Toshiba, Fujitsu Merge Mobile Units

After failing to gain much traction recently in mobile phone shipments and faced with an incipient assault by iPhone and Android mobile devices, Fujitsu and Toshiba announced they will merge their handset operations in Japan.

The merger, announced Thursday, is the latest consolidation among Japan’s mobile phone providers.

Scheduled to begin operation October 1, Fujitsu will be the majority owner of the new venture, which, with an estimated 18.7% market share, will be the second largest handset provider in Japan. Sharp’s 26.1% share of market paces the Japan market, according to recent market research reports.

With their cell phone shipments plunging some 25% in 2009, the Japanese handset providers are taking steps to better compete in a slowing market. Less than a month ago, Apple sent another strong message to Japan’s mobile phone manufacturers and carriers when the company launched its popular iPad in Japan through its exclusive provider, Softbank Mobile.

Apple enthusiasts – most of them young – lined up and thronged Softbank’s outlets for the iconic tablet. Although Apple has a miniscule share of the Japanese market, the enthusiasm shown for its iPhone and the iPad has galvanized handset makers and carriers to gird for strong new competition. Google’s Android phones have yet to make much of an impact in Japan, but they are expected to pick up momentum in the coming months. Toshiba bet heavily on Microsoft’s Windows Mobile operating system, but it, too, failed to gain traction.

The new combined Fujitsu-Toshiba operation will be faced with a new opportunity and challenge represented by the Japan Communications Ministry’s decision to require providers to offer devices with unlocked SIM cards. A significant portion of Japan’s population is expected to be attracted to unlocked handsets.

Earlier this month Casio Computer, Hitachi and NEC said they would combine their mobile operations. Many pioneering mobile phone innovations have been launched by Japanese suppliers, but the companies have had trouble translating the innovations into profits.