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3/3/2008
04:22 PM
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Mitsubishi Says Sayonara To Handset Business

Citing difficult days in the mobile market, the vendor will fold employees and assets back into its core businesses.

Competition claimed another casualty in the mobile handset market today as Mitsubishi Electric said it will discontinue operations after supplying NTT's mobile services unit, NTT DoCoMo, for nearly 25 years.

About 600 employees from Mitsubishi's mobile handset business will be redistributed to other lines of business, including Mitsubishi's mobile infrastructure unit, as well as closed-circuit televisions, security, automobile multimedia, and factory automation, according to Mitsubishi president and CEO Setsuhiro Shimomura.

The company cited greater competition and a recent decrease in shipments as the impetus for the withdrawal. It didn't specify the size of the decrease in percentages or units shipped, though it did say it expects to ship about 2.1 million units for the fiscal year ending March 31, 2008, with fiscal year handset sales projected at about $970 million, or 100 billion yen.

"It has become difficult these days, however, to expect growth" in demand for its phones, Mitsubishi said Monday in a statement. "Consumer preferences have become so diverse that business conditions have become 'severe,'" it added. Mitsubishi will continue to operate its after-sales service and handle the D06 lithium battery recall in Japan, announced in December 2006.

Globally, the worldwide mobile handset market is as doggedly competitive as ever, according to French consultancy Idate. As of the third quarter 2007, the largest vendors are Nokia (38%), Motorola (15%), Samsung (14%), SonyEricsson (9%), and LG (7%). Globally, Idate forecasts 8.42% annual growth between now and 2011 to 1.43 billion units. In addition, 2007 handset revenue was expected to hit $131 billion, jumping to somewhere between $148 billion and $150 billion in 2011, the consultancy said.

Idate dubbed Samsung "the only credible challenger" to Nokia's dominant position, but said it will have to make massive investments in factories and abandon its high-end market strategy to compete better.

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