Softbank to sell mobile phones with iPod nano

Japan's Softbank Corp said on Wednesday it has begun offering an Apple Computer Inc. iPod nano packaged with one of its own mobile phones.

The new promotion is designed to keep customers for at least two years as Softbank would require them to refund the cost for the handsets if they cancel their subscription within the period.

Softbank is offering one of its cellphone models made by Sharp Corp. together with the new 2 gigabyte iPod nano, which Apple unveiled on Wednesday. Apple sells the new iPod model for 17,800 yen ($151).

The price of the package is different at each retailer and Softbank could not provide a specific figure.

Softbank, which borrowed about 1.3 trillion yen to buy the wireless unit from Vodafone Group Plc this year, is trying to spread costs, such as incentives paid to retailers, over time instead of paying all at once.

Japanese operators typically offer hefty subsidies to retailers to bring down cellphone prices, and earn back the cost over time through monthly fees.

Softbank's popular digital TV phone, for example, costs Softbank about 70,000 yen a unit but is currently priced as low as 24,000 yen at retailers.

The new sales scheme allows Softbank to bring down the price of handsets while lightening the impact of the subsidy costs on short-term earnings.

The promotion with Apple's iPod, the world's bestselling digital music player, may help Softbank retain its 16 percent share in Japan's mobile market of 93.5 million users.

Softbank is competing against its bigger rivals NTT DoCoMo Inc. and KDDI Corp. to roll out new services and products before a rule change from October 24 that lets customers switch carrier while keeping their numbers.