Friday, August 9, 2013

Why Japanese carriers put "bloatware" on your smart phone (aka Why docomo won't sell iPhone)

If you buy an Android handset in Japan, you will be surprised how much bloatware there is on your phone. It can't be uninstalled without root, and only a small portion of it can be disabled, so you it can be hard to escape all the advertisements being pushed from the bloatware. (fortunately, it seems that the heaviest of the "notification spam" bloatware can be disabled).

To understand why they do this, take a look NTT Docomo's income statement. (Source)

 14% of sales from bloatware

Net sales : Billion JPY (year on year)
Mobile communication service (△7.4%)
Device sales  (+42.8%)
Others (+32.7%)

(Others is "Contents, payment services, handset insurance, ads, etc")

 You can see that 14% of their sales is from other optional services, such as bloatware, and it's continuously growing.

 Carriers sell devices at a loss

 And also from the report, the first quarter device sales is 63B - monthly support 70B = -6.6B.

They also show ARPU (Average Revenue Per Unit) for the three segments.
ARPU (Yen, the 1st quater 2013)
Voice ARPU
Packet ARPU
Smart ARPU

You see that 10% of ARPU is from other services. (That they call Smart ARPU)
The point here is that Voice / Packet service need a huge infrastructure investment, but bloatware doesn't require so much - only developing apps - so the profit rate is much higher (and push up your packet usage too!)

 Others Sales ≒ Smart ARPU

So, as long as their profit structure is
1. Selling devices at a loss; 
2. Earning their profit from packet communication fees and other services; 
You can't avoid bloatware. It's their goose that lays the easiest, fastest golden eggs.
(And that's why docomo won't sell iPhone, because they can't put bloatware on it)


  1. Very interesting. Good write up. So with the recent campaigns for the "top two" summer phones (Sony and Samsung), the franchise Docomo shops were waiving their profit (the down payment above the price set by docomo) if you signed up for a bunch of extra services. You didn't have to keep them, just sign up, then cancel before the next month (so you don't get charged).

    So docomo was obviously rewarding money to the franchises to induce them to push the bloatware services, at least what they would have made on a full-price sale.

    And then some percentage of users don't cancel and continue to pay for these extra services. This year was the first that Docomo did that, so it'll be interesting to see if the sales from bloat is significantly higher this time next year when the next report comes out.

  2. It's worth noting, too, that "mobile communication service " income - that is, income from people actually using their phones for calls and data - is flat while the sales and other are growing strongly. I'd expect bloatware to become a lot more important over time as its share grows even if they didn't push it onto users.

    Also, don't expect Nexus devices or "bring your own phone " in the foreseeable future.

  3. Ken Yasumoto-NicolsonAugust 9, 2013 at 10:11 PM

    The only reason I want to root my phone is to get rid of the bloatware on it. I suspect I must be leaving myself open to some vulnerabilities as I haven't got enough memory to keep them up-to-date.

    BTW, the しろ ROM MVNO device I mentioned elsewhere comes with its own load of crapware, but at least not as much as a docomo!