Sony is to stop selling its Clie handheld device in Europe and the US.
Instead, the consumer electronics giant will focus on developing wireless and multimedia gaming devices that will incorporate much of the functionality of its current handheld.
Sony said that it will continue to manufacture the Clie handhelds in Japan, but is 'putting on hold' production in the European and US markets, which are favouring smartphones that offer both voice and data tools.
"It is partly due to the sales trends in these markets," a Sony spokesman told vnunet.com.
"Smartphone sales are going up quite rapidly and our sister company Sony Ericsson is doing a great job in this market."
Research conducted by analyst firm Canalys shows that smartphones represented 63 per cent of mobile devices shipped in EMEA during the first three months of 2004, up from 35 per cent a year earlier.
Handheld devices - like the Sony Clie - fell from 40 per cent of the total to 29 per cent during the same period.
"We are really looking at the market and how it will develop, but we will continue to provide support to our customers [in Europe and the US]," said the spokesman.
The manufacturer said that its decision would not affect relationships with operating system partners PalmSource and Symbian.
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