Casio Hitachi NEC Rumor

Three of Japan's major cellphone makers are nearing a joint venture that would create one of the largest companies of its type, sources said on Friday. Contacts for the WSJ believe Casio, Hitachi and Sharp are in talks to create a phone-only firm that would launch by April 2010. The project would be an attempt to consolidate businesses after the combination of economic fallout and a largely saturated Japanese cellphone market, where such a high percentage of residents own cellphones that handset designers are often competing for upgrades rather than new users.

None of the involved companies have commented on the prospect of such a deal.

Estimates would put the combined entity at second place in the market, just behind Sharp, and would create a more significant cellphone manufacturer on the world stage.

The union would also come at a turning point in the industry. Customers are now asked to pay for some or all of a phone where they previously could assume the device would be free, leading them to more carefully choose their phone before they commit to service. At the same time, Apple has made surprising inroads into the Japanese market and just last month saw the iPhone 3GS lead sales in the country, beating Sharp and other domestic companies for the title.

The upset is widely thought to be a partial backlash against stereotypical Japanese cellphone design, which often provides very high-end features like 720p video capture but often have complicated interfaces and are often too tied to local features like 1Seg TV tuning or FeliCa wireless payments, rendering them unsellable outside of the country.

By Electronista Staff