Panasonic has officially pulled out of the Japanese smartphone race and will instead outsource production in emerging markets like India. Panasonic president Kazuhiro Tsuga said it isn't acceptable for the company to be bleeding red ink like they are so they have to think about ways to develop assets they do have in a more efficient direction.

In an interview with Reuters, Tsuga said the company's mobile division was likely to lose more than 1.1 billion yen ($11.02 million) for the financial year ending next March.  Last year, mobile was responsible for an 8.1 billion yen loss.

The deciding factor came when NTT DoCoMo Inc., the largest mobile carrier in Japan and a loyal distributor of Japanese-made phones, elected to only promote Sony Xperia and Samsung Galaxy handsets during its summer advertising campaign. The dominant carrier is one of the few major players that doesn't carry the iPhone.

Panasonic was once a force to be reckoned with in Japan. In 2001, the company ranked as the second largest handset maker behind NEC with more than 19 percent of the market. That figure fell to just over seven percent last year as it gave way to industry heavyweights Apple and Samsung. For reference, Apple held 25 percent of the market during the same period.

NEC also pulled out of the smartphone business earlier this year after two straight years of losses. Lenovo appeared to be the frontrunner for an acquisition but those talks eventually fizzled out.