Did Apple Start an iPhone 5S Price War in Japan?

Source: Apple.comApple’s (NASDAQ:AAPL) recently announced partnership with NTT DoCoMo (NYSE:DCM) has apparently kicked off a cutthroat pricing battle between Japan’s three biggest carriers, reports CNET. As reported by Japan’s Nikkei newspaper, the country’s three major wireless providers are offering the 16GB iPhone 5S for free if the customer purchases a 2-year service contract.

Although DoCoMo is Japan’s largest carrier with over 60 million subscribers, it has recently been adding users at a lower rate than the other two major Japanese carriers. Rivals SoftBank and KDDI added 225,000 and 254,500 subscribers in July, respectively. DoCoMo only added 172,500 subscribers during the same time period, reports Bloomberg.

More recently, a survey conducted by Kantar Japan found that 66 percent of DoCoMo’s former customers ended up purchasing an iPhone from one of the carrier’s rivals, reports TheNextWeb. This suggests that DoCoMo will see a significant benefit from the addition of the iPhone on its network.

Japan’s Nikkei newspaper reported that the Apple distribution deal stipulates that at least 40 percent of DoCoMo’s overall handset sales must consist of iPhones. CNET notes that if that report is true, Apple is likely to increase its domination of the Japanese market since DoCoMo already sells 23.5 million devices per year.

DoCoMo’s new deal with Apple represents a major turnaround in the company’s previous approach to selling smartphones. DoCoMo initially resisted making a deal with Apple because the Cupertino-based company’s apps and other services would directly compete with DoCoMo’s own integrated services and products business. DoCoMo also previously demanded that its logo be emblazoned on all devices on its network.

However, its recent subscriber losses appear to have changed DoCoMo’s mind on these issues. “We’re thrilled to offer the incredible new iPhone 5S and iPhone 5C to our customers,” said NTT DoCoMo CEO Kaoru Kato via Apple’s press release.

Here’s how Apple closed out the trading week.

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