Nokia pulls out of Japan
Faced with drastically lower global economic expectations, handset manufacturing giant Nokia says that they will pull out of the lucrative (but quirky) Japanese cell phone market, one of the largest in the world. Nokia has announced that they will stop developing and manufacturing handsets for Japanese partners NTT DoCoMo and Softbank Mobile, effective immediately.
The Japanese market is generally seen as a profitable one, but Thomas Jonsson, a Nokia spokesman, said “We’ve not reached our own internal targets over a sustained period.” As reported in PC World, Nokia has been involved in the Japanese market for five years this time, having entered again when 3G services were initiated in the tech-savvy island country. Recently lowered expectations for sales in Japan have forced Nokia to reconsider their involvement there as a part of a worldwide re-appraisal of business prospects and they have determined that the Japanese market was not a corporate priority for them.
At the same time, Nokia announced that they would maintain a presence in Japan, including a research and development center as well as procurement and purchasing activities. In addition, Nokia will continue to sell and support its premium handset brand, Vertu, in Japan. There are even rumors that Nokia will be involved in a new mobile virtual network operator (MVNO) system as early as next year, through which it would provide service for its Vertu handsets.
This will be the second time that Nokia has entered and then left the Japanese market, which is well known for its cellular hardware differences from the rest of the world. The company was active in Japan in the in the 90s, selling the country’s unique second generation handsets, but pulled out after a few years. It re-entered the market with its wideband code-division multiple access (WCDMA) devices, developed in conjunction with and sold by NTT DoCoMo and Softbank Mobile.
Because it tends to develop and use cellular hardware that is so much different than is used elsewhere, Japan represents a large but insular marketplace. Phones developed and sold in Japan are rarely sold and used elsewhere, and are developed with particular attention to local requirements. In the long run, this move by Nokia may be more representative of problems with profitability in Japan’s unique market than it is of problems within Nokia itself. It is probably safe to say, though, that worsening economic conditions worldwide bear a share of the responsibility as well.
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