What's Not Hot in Japan? Try iPhone

It may come as surprise to all of us here, but iPhone sales are not cutting it in Japan.

Apple's partnership with Japan's third-largest mobile operator, Softbank Corp., to sell the iPhone 3G certainly created a buzz. Like elsewhere, Japanese consumers lined up at stores in advance of the phone's release on July 11, and many locations sold out almost immediately.

But now analysts estimate that demand in Japan has fallen to a third of what it was initially, and analysts are now expecting fewer iPhone sales.

Who's to blame? There's no supply shortage: The device is readily available in Apple stores and other outlets. Major electronics retailer Yodobashi Camera's megastore in the western city of Osaka, for example, recently had more than 100 of them stacked up in open view.

Sales have been slowed by the iPhone's relatively high price and the fact that Japan is already home to some of the world's most advanced cellphones. The iPhone's limited success so far shows how tough it continues to be for foreign manufacturers to crack the Japanese cellphone market.

More than 10 domestic handset manufacturers compete for a slice of Japan's cellphone market, one of the world's largest with annual sales of 50 million phones. Nokia, the industry leader in global shipments, has less than 1% share in Japan. Instead, Sharp leads the Japanese market, with 25% of shipments. 

More in the Wall Street Journal.