purchase a new handset after they had paid the remaining installments,” 12.4% said they would purchase a handset in one lump payment, meaning that a total of 57.2% would likely purchase a new handset in two years. 24.2% said they would “use the handset for a while after the two years indicated in the contract had passed and the monthly payment became 0 yen.”

-    The average replacement purchase span for those who responded that their next purchase would be in over two year’s time was 34.3 months.

>   Among those who used their previous handset for less than two years and those who used them over two years, replacement intentions after the implementation of the new purchasing plan with the two-year contract were as follows:

-   Approximately 10%those who had their previous phone for less than two years said they would use their next phone for over two years, but the vast majority (90%) said their next purchase would again be made within two years.

-   Approximately 50%those who had their previous phone for two years or more said they would use their next phone for over two years, but 30% said their next purchase would be made soon after two years.

-    There is the possibility that the expansion of purchasing cycle will not greatly exceed the current 24.7 months, staying somewhere near the two-year span.

(2)Ownership of Second Cellular Phone

>   6.3% currently own a second cellular phone.

-    26.2% have a clear objective for wanting a second handset in the future.
65.6% would own one for business and another for personal-use, and 34.3% would own two for personal-use while differentiating between the uses of the two devices.

-   The desirable cellular phone type to be purchased as a second phone are “water-resistant” 9.5%, “voice and e-mail only” 9.5%, “designer handset” 5.9%, “small or slim size” 5.9%, “the same type as the main-use handset” 5.3%, “data card type” 5.2% and “smart-phone type” 4.3%.

(3)Use of Cellular Phones for Viewing Video

>   18.2% use their handsets to view videos.

-    On average, 18.2% said they use their handsets to view video (You-Tube, on-line video service, video clipping downloads, etc.) and 17.3% said they were “currently not using their handsets to view videos, but was interested,” which together amounts to 35.5%.

(4)High-Speed Data Communications-Related Contents

>   The contents respondents are hoping to see for cellular phone-use with high-speed data transmission are: “send and receive PC files” 47.7%, “use of video services, such as You-Tube” 46.9%, “downloading music albums” 45.3%, “music videos” 40.8%, “long videos, such as movies” 39.2%, “video clips (30-minutes or less), such as news and sports” 28.5%, “on-line games” 22.9% and “auctions” 20.5%.

(5)Use of Services and Functions of Cellular Phones

>   Everyday use of various functions and services on their cellular phones were “e-mail” (90%), “camera functions” and “decorated e-mail” (approximately 70%).

-   From highest to lowest, functions and services used on a daily basis on their cellular phones were: “e-mail,” “camera functions,” “decorated e-mail,” “send photo as e-mail attachment,” “Internet search,” “downloading ringtones (with lyrics or electronic sound)” ranked highest.

* Numbers in ( ) indicate results from 2007 study.
* Numbers without ( ) indicate results from 2008 study.

For details, contact:
Mr. Yagi
Products and Technologies Development
tel: 81-3-5403-9358  fax: 81-3-5403-9360  e-mail: t-yagi[at]ciaj.or.jp

For more general inquiries, contact:
Mr. Mano
Corporate Communication
CIAJ
tel: 81-3-5403-9351  fax: 81-3-5403-9360 e-mail: mano[at]ciaj.or.jp