• By
  • Mayumi Negishi
Apple CEO Tim Cook speaks during an Apple special event at the Flint Center for the Performing Arts on Sept. 9, 2014 in Cupertino, California.
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Ten years before Apple Pay, there was NTT Docomo Inc.'s “Osaifu-Keitai,” or “mobile wallet.”

Japan’s largest mobile carrier by subscribers introduced its pioneering mobile-payment system in 2004. Now there are 33 million osaifu-keitai cellphones that can be used to pay for everything from train tickets to vending-machine products and pots and pans at 1.8 million retailers that have readers installed.

So when Apple Inc. unveiled its Apple Pay service this week, the response in Japan was underwhelming. Instead of excitement, the main concern was that Apple might have chosen a type of “near field” communication technology that was incompatible with Japan’s existing mobile payments system.

Osaifu-keitai, which can also be used to unlock doors and log into computers, uses near field communication (NFC) type C chips, different from the type A/B chips that Apple is thought to have chosen, people familiar with the matter said.

If Apple ends up setting the global standard on mobile settlements, it would be another example of Japan yielding leadership in technology, despite adopting the new technology years earlier.

Time and time again, Japanese companies have led the way with new technology, only to be defeated by shrewder marketing, pricing, and product-design savvy when the world was finally ready for what the Japanese had foreseen.

Docomo’s pioneering mobile Internet service i-mode, introduced in 1999, failed to win support from major handset makers outside Japan.

Sony Corp. pulled the plug on its Aibo robot dog in 2006, seven years after its introduction, lacking the fast networks, cloud technology and affordable pricing that might have given it the mass appeal that personal robots are winning today.

Sega Corp. was ahead of its time in 1998 with online gaming in consoles, and Sharp Corp. was decades early with its solar panels in the 1960s. Casio Computer Co. never reaped the rewards for developing the pioneering handheld personal data assistant (PDA) technology back in 1983.

As to why Docomo failed to use its huge lead in mobile payments to go global, Keio University Professor and i-mode creator Takeshi Natsuno tweeted: “Well, we didn’t expand overseas.”

To be fair, Docomo did try. But few companies abroad were willing to shoulder the initial cost of setting up the infrastructure, a Docomo spokesman said.

More recently, companies such as Google Inc., eBay Inc.'s PayPal and Square Inc. have worked toward making mobile payments mainstream in the U.S.

In Japan, osaifu-keitai was going strong for the first few years. Initially shipped by Panasonic Corp., and using Sony Corp.’s Felica technology, the system won retailers such as East Japan Railway Co., Seven & I Holdings Co., and Aeon Co.

But user growth slowed after the Apple iPhone — without tap-and-go payment support — was introduced in Japan in 2008.

At the end of June, the number of Docomo osaifu-keitai users was down 8% from a year earlier.

Corrections and Amplifications: NTT Docomo’s Osaifu-Keitai system uses NFC type C chips, while Apple is thought to have chosen type A/B chips.

The fourth paragraph of the story has been changed to reflect what type of NFC chips the two companies use. A previous version incorrectly had the type of chips reversed for the two companies.



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