Panasonic recently announced plans to launch smartphones targeting the European market, with the company stating sales targets that, while not overly aggressive, certainly indicate that the consumer electronics giant is serious.

This is not the first time the company has looked to build on its presence in Japan to establish an international handset business. Indeed, in 2000, the company was knocking on the door of the top five biggest vendors, although the chart at the time looked very different – while Nokia was in its familiar number one spot, it was followed by current also-rans Motorola and Ericsson (pre-Sony merger), with Samsung and LG Electronics nowhere to be seen.

It is not even Panasonic’s first attempts at smartphones in Europe. In 2004/2005, it announced several Symbian OS devices (using Nokia’s Series 60 user interface), which failed to generate much interest from consumers or operators.

It is, of course, widely noted that the handset vendor profile in Japan is very different to that of Europe, the US, and even other APAC markets. Domestic brands such as Sharp, Panasonic, NEC Casio and Fujitsu feature heavily in the line-ups of operators, while these companies have largely failed to generate much interest elsewhere.

But the same is also true in reverse. While Nokia has dominated the global handset market, it encountered a number of hurdles in its attempts to build a Japanese business. And it is not the only one – Samsung and LG are also under-represented in the market.

The biggest stumbling block has been a real disparity between the demands of Japanese customers and the preferences elsewhere. Japanese consumers have been used to handsets having clamshell form factors, built-in digital TV receivers, and contactless commerce technology. The country has also led the way with its own, discrete mobile internet services. Without support for these, it has been difficult for overseas device makers to compete.

And with these features not supported beyond Japan, the devices offered by domestic vendors in international markets have often been lacklustre in comparison, making it difficult to make inroads into the established market shares of competitors such as Nokia, Samsung, LG and the others.

But what is different this time around is the growth of the smartphone. While it has taken some time, Apple’s iPhone and a range of Android devices have gained ground in Japan, and in the case of Android devices, local vendors have jumped in on this opportunity. And international vendors including Samsung and HTC are now finding it easier to build a business in Japan, by capitalising on this smartphone growth.

With common ground now reached, there is also an opportunity for Japanese Android device makers to move into other markets. Indeed, Panasonic is not the only company to recently announce an international play: Sharp is also working with Orange to offer an Android handset beyond its home market.

But there still remains a significant challenge: internationally, there is no shortage of smartphone vendors, especially using the Android platform. For everything that Panasonic (or Sharp) can offer, there will be equally appealing devices available from Samsung, LG, HTC, Motorola, Sony Ericsson and others.

The challenge will be in bringing differentiated products to market, in order to build market share in an already fiercely competitive market.

Steve Costello

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members