AT first glance, Japanese cell phones are a gadget lover’s dream: ready for Internet and e-mail, they double up as credit cards, boarding passes and even bodyfat calculators.

But it is hard to find anyone in Chicago or London using a Japanese phone such as a Panasonic, Sharp or NEC. Despite years of dabbling in overseas markets, Japan’s handset makers have little presence beyond the country’s shores.

“Japan is years ahead in any innovation.

But it hasn’t been able to get business out of it,” said Gerhard Fasol, president of the Tokyo-based IT consulting firm Eurotechnology Japan.

The Japanese have a name for their problem: Galápagos syndrome.

Japan’s cell phones are like the endemic species that Darwin encountered on the Galápagos Islands – fantastically evolved and divergent from their mainland cousins – explained Takeshi Natsuno, who teaches at Tokyo’s Keio University.

This year, Natsuno, who developed a popular wireless Internet service called i-Mode, assembled some of the best minds in the field to debate how Japanese cell phones can go global.

“The most amazing thing about Japan is that even the average person out there will have a super-advanced phone,” he said.

“So we’re asking, can’t Japan build on that advantage?” The only Japanese handset maker with any meaningful global share is Sony Ericsson, and that company is a London-based joint venture between a Japanese electronics maker and a Swedish telecommunications firm.

Yet Japan’s lack of global clout is all the more surprising because its cell phones set the pace in almost every industry innovation: e-mail capabilities in 1999, camera phones in 2000, third-generation networks in 2001, full music downloads in 2002, electronic payments in 2004, and digital TV in 2005.

Japan has 100 million users of advanced 3G smartphones, twice the number in the United States, a much larger market. Many Japanese rely on their phones, not a PC, for Internet access.

Indeed, Japanese makers thought they had positioned themselves to dominate the age of digital data. But Japanese cell phone makers were a little too clever. The industry turned increasingly inwards. In the 1990s, they set a standard for the 2G network that was rejected everywhere else. Carriers created fenced-in Web services such as i-Mode. Those mobile Web universes fostered huge e-commerce and content markets within Japan, but also increased the country’s isolation from the global market.

Then Japan quickly adopted a 3G standard in 2001. The rest of the world dallied, essentially making Japanese phones too advanced for most markets. At the same time, the rapid growth of Japan’s cell phone market in the late 1990s and early 2000s gave Japanese firms little incentive to market overseas.

But now the market is shrinking significantly, hit by a recession and a greying economy; makers shipped 19 per cent fewer handsets last year and expect to ship even fewer this year. The industry remains fragmented, with eight cell phone makers vying for part of a market that will be less than 30 million units this year.

Several Japanese firms are now considering a push into overseas markets, including NEC, which pulled the plug on its moneylosing international cell phone efforts in 2006.

Panasonic, Sharp, Toshiba and Fujitsu are said to be planning similar moves.

A recent meeting of Natsuno’s group revealed that despite their advanced hardware, Japanese handsets often have primitive, clunky interfaces. Most handsets have no way to easily synchronise data with PCs as the iPhone and other smartphones do.

Because each handset model is designed with a customised user interface, development is time-consuming and expensive, said Tetsuzo Matsumoto, senior executive vice president at Softbank Mobile, a leading carrier.

“Japan’s phones are all ‘hand-made’ from scratch,” he said. “That’s reaching the limit.” Then there are the peculiarities of the Japanese market, like the almost-universal clamshell design, which is not as popular overseas. Recent hardware innovations such as solar-powered batteries or waterproofing have been incremental rather than groundbreaking.

The emphasis on hardware makes even the newest phones here surprisingly bulky.

Some analysts say cell phone carriers stifle innovation by demanding so many peripheral hardware functions for phones.

Meanwhile, Japanese developers are jealous of the runaway global popularity of the iPhone and App Store, which have pushed the American and European cell phone industry away from its obsession with hardware specifications to software.

The conflict between Japan’s advanced hardware and its primitive software has contributed to some confusion over whether the Japanese find the iPhone cutting-edge or boring.

The forum Natsuno convened to address Galápagos syndrome has come up with a series of suggestions: Japan’s handset makers must focus more on software and must be more aggressive in hiring foreign talent, and the country’s cell phone carriers must also set their sights overseas. – NYT