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August 6, 2013

Panasonic to withdraw from smartphone market

Japanese electronics giant to discontinue smartphones after ending contract with last customer.

By Claire Vanner

The consumer electronics company is set to discontinue making smartphones after reportedly telling a Japanese operator it will no longer produce handsets for them.

Panasonic’s mobile phone business had diminished so significantly over the years that it only had one customer left – Japanese mobile phone operator NTT Domoco.

Japanese news service Kyodo now reports that Panasonic will no longer be supplying Domoco with handsets, but will continue smartphone production at its Malaysian factory for now.

The move comes after Docomo, the country’s largest mobile operator, adopted a new strategy to promote handsets by Sony and Samsung over struggling Panasonic.

It is the second Japanese company to pull out of the market this fortnight, after NEC, an early pioneer of 3G mobile phones, announced a similar withdrawal.

Panasonic’s smartphone unit reported an operating loss of 5.4bn yen between April and June 2013.

Japan’s mobile market used to de dominated by domestic brands, such as Panasonic, Mitsubishi and Sanyo, which pioneered cameras, internet access and mobile payment. But global standardization and aggressive competition has seen foreign manufacturers become more attractive to Japanese consumers.

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Meanwhile, Panasonic devices failed to make an equivalent impact in Western markets. The company pulled out of the European market in 2006, but returned in 2012 with ambitious plans for an Android-powered, waterproof handset called the Eluga.

"We are well aware of our powerful competitors," said Toshinori Hoshi, then head of Panasonic’s mobile communications unit, ahead of the Eluga launch. "However, market shares are changing dramatically and if we launch into this fast-changing market, we believe we have a chance of a hit."

But the product never took off and Panasonic was forced to withdraw from the European market again less than a year after re-entering. This followed record losses for the company in 2011, which led to the relocation of its smartphone production from Japan to Malaysia.

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