Skype and KDDI partner in Japan

By Sachi Izumi and Michael Erman

TOKYO/NEW YORK (BestGrowthStock) – KDDI Corp, Japan’s No. 2 cellphone operator, unveiled four new smartphones and announced a tie-up with Internet telephone company Skype in a bid to catch up with rivals in the booming smartphone market.

KDDI had once gathered strong momentum by launching a third-generation mobile phone service ahead of its rivals but is now struggling to gain new subscribers in Japan’s mature mobile market due partly to its slow entry into the growing segment of phones with computer capabilities.

KDDI still lags industry leader NTT DoCoMo Inc by a wide margin and has seen smaller rival Softbank Corp quickly narrow the gap with the help of Apple Inc (Read more about Apple stock future.)’s popular iPhone and iPad.

Incoming KDDI president Takashi Tanaka admitted that the company has been a laggard in the smartphone sector but vowed to step up the fight with new devices and applications.

“We would like to show that we are (competing in the segment) in earnest and with dedication,” he told a news briefing.

All of KDDI’s new smartphones will be based on Google Inc (Read more about Google Stock Analysis)’s Android platform.

The flagship model “IS03” is made by Sharp Corp and offers an electric payment function and other features that are found on traditional mobile phones in Japan. It will hit store shelves in late November.

The phone will also come with a Skype application, which will allow users to make unlimited Skype-to-Skype voice calls without being charged against their monthly minute allowance or data plan except when initiating calls.

KDDI plans to broaden the Skype service to more devices in 2011.

Skype, which plans an estimated $1 billion initial public offering, has a pact with Verizon Wireless to offer its service on Verizon mobile phones in the United States. Verizon is a venture of Verizon Communications and Vodafone.

Besides the four smartphones, KDDI will also start selling a Wi-Fi-only tablet device made by Samsung Electronics, an electronic book reader, and 14 new traditional mobile phones in the coming months.

KDDI released its first smartphone in June, about two years after Softbank introduced the iPhone in Japan. KDDI ranked third last year in terms of net increases in mobile phone subscribers.

Smartphone sales in Japan are forecast to jump 78 percent to 3.86 million units this year and expected to top 20 million units in the 2015/16 business year, according to MM Research Institute.

By then, smartphone sales will likely account for almost 55 percent of total mobile phone sales, the research firm said.

KDDI shares closed up 0.1 percent at 399,000 yen. The benchmark Nikkei stock average ended flat.

(Reporting by Sachi Izumi and Nobuhiro Kubo in TOKYO and Michael Erman in NEW YORK; Editing by Chris Gallagher)

Skype and KDDI partner in Japan