Panasonic becomes latest smartphone maker to withdraw from the market

Panasonic follows NEC out of the market as global standardisation continues to squeeze uncompetitive manufacturers

The shake-out of the mobile phone market has continued with the news that Japanese consumer electronics giant Panasonic is to discontinue making smartphones.

It comes a week after its rival NEC announced a similar withdrawal. However, Panasonic's mobile phone business had shrunk so dramatically in recent years that its sole customer left was Japanese mobile phone operator NTT Docomo who, it complained, preferred to promote rival devices from Sony and Samsung more aggressively.

Panasonic's smartphone unit reported an operating loss of 5.4 billion yen (£35m) in the quarter to the end of June. Smartphone production at its Malaysian factory will continue for the time being, but if NTT Docomo stops placing orders, the operation will soon be stopped as well, reported the Japan Daily Press.

NEC, meanwhile, was an early pioneer of 3G mobile phones, but has been all but absent from non-Japanese markets for the past five or more years. In 2009, it negotiated with Hitachi and Casio to merge their respective mobile phone units, completing the merger in May 2010 and taking a 79 per cent stake in the venture.

"As the market for mobile phone handsets, including the rapid spread of smartphones, has dramatically changed, economies of scale have become increasingly important... However, NEC's mobile phone handset shipments are following a downward trend and it is difficult to foresee improved performance in the future," claimed the company in a statement.

It will continue making feature phones, via its NEC Saitama unit, and tablet computers.

Japanese vendors could traditionally rely upon an idiosyncratic, technophilic home market to bolster sales, even if international sales were disappointing. Handsets from Japanese manufacturers were the first to include cameras, internet access, mobile payment and other now standard features.

However, a combination of global standardisation, combined with aggressive competition and a price war in the Japanese market over the past five years, has forced the hand of struggling manufacturers, which have progressively withdrawn from global markets, and been losing market share in Japan, too.