Japan’s NEC yesterday all but confirmed that it is exiting the smartphone business. The company announced yesterday that it is conducting a review its mobile phone handset business but has already decided to stop developing new smartphones. It will limit itself to models already on the market. It will also continue providing maintenance and support services for existing smartphones.
At the same time and despite waning sales, NEC will continue to develop and manufacture conventional mobile phone handsets and tablets.
As the market for mobile phone handsets, including the rapid spread of smartphones, has dramatically changed, economies of scale have become increasingly important for the maintenance and strengthening of competitiveness. However, NEC’s mobile phone handset shipments are following a downward trend and it is difficult to foresee improved performance in the future.
NEC has seen its smartphone sales plummet. It currently only has a 5% share of the Japanese handset market and posted an operating loss of ¥9 billion (about US$92 million) in its last quarter.
NEC was reportedly looking to sell its mobile phone busines unit to Lenovo. Discussions have apparently stalled as the two companies could not agree over the topics of majority ownership and patents.