6. Expansion of Business Domains
1986-
(4) Struggles in the Telecommunications Business
- 1994
- Believing that communication technology would become indispensable for the informatization of cars in the future, our company ventured into the wireless, car phone, and eventually the mobile phone business. Although we released a hit product in 1994, we withdrew from the market due to intensifying price competition.
In the early 1960s, a culture of anticipating future social trends and engaging in research and development began to take root within our company. Among these trends was the idea that “future cars will have communication functions and become intelligent.” This led us to challenge the development of amateur radios, which required advanced technology for high-frequency transmission and reception.
Despite significant difficulties, we released our first amateur radio, the car transceiver, in 1973. Over time, we launched nine models, but due to weak brand recognition and sales channels, the sales volume did not increase significantly.
- Deep DiveDevelopment of the Car Transceiver
- In the early 1970s, when our company embarked on the development of car transceivers, there were no reference books available on high-frequency transmission and reception technology. Engineers passionately dove into the limited basic materials they could find, dividing the work among themselves and immersing in research.
Every time a prototype of the car transceiver was assembled, we asked in-house amateur radio enthusiasts to monitor and repeatedly check the practical performance. When we released our first model in 1973, the previously lukewarm atmosphere within the company transformed dramatically. Sales and service technicians even obtained amateur radio licenses to support the sales effort, turning it into a company-wide initiative.
In 1976, the successor model (ND-2000) was released, earning our company its first “Good Design Award.” This marked a significant milestone, as our products, known for their performance and durability, finally achieved a level of design excellence comparable to consumer electronics manufacturers.
In 1982, the Radio Act was amended, allowing the sale of personal radios. Leveraging our experience with car transceivers, we decided to enter the personal radio market, launching our first model, the “Hello Call PX9000,” in 1983. Its popularity surged because it could be used by anyone without a license. However, the initially high demand eventually plateaued. With the outlook for commercializing car phone terminals becoming clearer, we exited the personal radio business in 1985.
In 1985, the telecommunications industry was deregulated, allowing companies other than NTT to enter the market. This deregulation was expected to significantly expand the demand for car phones. Our personal radio development team shifted to car phone development, recognizing that car phones were crucial for the future informatization of vehicles.
In 1987, our first car phone was incorporated into the “Toyota Multi-Vision System,” featuring hands-free communication, a precursor to later hands-free functions. The proliferation of car phones accelerated technological advancements in mobile communications, leading to an anticipated surge in mobile phone users. In 1987, we launched the “F Project” for mobile phone development. Despite significant technological barriers and extreme development challenges, we succeeded in releasing our first mobile phone, the “Tokyo Phone T-64,” in 1992.
In 1994, the Ministry of Posts and Telecommunications (now the Ministry of Internal Affairs and Communications) deregulated mobile phone sales. Seizing this opportunity, we pursued a differentiation strategy to stand out from competitors. We aimed to develop terminals with innovative selling points to enhance our weak brand recognition.
- Deep DiveDifferentiation Strategy for Mobile Phone Terminals
- In response to the deregulation of mobile phone sales in 1994, our company adopted a differentiation strategy for new models that focused on miniaturization and weight reduction rather than low cost. We aimed to achieve the “world's smallest and lightest” mobile phones.
To this end, our development efforts concentrated on increasing the integration of digital circuits, miniaturizing high-frequency components, and adopting ultra-small chips. Additionally, to reflect our identity as an automotive parts manufacturer, we aimed to enhance portability, vehicle mountability, and ease of use within cars.
We actively incorporated the opinions of young employees in the design process, selecting innovative designs that would attract the attention of general users.
The “T-204,” known as “Two-Finger,” was released in 1994, achieving groundbreaking miniaturization and lightweight design, and its unique vertical design garnered significant attention and sales.
Following this, the “T-209,” released in 1995, focused on low-cost strategies in anticipation of fierce competition. It became a massive hit, selling 250,000 units in one year, double the target.
We continued to respond to user needs by launching models with new features, accumulating our information communication technology expertise. We also established a base in the United States to pursue advanced technologies.
- Deep DiveExpansion into the United States
- In 1991, our company established the “LA Lab” in California, USA, as a communications technology research institute. The primary objectives were to gather cutting-edge information from the U.S., which was ahead in the communications field, and relay it to Japan, as well as to explore new business opportunities in the American telecommunications market.
At that time, the U.S. mobile communications market was vastly different from Japan's in terms of radio wave specifications, the number of communication operators, and the degree of market liberalization. Despite these differences, we chose to establish the LA Lab, anticipating that the Japanese telecommunications market environment would eventually follow a similar trajectory.
Based on the findings from the LA Lab, we established “DENSO Wireless Systems America (DWAM)” in California in 1997, a company dedicated to producing mobile phones.
However, the mobile phone market soon fell into intense price competition. Before the burden became too overwhelming, we decided to withdraw from the market.