Japanese manufacturers lose out on the smart phone market, working behind closed doors to weaken brands and falling into a predicament

After NEC announced the cessation of research and development of new smartphones, another Japanese manufacturer may withdraw from the smartphone market. Panasonic Group of Japan recently announced that it will stop supplying new smartphones to NTT DoCoMo, the country's largest telecommunications operator. Due to Panasonic only selling its mobile phone products through DoCoMo in recent years, this may suggest that it is about to exit the smartphone stage.

In the era of smartphones, Japanese manufacturers have not made significant progress in the local market, and the high degree of state-owned enterprise ownership is a major factor. Japanese electronic companies represented by Panasonic, NEC, and Sharp have been unable to keep up with the changes and pace of the mobile phone market for more than a decade, gradually retreating to the island and only producing and selling phones according to the requirements of operators, which is equivalent to OEM. At the same time, foreign enemies such as Apple and Samsung have also brought great pressure to local Japanese manufacturers. In overseas markets, Japanese manufacturers also suffer from the disadvantage of not being able to make changes without authorization. It can be seen that in the rapidly changing smartphone market, only by keeping up with the pulse of the market and keeping up with consumer trends in a timely manner can we have a foothold.

NEC and Panasonic successively lost out on the smartphone market

Panasonic Group recently announced that it will stop supplying the country's largest telecommunications operator NTT DoCoMo with the latest smartphone products for this winter. Due to Panasonic only selling its mobile phone products through DoCoMo in recent years, the company's decision this time means that it will abandon the smartphone market.

In fact, Panasonic's abandonment of the smartphone market had early signs. Previously, Panasonic began to reduce the size of its mobile phone business unit. Last October, Panasonic publicly announced that it would stop selling smartphones in Europe, causing its Eluga model to lose its only overseas market. Regarding this, senior IT analyst Tang Xin stated that most Panasonic smartphones are custom-made NTT Docomo phones, while operator NTT DoCoMo Communication Company has formulated a "2TOP" discount strategy for Samsung and Sony brands this year, significantly reducing sales prices, seriously hindering Panasonic's sales expansion plan. This is the most direct reason for Panasonic's exit from the market.

Panasonic is not the only Japanese manufacturer that cannot continue in the smartphone market. Just recently, due to the breakdown of negotiations with Lenovo Group, NEC Group, another Japanese electronic device manufacturer, also announced its withdrawal from the smartphone market.

Three years ago, NEC merged its mobile phone business with Casio and Hitachi to establish NEC Casio Mobile Communications, but the merger did not bring NEC impressive performance. Now, NEC is negotiating with China Lenovo Group to establish a smartphone joint venture, but ultimately no agreement has been reached. According to NEC's first quarter financial report for 2013, the company's mobile phone business suffered an operating loss of 9 billion yen. Relevant reports predict that NEC's mobile phone business will cause an operating deficit of about 15 billion yen by March 2014. NEC, which is weak and unable to reverse its losses, chose to abandon the smartphone market.

The main reason for "making cars behind closed doors"

The decline of NEC and Panasonic in the market is just a microcosm of the decline of Japanese mobile phones. According to a report released by Japanese market research firm MM Research Institute in May this year, as of the end of March, Apple's market share in the Japanese smartphone market in the past 12 months reached 35.9%, surpassing local brands Fujitsu and Sony, with the latter two accounting for 13% and 12% respectively. The once glorious Japanese mobile phone is now in a mess.

In the era of feature phones, the local advantages of Japanese phones were almost unbeatable even for Nokia and Motorola, which dominated the mobile phone market at that time. But with the rise of smartphones, foreign products including Apple iPhone and Samsung series smartphones have gradually taken over the Japanese market, competing for limited capacity in the local market. "Japanese electronics giants' brand awareness on smartphones is gradually weakening. In the era of smartphones, in addition to hardware appearance design and user experience, brand influence has become the most basic requirement for users to choose smartphones," said Fu Liang, an independent telecommunications analyst.

The special relationship between Japanese electronic companies and local operators also constrains the innovation pace of mobile phone production. There is a very unique relationship between Japanese electronic companies and operators: operators can participate very deeply in mobile phone manufacturing. This "deep participation" model has both advantages and disadvantages: on the one hand, operators can control the entire mobile phone industry chain and lead the customized research and development of mobile phone manufacturers; On the other hand, the strong control of mobile phone research and production by operators has led to mobile phone manufacturers gradually retreating to the role of contract manufacturers.

In addition, missing out on the good opportunities in the Chinese market is also one of the reasons for the failure of Japanese mobile phones. According to data released by market research firm Canalys, Samsung remained a leader in the Chinese smartphone market in the second quarter of this year, accounting for 17.6% of the market share; Ranked second to sixth in order are Lenovo, Yulong, ZTE, Huawei, and Xiaomi; Unfortunately, Apple's iPhone fell out of the top six and only ranked seventh. However, Japanese mobile phone brands such as Sony failed to enter the top eight in sales.

In short, due to the fact that Japanese electronic companies have been unable to keep up with the pace of the smartphone market in recent years and rely too much on local operators, when foreign rivals such as Apple and Samsung come to power, they become the "abandoned children" of operators, gradually being eliminated by the fiercely competitive market.

Chinese manufacturers need to learn from previous experiences

The closed door approach in the Japanese mobile phone industry has led many manufacturers to become trapped in the domestic mobile phone market, and even in overseas markets, Japanese manufacturers still suffer from the disadvantage of not being able to change easily.

Taking the Chinese market as an example. In 2005, with the advent of the 3G era, major Japanese mobile phone companies predicted that the size of China's mobile phone market would reach 80 million units that year, so they entered the Chinese market one after another. However, due to the limitations of mobile communication specifications in China, mobile phone manufacturers had to invest heavily in developing new network communication specifications. Eventually, Panasonic, Toshiba, and NEC abandoned the Chinese market.

The experience of Japanese mobile phones has sounded an alarm for domestic mobile phone manufacturers, who are also facing similar problems as Japanese mobile phones. Domestic mobile phone manufacturers such as Huawei and ZTE all rely on the customization, centralized procurement, and exclusive sales policies implemented by operators in recent years. The excessive reliance on telecom operators has greatly helped these mobile phone manufacturers increase their sales and share, but this dependence can also constrain them and erode their innovation drive.

In addition, Chinese mobile phone manufacturers have not been able to solve brand issues. Like Japanese manufacturers in the era of smartphones, there is currently no Chinese smartphone manufacturer that can compete with Apple and Samsung. Although the sales of Chinese mobile phone manufacturers are growing rapidly, their brand influence and reputation are even inferior to the aging Nokia. As a result, most of them are still in a vicious cycle of low profits.

By learning from history, one can know the rise and fall. At present, domestic manufacturers such as ZTE and Huawei have gained a lot in the local market and are constantly trying to expand overseas markets. Domestic brands should learn from the failure of Japanese manufacturers in the smartphone market and try not to repeat the same mistakes.