The official announcement from Mitsubishi Electric indicating they will exit the mobile handset business just hit the newswire. Noting fierce competition and downtrending market share they are the second Japanese ODM to terminate their manufacturing operations this fiscal year. According to their statement, the company estimates 2.1 million units sold over the year for approx. $1 billion and plans to “maintain and further strengthen the partnership with NTT DoCoMo through the communication related business”, essentially so-called ‘hard iron’ base station network segment.
Mitsubishi Electric will strategically shift resources of the mobile handset business to fields that can make best use of its technologies and know-hows, and is also expected to show further development and expansion. For example, the company plans to strengthen its businesses in the following fields: the communication infrastructure business which involves next generation network (NGN) related equipments and base transceiver stations for mobile phones, as well as closed circuit televisions (CCTVs) and other total security businesses, car multi-media business, factory automation system business, train information management systems business and others.
The company’s decision will cause a temporary loss of approximately 17 billion yen in income before income taxes for fiscal 2008. Although the forecast for fiscal 2008 may be assessed after the undergoing review of each business, Mitsubishi Electric expects to absorb the temporary loss with improvements in various fields.
The road towards consolidation has been evident here for some years now and we have seen several examples of joining handset divisions, such as Casio with Hitachi, NEC with Panasonic and most recently the Kyocera purchase of Sanyo, in order to gain efficiency of scale.