Nokia Says Sayonara To Japan

Finnish handset-maker Nokia exited Japan on Thursday, jettisoning a tiny slice of a dwindling market as it admitted defeat in the face of the global financial crisis.

"In the current economic climate we have been forced to sharpen our business focus," a Nokia (nyse: NOK - news - people ) representative told Forbes.com. The handset maker will stop selling phones and end marketing activities in Japan, a decision which is likely to cost about 50 jobs. About 350 employees, mainly researchers, will stay on. The company will also continue selling its ultra-high-end range of "Vertu" phones in Japan: these luxury handcrafted phones are tailor-made for recession-proof buyers, at around $5,000-$10,000 a pop.

The news did not come as a surprise -- Nokia's market share in Japan was barely 1.0%. Japan is a very mature market, dominated by local manufacturers and network operators like NTT DoCoMo (nyse: DCM - news - people ). Consumers also have little desire to upgrade and replace their phones. With the country in recession, Nokia was unlikely to want to plow more money into a sinking ship.

"Nokia has bigger opportunities in other markets," said Carolina Milanesi, an analyst with Gartner Research, "not in a shrinking market like Japan."

Shares of Nokia were up 2.0%, to 11.34 euros ($14.63), during afternoon trading in Helsinki on Thursday. Swedbank analyst Jan Ihrfelt did not think the announcement would influence investor sentiment; he told Forbes.com that even rivals like Sony Ericsson were having difficulty making progress in Japan.

A representative of the joint venture between Sony (nyse: SNE - news - people ) and L.M. Ericsson (nasdaq: ERIC - news - people ) said there were no plans to shelve activities in Japan. But she admitted there would be a "shift" to a more research-focused business, creating a "center of excellence" for high-end handset development.

Also on Thursday, Nokia said it had begun shipping its answer to the Apple (nasdaq: AAPL - news - people ) iPhone: its touch-screen 5800 model. Although most of Europe and the United States will have to wait till 2009 before they get their hands on it, markets including Russia, India, Hong Kong and Spain will have the phone before the year is out. As Forbes.com revealed last month, Spanish network operator Telefonica (nyse: TEF - news - people ) will offer the 5800, as well as the iPhone, in Spain.