With the notable exception of Sony, Japanese handset makers have failed to make much impact outside their own country, but they have traditionally enjoyed high market share at home.
This was thanks to a user base which was, in the early days of mobile data, demanding a far more advanced experience than the global OEMs were providing, and drove the operators to invest heavily in close ties with cellphone makers.
However, Japanese consumers have been converted to open smartphones over the past few years, and news that the largest cellco, NTT DoCoMo, may finally offer an iPhone, sounds another death knell for the native vendors and their rarefied ecosystem.
As uptake of Android and iOS rises, the Japanese suppliers see their home base shrinking and they lack the scale or brand recognition to compete with Samsung and the others with their own Android offerings. Their old differentiations are lost, and one by one they are consolidating or exiting the market.
The latest casualty is Panasonic, which is finalizing plans to withdraw from the local smartphone business, although it may still produce specialised devices for enterprises. It will reportedly cease selling consumer cellphones by the end of this year and will stop all production by March next year.
Like other suppliers, Panasonic previously provided a high percentage of the handsets sold by NTT DoCoMo and KDDI, in particular (third cellco Softbank leapt earlier into the smartphone race, narrowing the market gap with its rivals by adopting the iPhone on an exclusive basis in 2008).
The final blow for Panasonic was DoCoMo's decision, announced earlier this year, to focus its sales efforts mainly on Sony and Samsung devices, in order to streamline its supply chain, and probably to add an iPhone to its catalog too, like its main rivals.
Although DoCoMo sells the iPad, it has never taken the Apple handset, reportedly because of differences over the OEM's brand control, sales targets and subsidy requirements. As also seen in Apple's likely deal with China Mobile, it is likely becoming more flexible in its demands on carriers as it comes under higher competitive pressure from Android.
Panasonic Mobile was an early player, entering the mobile terminals space almost three decades before Apple, in 1979, when it provided the car-mounted cellphone, the 800MHz TZ-801, to NTT. Its peak came in 2008, when it announced it had sold 100 million units in Japan since the launch of the original device, mainly working with DoCoMo.
The company is also seeking a buyer for its base station manufacturing subsidiary, and has reportedly approached several potential buyers.
The latest development in the Japanese smartphone space comes just a month after NEC was reported to be preparing its exit, having failed to sell its handset business to Lenovo of China. According to The Nikkei, NEC had offered Lenovo a majority stake in its handset unit, NEC Casio Mobile Communications, but the firms could not come to an agreement on price or terms.
As a result NEC, which has 5% share in Japan and virtually none elsewhere, will stop developing new smartphones under its own or Casio brands, though it will still make some feature-phones – which in Japanese terms often means high performing handsets, but ones that do not support open operating systems and are generally exclusive to one carrier. NEC is still said to be open to other deals for the unit, or to selling off its handset related IPR.
NEC already underwent significant cuts and restructuring, largely as a result of handset decline, in early 2012. It pulled out of international handset markets in 2006, though it returned to some of them in 2009, and in 2010 it formed a joint venture for cellphones with Casio Hitachi Mobile, itself a JV created in 2004.
In 2008, Kyocera bought Sanyo's cellphone unit, and in 2011, Toshiba was reported to be exiting its handset JV with Fujitsu after less than a year, and leaving the sector. Although the second largest supplier in Japan after Sharp, with over 21% share last year, Fujitsu Toshiba still had only 1% of the world handset space, though in Japan, it was ahead of Panasonic and NEC Casio.