The Japanese electronics industry is still slowly recovering from 2002, its worst year in a decade. Digital TVs and cellular phones are expected to contribute to the recovery, and the launch of terrestrial digital TV broadcasting, scheduled for December, will also give it a boost and likely stimulate the market for large, flat-panel TVs.
Sharp Corp. was the first to announce LCD TVs with screen sizes ranging from 30 to 37 inches on the diagonal, and will begin marketing them this month. "Terrestrial digital TV broadcasting is a big change for both manufacturers and consumers-a change of the infrastructure," said Masatsugu Teragawa, division general manager of Sharp's LCD digital systems division.
By the time preliminary broadcasting starts in August, other manufacturers will follow suit. Sharp expects the LCD-TV market in Japan will double, to 1.5 million units, this fiscal year, thanks to the advent of terrestrial digital broadcasting. TVs with plasma screens, still a small market in volume, are also expected to benefit from the changeover, rising nearly 70 percent to 320,000 units this year, according to the Japan Electronics and Information Technology Industries Association.
Next to the digital TV, DVD recorders are starting to replace VCRs among Japanese consumers. Fumio Otsubo, president of Matsushita AVC Co., called 2003 "an epochal year for AV manufacturers." The company is set to replace VHS recorders with DVD-RAM recorders in its product portfolio and expects that the crossover for buyers will take place next year in Japan. Matsushita plans to build a capacity of 1 million units a month.
Matsushita expects that the DVD recorder market in Japan will grow from 750,000 units last year to 2.2 million units this year and 3 million units in 2004.
Because several formats coexist for DVD recorders, manufacturers are starting to offer models that handle multiple formats. This month, Sony Corp. will introduce a recorder supporting both DVD-RW and DVD+RW. Toshiba Corp. will offer a "bridge" recorder that spans the DVD-RAM and DVD-RW formats by introducing a compatible recorder sometime this summer.
Last year the hot topic in cellular was camera phones, and the trend has only intensified in 2003. People who were enjoying still pictures at 100,000- to, at most, 300,000-pixel resolution last year are showing interest in higher resolution and in moving pictures. This year, the top models are equipped with charge-coupled-device or CMOS sensors of 1-Mpixel or higher resolution.
Among them, Docomo's SO505i, which is supplied by Sony Ericsson, has a 1.3-Mpixel CCD camera, the highest resolution for mobile phones at present. The model has been disappearing from store shelves as fast as retailers could stock it since its introduction early this month.
To keep up with higher-resolution cameras, mobile-phone displays are also evolving into QVGA (256 x 326 dots) resolution from the conventional QCIF (176 x 144 dots). Docomo's SO505i has a 2.2-inch low-temperature polysilicon QVGA display, and J-Phone's J-SH53, a megapixel camera phone supplied by Sharp, has a 2.4-inch continuous-grain silicon display with 320 x 240 dots. Such top-of-the-line specifications will soon become standard in most camera phones, industry experts said.
Multimedia Research Institute, a Tokyo-based company specializing in high-tech market research, estimated that camera phones will account for 85.2 percent of the 41.3 million cell phones shipped this year. The share has climbed steeply, from 6.9 percent in 2001 and 58.6 percent last year, according to the research company.
The shift to third-generation (3G) phones will accelerate, largely in the second half of this year and into 2004, IDC Japan projects. Although NTT introduced its Foma service as the first 3G service in the world, Foma has struggled with slow growth because of limited service coverage and expensive terminals with short operating hours.
These problems are being resolved and monthly projections of about 100,000 units of Foma handsets are expected in the current fiscal year, said Keiji Tachikawa, the president of Docomo. "Foma promotion will be the most important focus of this year's business. We are targeting to increase Foma subscriptions to 1.5 million this fiscal year," said Tachikawa.
For its part, KDDI, the second largest mobile-services carrier in Japan, is making full use of the upward compatibility between cdmaOne (2.5G) and cdma2000 1x (3G) to expand its third-generation service. The company has reported that its 3G service acquired 7 million subscribers in the last fiscal year. By the time this fiscal year ends, in March 2004, KDDI projects that total subscriptions will reach 16 million, with about 80 percent of them 3G. In the fall the company will begin offering 1x EV-DO, the enhanced data communication service with a maximum data rate at 2.4 Mbits/second.
Many of the 3G phones, as well as 2.5G models, now support moving pictures. The capability to shoot video and send clips as e-mail are the top-selling features of leading-edge models.
Overall, the mobile-phone market is becoming saturated in Japan.
A total of 82.2 million subscribers as of May represents 65 percent of Japan's population of 127.4 million. Though the market has reached a plateau, industry watchers believe that successively adding new functions and new services will continue to fuel demand for about 40 million cell phone units per year.