If you look just at the handsets available in 2000 or so it would have been very easy for Japanese telcos to look at what the world had to offer and conclude it was not much. Compare turn of the century Japanese devices* next to four-color phones like the Siemens S25 and Motorola's monochrome handsets.
If you want to blame anyone for not pushing adoption of GSM GPRS and beyond it shouldn't be Japan. There's one country that could have made it the obvious choice for everyone, but thanks to "competition" it never happened...
Not following you here -- Japan never had GSM, and even their initial attempts at 3G (FOMA, CDMA2000) didn't play ball with the rest of the world.
At the end of the day, the problem in the Western world was that operators were so in love with their massive SMS revenues with nearly 100% profit margins that they had zero incentive (well, negative incentive, really) to push for anything else. Whereas Japan, precisely thanks to not adopting GSM, never had SMS in the first place, so e-mail charged by the byte became the first killer cross-operator messaging app. (There were SMS equivalents in Japanese networks as well, but most all were restricted to one operator and consequently never really took off.)
Sure - what I mean is had Japan been the only place not to have GSM they may well have been forced to adopt it. GSM was around in the USA at that time (Moto Timeport "Worldphone" etc.) but was nothing like a standard, everywhere I looked I saw CDMA.
If you want to blame anyone for not pushing adoption of GSM GPRS and beyond it shouldn't be Japan. There's one country that could have made it the obvious choice for everyone, but thanks to "competition" it never happened...
*i.e. J-Phone Sharp J-SH04 http://en.wikipedia.org/wiki/J-SH04