NTT DoCoMo's entry into the iPhone fray in Japan is sparking fierce competition for customers, with all three carriers offering certain iPhone 5S models for free with a two-year contract.
DoCoMo, KDDI (au), and SoftBank will offer the 16GB versions of the iPhone 5S for effectively nothing with a two-year contract on certain plans (the so-called "0 Yen Plan"), all three carriers announced Friday.
In DoCoMo's case, for example, discounts are applied monthly over the term of the contract -- that means no upfront cost, effectively yielding a free handset. KDDI and SoftBank have similar deals.
All three have set monthly data network fees at 5,460 yen (about $55).
The entry of DoCoMo, Japan's largest carrier, into the market marks a tectonic shift in that company's strategy and for the Japanese phone market in general. Domestic phone suppliers like Sharp and Fujitsu, which are in DoCoMo's stable of handset suppliers, are expected to suffer as a result.
And the numbers aren't pretty. DoCoMo sells about 23.5 million mobile phones a year. If Apple takes 40 percent of that number -- as Nikkei recently reported -- the iPhone maker could dominate the Japanese market.
Until Tuesday's iPhone 5S and 5C announcement, DoCoMo had resisted offering the iPhone. Most recently in its summer campaign, DoCoMo favored Sony and Samsung.
A recent report showed a steep drop in the number of new net subscribers for DoCoMo in August compared with the month before.
Phone vendors Panasonic and NEC, which DoCoMo did business with in the past -- and indeed supported -- have both announced they are exiting the consumer smartphone business.
Editor's Note: Is it not unusual for 16GB iPhone models to be offered with a "0 Yen Plan" in Japan. But the fact that DoCoMo is offering this out of the gate means it's serious about taking on KDDI and SoftBank.