Panasonic to kill GSM phones, focus on 3G Linux handsets

Panasonic Mobile Communications Co. Ltd. is ending development of 2G (second generation) cell phones in the face of "severe global competition" to concentrate on development of 3G (third generation) Linux-based handsets, it said Friday.

The move makes Panasonic the first major cell-phone maker to discontinue second-generation handset operations. Sales of 3G handsets are climbing fast and becoming an increasingly important part of each handset maker's global sales. However, for many companies 2G sales still dominate. Panasonic, like many Japanese companies, was late to the GSM (Global System for Mobile Communications) market and so such sales are less important.

The company, which is a unit of Japan's Matsushita Electric Industrial Co. Ltd., will now put its efforts into Linux-based 3G handsets. It is already selling such phones in Japan and hopes to reduce costs by utilizing a common platform for its phones worldwide.

As a result of the decision, the company will close its research and development operations at Panasonic Mobile Communications Development Corp. of U.S.A., which has been working on non-Linux platforms. The company's European research at Panasonic Mobile Communications Development of Europe Ltd. in the U.K. will turn its attention to 3G and other platforms, Panasonic said.

Additionally, the company will close Panasonic Mobile Communications Corp. of the Philippines, where it makes many GSM handsets, and close GSM production at Panasonic Mobile & Automotive Systems Czech SRO. GSM handset production at Panasonic Putian Mobile Communications Beijing Co. Ltd. in China will be shifted to 3G handsets.

Sales and service for its current GSM products will continue, it said.

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