Nokia to Pull out of Japanese Handset Market

The world's largest cell phone maker is pulling out of one of the world's biggest cellular markets. Nokia said on Thursday that it will stop developing handsets for NTT DoCoMo and Softbank Mobile, effectively ending a push that began five years ago when Nokia re-entered the Japanese market with the launch of 3G services here.

The current global economic conditions pushed Nokia to withdraw from the Japanese market, said Thomas Jonsson, a company spokesman. Faced with lower demand for cell phones the company is examining its operations worldwide and decided that development for the Japanese market is not a priority.

"We've not reached our own internal targets over a sustained period," he said but declined to say what those targets were.

Nokia will keep a research and development center open in Japan and continue its procurement activities, said Jonsson. The plan also won't affect its high-end Vertu brand handsets. A recent press report, which Jonsson declined to comment on, said Nokia would launch an MVNO (mobile virtual network operator) next year through which it would provide service for Vertu.

The company was active in Japan in the 1990s, supplying handsets for the country's proprietary second-generation PDC networks, but pulled out of the market. It reentered earlier this decade when 3G services began and has had one or two handsets on sale ever since through NTT DoCoMo and Softbank, which both operate WCDMA (wideband code-division multiple access) networks.

Nokia's decision probably says more about the Japanese market than it does about Nokia. Handsets from NEC, Fujitsu, Sharp, Panasonic and other domestic makers, which are typically developed in close cooperation with carriers and highly tuned to local tastes, are most popular here and no foreign phone maker enjoys the same level of popularity here that it does in other major markets.

For example, the recently announced new line-up of 22 phones from NTT DoCoMo includes five from Panasonic, four each from Fujitsu, Sharp and NEC and then two from Taiwan's HTC and a single handset each from Nokia, LG and Blackberry.

Coupled with a highly developed yet proprietary mobile Internet system, the Japanese market is sometimes referred to as the "Galapagos Islands" of the cellular industry -- a reference to the Pacific islands where a vast number of species have developed differently from most of the rest of the world.