Panasonic to kill GSM phones for 3G Linux handsets

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

The move makes Panasonic the first major cell phone maker to discontinue 2G 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. Yokohama, Japan-based Panasonic, like many Japanese companies, was late to the Global System for Mobile Communications (GSM) market, so such sales are less important for it.

The company, which is a unit of Matsushita Electric Industrial Co., will now put its efforts into Linux-based 3G handsets. It's already selling such phones in Japan and hopes to reduce costs by using 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 Corporation of U.S.A., which has been working on non-Linux systems. 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 Corporation 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. in China will be shifted to 3G handsets.

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