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Panasonic Quits Smartphones
ARTICLE
COMMENTS (1)
ASIA
FEATURE PHONES
JAPAN
NEC
PANASONIC
SMARTPHONES
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By DAISUKE WAKABAYASHI
CONNECT

Panasonic’s Eluga smartphone. Panasonic Corp.
The smartphone industry keeps claiming more victims. The latest is Japanese electronics giant, Panasonic Corp.6752.TO +0.73%, confirming that it plans to stop development of smartphones for the mass market in order to reallocate its resources elsewhere.

The news is hardly surprising. The company said in July that it planned to review its smartphone strategy after posting losses at its mobile phone business in the most recent quarter to June due to weak sales of smartphones in Japan, the only market where the company had any presence to speak of.

Panasonic said it plans to focus on manufacturing and selling feature phones – or the clamshell-type handsets that were a staple of the pre-iPhone era. Feature phones still maintain a loyal following in Japan, accounting for about 30% of all mobile phones sold. Needless to say, that figure is shrinking.

The feature phone market is less competitive with fewer players and the profit margins are better, because they are cheaper to produce since they don’t require the powerful processors or giant screens found in most smartphones.

Panasonic said it will continue to make smartphones for non-consumer markets – imagine, for example, if the company brought its Toughbook brand used by the military, police officers, and utility workers to smartphones – but it will suspend development of smartphones for consumer markets from October.

For all of its explosive growth, the smartphone industry hasn’t generated much profit for companies other than Samsung Electronics Co. and Apple Inc., the duopoly currently dominating the market.

Panasonic’s exit comes two months after another domestic rival, NEC Corp., announced its own retreat from the smartphone market and amid a flurry of deals that signal how past mobile phone performance is no indication of future success in the smartphone age.

This week, BlackBerry said it reached a preliminary deal with one of its biggest shareholders to take the company private for about $4.7 billion, a fraction of its peak valuation of $83 billion. It comes after Microsoft Corp. announced plans earlier this month to buy Nokia Corp.’s mobile phone business for $7.2 billion, a sharp decline for the Finnish handset maker which once dominated the cellphone market.

ASIA
FEATURE PHONES
JAPAN
NEC
http://blogs.wsj.com/digits/2013/09/26/panasonic-quits-smartphones/