Panasonic aims $2B revenues from smartphone biz

By Money Times

Sep 29, 2015 07:17 AM EDT

After exiting the smartphone business in 2005, Japanese electronics major Panasonic is making a comeback in this segment and has prepared business plans to bolster sales volume for reaching the target of $2-billion revenues in next three years.

The company is optimistic about a three-fold rise in sales by 2018.

Panasonic is banking on Indian market as it expects the half of the smartphone revenues from the country. The current sales volume in India is pegged at INR18bn.

As part of its global sales strategy, Panasonic is considering Indian market as major contributor to the top line. Panasonic will soon tap the Middle East and South African markets soon.

Buoyed with the initial success in the Indian market, Panasonic has decided to make Indian market as its base for business expansion in South Asia, Middle East and Africa.

Panasonic aims to make an impact on the market like Samsung Electronics, which enjoys a lion's share in the smartphone segment at 70 percent market share.

Manish Sharma, Managing Director, Panasonic India, said: "Panasonic has commenced assembling smartphones in India through contract manufacturing. We'll expand later into a full-fledged manufacturing."

The company's annual revenue is growing at 20 percent and television and home appliances segment contributed INR40bn to the company's topline in 2014-15.

Panasonic exited the mobile phone business in 2005 owing to the sluggish sales and its effort to make a comeback in 2012 was also not successful.

Moreover, the attempt caused the company operating losses of Yen ($45million) in the mobile business segment. Samsung and Sony made it to the top two slots in the smartphone business.

As part of its new business strategy, Panasonic is targeting the Middle East, South Asia and African markets. The company is aiming to tap low-end market by offering a variety of smartphones at affordable prices. Panasonic is banking low margins business push to enhance the sales volume. 

After suffering from $15-bn losses in the two consecutive financial years, Panasonic was making efforts to turnaround by shifting focus from being a manufacturer to a supplier to other businesses.

Panasonic President Kazuhiro Tsuga had strategized the turnaround plan. Tsuga prefers to spin off any business wing that can't meet the target of five percent operating margins within a three-year time frame. 

Panasonic had decided to focus on developing smart phones for business use on the lines of its successful notebook PC series 'Toughbook.'

Apple and Samsung have been successfully expanding their market share surpassing traditional dominance of mobile players. Microsoft has also bought Nokia's phone business. Nokia had also lost its huge market share owing to the latest developments in the smartphone business globally. 

Panasonic's current market share in India is three percent and the company aims to treble it by 2016 and will be among top four brands in the country.

As part of its sales strategy, Panasonic is planning to offer a wide range of smartphones priced 15 percent less than the competitors. Panasonic has decided to enter markets including Dubai, Iran and Saudi Arabia in addition to South Africa next month.

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