Sharp is releasing an Aquos Android clamshell phone with a 16-megapixel camera running Gingerbread. This is the latest step in Android’s quiet and gradual takeover of the Japanese phone market. I believe that Japan will eventually become a strategic stronghold for Android and in turn this will serve to shore up Google’s historically weak performance against Yahoo in search and online services in Japan.

Japanese Market

The mobile phone market in Japan has always suffered from the Galapagos syndrome. Clamshell phones developed in Japan by companies such as Casio and Sharp can find little demand in other markets, while on the flip-side, international titans like Nokia and Blackberry never had any significant presence in Japan.

Some believe that Japanese consumers simply dislike foreign products because they are not Japanese while pointing to examples such as the Xbox 360, but Apple’s success with iPod demonstrates that that is a superficial argument. The more likely explanation is that Japanese consumers have quirky demands that are often not part of the design considerations for overseas companies.

The iPhone has found greater success in Japan than any other foreign-made phones, but its presence is nowhere close to the level of ubiquity it commands elsewhere. That is because as much as iPhone and Apple are considered hip brand names in Japan, Apple’s brand philosophy does not allow the iPhone to be customized for the Japanese market beyond adding emoticons to the soft keypad. The poor-performance camera, the lack of Mobile FeliCa contactless payment and the lack of 1seg digital receiver are severe disadvantages in the Japanese market and these cannot be resolved without custom hardware.

At the same time, Japanese keitai phones are rapidly falling behind in terms of software, a traditional area of weakness for the Japanese tech industry. New keitai models being released today are still running heavily modified variants of Symbian, an outdated platform that has been dead for years and recently abandoned by its primary proponent Nokia in favour of Windows Phone 7. The Japanese industry needs a new platform fast but is incapable of creating one.

Android’s Rise

This is where Android comes in. Unlike iOS, Android is flexible enough to be adapted for all the range of hardware required by the Japanese market.

Microsoft’s Windows Phone 7 doesn’t even have support for Japanese input yet. Microsoft has traditionally been inept at marketing for Japan and its mobile division clearly does not see Japan as an important market. Furthermore, WP7 also comes with stricter hardware guidelines (e.g. capacitive touchscreen) that are unlikely to fly well with the clamshell phones that Japanese school girls love so much.

The process has already begun. Android has already replaced Windows Mobile 6.5 in the smartphone market in Japan. Just take a look at the smartphone offerings for the three major providers: Docomo, au KDDI and Softbank. They are dominated by Android, save for maybe one WM6.5 and one Blackberry. The only real competition in this sector is the iPhone, which is doing quite well as Apple products enjoy the cool factor even in Japan.

For the past few months, KDDI has been running a series of Android ads called “Android au” in multiple media formats, a campaign that is reminiscent of Verizon’s successful Droid campaign which is often cited as the reason for the sudden explosion in popularity of the Android platform. The KDDI Android ads include endorsement by boy band Arashi and prime-time TV spots, suggesting that KDDI is rather serious about committing to the platform for the long term.

Android’s Dominance

Last year, it was reported that iPhone took up 72% of the smartphone market in Japan in FY 2009. This sounds very impressive at first, until one realizes this is because a smartphone market didn’t exist and even high-end keitai phones are not considered smartphones. In actuality, Apple’s overall 2009 mobile marketshare in Japan amounted to a mere 4.9%. (Source: MM Research Institute)

In the fiscal year 2010, which had just ended, Android sales exploded and took up 57% of the Japanese smartphone market with 4.91 million units sold, while Apple fell to 38% with 3.23 million units. (Source: Bloomberg) With the support of KDDI and OEM giants like Sharp, Android’s lead in the smartphone market appears to have been secured. But beating Apple is just the first step.

The real battle lies in the keitai market, the vast majority of the Japanese mobile industry, and this is where Android will cement its dominance. The iOS is not even in play here due to its hardware dependency and there is no other competing OS platform with the same long-term potential and developer support that Android has. Furthermore, Japanese users expect their keitai interface to conform to certain norms and Android is really the only modern smartphone OS malleable enough to fit that mould and displace Symbian. Sharp’s new clamshell phone marks the beginning of this process.

Implications

For Japanese keitai manufacturers such as Sharp, Android is the most obvious way to leap-frog their phone firmwares to modern specifications without compromising on the traditional user experiences that Japanese users require.

This also has the long-term benefit of finally making their products export-ready (e.g. Sharp’s Galapagos is heading to the US with Android) and cutting down unnecessary R&D previously spent on replicating modern OS features on Symbian. Sharp’s new Android smartphones, such as the IS12SH with 3D cameras, are basically ready for the overseas market with a simple firmware change.

In the long run, Android is essentially going to win by default in Japan simply due to the lack of alternatives. One day, Japanese school girls will be buying Android clamshells and they won’t even notice the difference. This transition may also prove to be an excellent opportunity for Japanese hardware makers to re-enter the international market after losing badly to companies like Samsung and Nokia.

I for one welcome our new Android overlords.