Japanese and Korean consumers are leading early adopters of cutting-edge mobile phones and other mobile communications technologies, recent market reports show. The two countries' leading positions in mobile technology will help shape the future of the global handset market, ABI Research predicts.

The new technologies being adopted in Japan and South Korea also provide an opportunity to sell more expensive products which tend to bring higher profit margins for manufacturers and service providers in mature markets.

"Japan and South Korea have launched HSDPA and CDMA 1xEV-DO Rev. A services this year," reports Andy Bae, a senior analyst with ABI, based in Seoul. "This technologically advanced environment has spurred mobile vendors to develop premium and high-end handsets to support video call and music track download services."

Korean manufacturers, Samsung and LG, and Japanese-Swedish joint venture, Sony Ericsson, all report higher average selling prices for their phones than US-based Motorola and Finland's Nokia, according to recent research reported by VNUnet.com. In fact, Samsung and Sony-Ericsson's reported average selling prices are some 50 per cent higher than Nokia's, at around $180 compared to less than $120.

Service providers also benefit. High bandwidth data connections using technologies like HSPDA and CDMA 1xEV-DO are helping to boost sales of downloadable music in Japan, according to ABI.

Almost 14 per cent of mobile handsets in use in South Korea can already receive DMB (Digital Mobile Broadcast) television broadcasts, despite the technology only recently being introduced to the mass market. “This high percentage is just one indicator of the continuing flow of innovation coming from Korean and Japanese handset designers,” Bae said.

According to Bae, phones equipped with both mobile TV and advanced cameras are expected to become key growth drivers in Japan and Korea during the next few years. "Two megapixel camera phones with autofocus and zoom functions have started to outpace 1.3 megapixel models in Japan and South Korea," said Bae. " Two and three megapixel phones will be mainstream by 2008. Five, and greater, megapixel models will dominate after 2010."

Built-in cameras are close to becoming a standard mobile phone feature in Japan, where around 75 per cent of mobile users' handsets now have them. The figure for South Korea is 52 per cent.

Mobile manufacturers and service providers are using the two nations as testbeds for technologies which are later rolled out worldwide, market observers say. Japan and South Korea have several factors in common, including relatively high incomes, a unique language, and cosy relations between large hi-tech corporations and government. These are all seen as conducive to the creation of 'walled gardens' where a small number of companies can reap profits from the accelerated introduction of new technologies, with a reduced risk of outside competition driving down prices.

“Along with mobile service operators, manufacturers of mobile handsets and components in the region are aiming to develop next generation – so-called 4G – services by about 2010,” ABI predicts.