Nokia exits Japanese market

28 Nov 2008

1

Japan has often prided itself as one of the strongest economies in the world, and not without reason. After the devastation of World War II, the country has risen like the proverbial phoenix from the ashes and established itself as the biggest economy in Asia. However, one international major has found that the market has become saturated and taken steps to exit.

Finnish handset-maker Nokia, the world's No.1 mobile phone manufacturer, virtually exited Japan on Thursday, jettisoning a tiny slice of a dwindling market as it admitted defeat in the face of the global financial crisis. It has decided to stop selling phones and end marketing activities in Japan, a decision which is likely to cost about 50 jobs. About 350 employees, mainly researchers, will stay on.

However, the company will also continue selling its ultra-high-end range of "Vertu" phones in Japan: these luxury handcrafted phones are tailor-made for recession-proof buyers, at between $5,000-$10,000 each.

Timo Ihamuotila, executive vice president at Nokia, said in a statement that the low expectations for Nokia phone sales in Japan had forced the decision. ''In the current global economic climate, we have concluded that the continuation of our investment in Japan-specific product variants is no longer sustainable,'' he said.

The news did not come as a surprise; Nokia's market share in Japan was barely 1.0 per cent, quite a contrast from the leadership position it occupies in most markets globally. Japan is a very mature market, dominated by local manufacturers and network operators like NTT DoCoMo.

Consumers also have little desire to upgrade and replace their phones. With the country in recession, Nokia was unlikely to want to invest further in a loss-making venture. (See: Developed economies in recession)

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