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No one, not even the president of NTT Personal Communication Network, Inc., could ever claim that the July 1995 launch of the company's Personal Handy System telephones was a success. Technical breakdowns, delays and misinformation about what the system could or could not do plagued the introduction. In short: Chaos reigned.

But in 1996, the subsidiary of telecommunications giant NTT, under President Takeshi Kawauchi, revamped its marketing strategy and redefined its products to make its PHS phones the comeback story of the year. With 30% of the PHS market and 1.3 million units sold since its debut, NTT has caught the interest of many international suitors: Thailand already has signed a contract to implement the system in Bangkok and five other Thai cities. Singapore and Argentina also have expressed keen interest in the phones.

Lighter and cheaper than a cellular phone, the PHS phone is designed with city use in mind, having only about a 30-kilometer radius of usage. Considering the compact, densely populated nature of Japan's cities, it's little wonder why NTT Personal chose to give the phones a second life on the market rather than give up on the huge sales potential.

Acknowledging that NTT's initial rollout catered heavily-and mistakenly-to the Japanese desire to own the newest and trendiest products, Mr. Kawauchi said, "Our concept this year concentrated on the advantages of the PHS that cellular phones do not have.

"We presented the PHS as a seamless system, which can be used as a cordless phone in the home, then as a portable phone while commuting and finally as a personal phone in the office."

The advertising campaign, created by Dentsu, Tokyo, featured a newlywed couple and the different ways they use their phones. For example, with a device called "home station," the PHS is converted into a regular cordless phone that rings up the charges of ordinary telephone calls. So the wife is seen in the TV commercial and brochure chatting with friends while doing housework, then calling her husband during his commute. The husband, meanwhile, uses his PHS to receive personal calls in the office.

NTT Personal's marketing approach also took a decidedly different tack from its competitors. The other companies decided to give away their phones to unload their 1995 stock-first to companies as prizes and as part of promotional events, and then to discount electronics stores. NTT, however, refused to enter that fray. "NTT Personal never took part in these major discount campaigns because our policy was that they might damage the overall reputation of the PHS as a throwaway gimmick," said Mr. Kawauchi, 57. Taking the high road worked: Because of the policy, consumers regard the NTT phones as superior products.

Next on the horizon for Mr. Kawauchi is marketing an NTT wristphone, currently displayed only at high-tech conventions and shows. "We have gone from the portable, to the pocketable, to the age of the wearable phone," he said.

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