Panasonic to pull out of consumer smartphones

Japanese electronics giant Panasonic is retreating from the smartphone market in Japan, and cutting down its smartphone operations to outsourced production in developing markets such as India.

According to Reuters on Wednesday, Panasonic president Kazuhiro Tsuga expects the company's mobile division to lose more than the 1.1 billion yen (US$11.02 million) targeted loss for the financial year ending next March. The unit had lost 8.1 billion yen last year.

"It's not acceptable for the company to be bleeding red ink like this, so we have to think about ways to develop assets that we do have in a more effective direction," Tsuga said in the report. However, the company will be focusing more on smartphones for business use similar to its popular "Toughbook" notebook series.

Tsuga added Panasonic did not need to make and sell its own smartphones under a vertically integrated business model, but would use its brand under an original equipment maker (OEM) instead as it already does in places such as India.

As part of plans to revive the company's fortunes, the Panasonic president had warned he would eliminate any division that did not meet a 5 percent operating marging within three years. The company has posted losses of more than US$15 billion over the last two financial years.

Reuters noted Panasonic was the second-largest handset maker in Japan in 2001 behind NEC, with more than 19 percent of the market. However last year, it barely had a 7 percent share, far behind Apple's lead of 25 percent.