It has been revealed that China’s Lenovo will support the restructuring of smartphone manufacturer FCNT, which applied for procedures under the Civil Rehabilitation Law in May 2023, as a sponsor.
FCNT originally originated from Fujitsu’s mobile phone business. It supplied “Raku-Raku Phone” and “Raku-Raku Smartphone” to NTT Docomo, as well as “arrows” to other carriers.
However, on May 30th, FCNT suspended the development, sales, and repair business of mobile phone terminals. While looking for sponsors, talks with Lenovo have been finalized, and the company is expected to establish a new company and resume business in September.
FCNT did not have a strong smartphone brand of its own and mainly delivered to carriers, so a decline in orders from carriers had a significant impact on profits.
Moreover, due to the Ministry of Internal Affairs and Communications’ restrictions on discounts on devices, discounts tied to communications contracts are capped at 20,000 yen. With the upper limit set at 20,000 yen, carriers began procuring smartphones that could be sold for 20,000 yen from manufacturers. While Chinese manufacturers were responding to these expectations, FCNT also developed “arrows We,” which sells for around 20,000 yen. Even though it was a Japanese manufacturer, it was a huge hit as it could be purchased at a fairly low price after applying a discount of around 20,000 yen.
However, in recent years, in addition to the yen’s depreciation, component costs have soared. As a result, FCNT struggled with procurement, and the company’s management deteriorated.
What is Lenovo that will save FCNT?
It is Lenovo from China that will save FCNT. In the smartphone business, the company acquired Motorola Mobility, a smartphone manufacturer owned by Google, in 2014. Since then, Motorola Mobility has been increasing its market share in North and South America, especially among young people, and is expanding its product lineup into high-end products, including introducing foldable smartphones in Japan.
Motorola’s foldable smartphone “razr+”
In the first place, Lenovo acquired the Thinkpad brand from IBM in the PC business, and has expanded by acquiring the PC business from NEC in 2011 and from Fujitsu in 2018.
The ThinkPad series is also a Lenovo brand.
By acquiring FCNT, Lenovo will be able to expand its deliveries to Japanese carriers, where Lenovo and Motorola brands have struggled. In addition, there is a possibility that the company will use its highly reliable “Japanese brand” as a weapon to expand its products around the world.
On the other hand, isn’t it good news for NTT Docomo to be able to maintain the “Rakuraku Smartphone” brand?
Sony is the only Japanese consumer smartphone manufacturer left.
However, questions remain as to whether Lenovo’s rescue of FCNT was really good for the Japanese market.
Although FCNT was not able to create a strong brand on its own, it can also be said that its management stalled due to the Ministry of Internal Affairs and Communications’ 20,000 yen discount regulation. Had it not been for the Ministry of Internal Affairs and Communications’ mismanagement, FCNT may still be able to maintain stable management.
This year, not only FCNT but also Kyocera is reviewing its smartphone business. Although some high-durability models will remain, it seems that they will no longer make terminals designed by carriers as they have done in the past.
Until now, there were four manufacturers involved in smartphone development in Japan: Sony, Sharp, FCNT, and Kyocera. However, Sharp’s parent company is Taiwan’s Fokconn, and Kyocera also announced a reduction in its smartphone business. Once FCNT became part of Lenovo, Sony became the only pure Japanese manufacturer developing smartphones for general users.
Sony has released the Xperia, but the product concept is aimed at “creators who are passionate about their passion,” and they specialize in creating products for people who are particular about things like cameras and sound.
It’s hard to imagine that Sony will ever make products that are “simple” or “for seniors,” which Kyocera and FCNT have excelled at.
Ministry of Internal Affairs and Communications considers reviewing regulations “too late”
In recent years, as political tensions have increased around the world, there is a need to ensure economic security in the digital field, including communications.
By banishing China’s Huawei several years ago, the United States succeeded in reducing Huawei’s global market share. Due to U.S. sanctions, Huawei is unable to run a pure Android operating system or app store, and is also unable to receive Qualcomm’s 5G chips. As a result, even in Japan, Huawei terminals, which were popular as SIM-free smartphones, were no longer available for purchase.
However, by developing its own semiconductors and outsourcing manufacturing in China, Huawei is now able to manufacture smartphones with performance comparable to the iPhone of several years ago.
If Japan also wants to ensure its economic security, it must immediately stop making mistakes like forcing Japanese smartphone manufacturers to withdraw from the market and become owned by foreign manufacturers.
In the Japanese telecommunications industry, NTT Group’sIOWNThere is a movement to develop a “smartphone that does not need to be charged for a year” using this technology.
However, when such technology is truly developed, is it desirable for the parent company to place an order with an overseas smartphone manufacturer?
Ideally, it would be ideal for Japanese companies to create smartphones that are compatible with IOWN and only need to be charged once a year, and export them around the world on a large scale. However, in the end, the brand may be Japanese, but the manufacturing and sales will be done by overseas manufacturers, and there is a risk that all the deliciousness will be taken away.
The Ministry of Internal Affairs and Communications is trying to revise the regulation from 20,000 yen to 40,000 yen, but it is already too late.
Although it is a relief for carriers and users that FCNT was rescued by Lenovo, when considering the future of Japan’s telecommunications industry, the loss may have been too great.