Why is Japan not producing mobiles like China?

  1. Galapagos Mobile

    Japan was one of the earliest developers of mobile phones and started the world first internet access services called “i-Mode”. Refer to Wiki for details; i-mode - Wikipedia It became very popular in Japan and became a national standard, while in other part of the world, it was way too advanced and Japan failed to make it a global standard.

    Yet i-Mode was so popular, further domestic development continued to win the domestic competition and made the Japanese mobile market far different from any other countries. It was then called as Galapagos Mobile because of its pretty unique evolution just like those uniquely evolved creatures in Galapagos islands.

    Soon after an iPhone was released, many Japanese jumped to it as well making the i-Mode obsolete very quickly. But again due to the domestic competition, Japanese phone makers continued releasing new Galapagos mobiles allowing Google to launch Android which in parallel with iPhone became global standards.
  2. iPhone/Android Domination; commoditization and assembly cost

    Since Android is an open source OS, anybody could develop their own smart phone relatively easily and all the technical advantages Japan accumulated by then became void or useless.

    Japanese phone makers could develop their own version of Android mobile. Sony actually does so, but then a question in competition was only assembling costs where countries like Korea, Taiwan, and China had a definite advantage over Japan. Even Sony had to decide to assemble its Xperia series in Taiwan.
  3. Shift in Business Model

    In parallel to the transition above, Japanese companies also failed in competition in LCD display device. Until 15 years ago, every Japanese consumer electronics manufacturer was producing LCD displays, which also became a commodity. Except for two companies today, no LCD’s are made in Japan.

    What Japanese electronics companies decided to do in mobile phone market then was to shift from a product supplier to a component supplier. See a chart below from an article in the WSJ Dec 16, 2010 edition wrote by the Asia Development Bank.
As you can see, Japanese companies are making the most money out of an iPhone. The situation is quite similar in other Android phones, even today.
Typical example is an image sensor used in cameras in a phone. Sony enjoys almost domination in this semi-conductor field. There are many other components where Japanese companies offer highly competitive, compact, and high quality parts.
In conclusion, Japanese companies really are benefiting from mobile phone market. Actually roughly one third of the global sales flows into Japanese companies. You could say their are winners, not losers.
But I agree, it is sad to see a statistics showing almost no mobile phones are being made in Japan.