Panasonic bows out of smartphone market

The electronics company informed operator NTT Docomo it would stop supplying them with handsets from this winter, according to sources cited by the Japanese news service Kyodo.

The move comes after Docomo, the country’s largest mobile operator and now the sole channel for Panasonic’s devices to reach the market, adopted a new strategy pushing handsets made by competitors Sony and Samsung.

It is the second Japanese company to pull out of the market in as many weeks, after NEC announced it would stop manufacturing smartphones at the end of last month.

For many years the country’s mobile market was dominated by domestic brands such as Panasonic, Mitsubishi and Sanyo, but in recent years foreign manufacturers have proved more attractive to Japanese consumers.

Meanwhile, Panasonic devices failed to make an equivalent impact in Western markets.

The company originally pulled out of the European market in 2006, only to return in 2012 with ambitious plans for an Android-powered handset called the Eluga.

The slim, water-proof device was billed as Panasonic’s first ‘global’ handsetand there were plans to sell 1.5 million of them in Europe over 2012-13 before delivering 15 million world-wide by 2016.

"We are well aware of our powerful competitors," said Toshinori Hoshi, then head of Panasonic's mobile communications unit. "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.

According to Kyodo, Panasonic will continue production at the Malaysian factory for now. The news agency also reported Panasonic’s mobile division made an operating loss of 5.4 billion yen (£35.9m) between April and June this year.