NEC, Casio and Hitachi announced today that they are merging their mobile handset divisions. The following two graphs explain why:
Handset sales in Japan have been falling steadily since 2007, when the mobile networks cut subsidies on new phones, and the market has now all but halved in size. The blue line shows the twelve-month moving average of sales and the data is from the Japan Electronics and Information Technology Industries Association.
Despite the fall in sales, the handset market remains fragmented, with eight large Japanese companies plus the Apple iPhone. At present, none of these companies (except Apple) are making any money. Data is from the market research company BCN (click chart to enlarge).
The only question is why it has taken so long for the mergers to begin. The answer – which I have heard from executives of Fujitsu and Hitachi amongst others – is that mobile phones are expected to become an ever more important device to consumers and nobody wants to get out unless they have to.
The market cannot sustain so many players, however, so the NEC, Casio and Hitachi deal is likely to be the first of many – albeit other deals may take years to come to fruition.
