TOKYO (Bloomberg) — Nokia Oyj, the world's largest maker of mobile phones, will abandon the Japanese mass market for phones after failing to break the dominance of local brands, opting to concentrate only on selling luxury devices.

Nokia said it will stop supplying phones to operators in Japan. The Vertu luxury brand of phones will be sold through an independent network in Japan, Thomas Jonsson, a spokesman for Espoo, Finland-based Nokia said yesterday. Vertu phones, which are built with gems and precious metals, start at 3,800 euros ($4,900) and can cost more than 100,000 euros each.

Nokia said earlier this month it plans to deepen cost cuts after lowering its forecast for global industry unit sales this year and saying the market may decline in 2009. Nokia has less than one percent of the Japanese market, according to MM Research Institute Inc. Globally, Nokia has close to 40 percent market share. The company hasn't met its targets in Japan, Jonsson said.

"In the current global economic climate, we have concluded that the continuation of our investment in Japan-specific localised products is no longer sustainable," Timo Ihamuotila, Nokia's head of sales, said in a statement.

Handset sales in Japan dropped 28 percent to 9.4 million units in the third quarter from a year earlier and were unchanged from the previous three months, according to researcher Gartner Inc.

The Japanese market is dominated by domestic companies such as Sharp Corp. and Fujitsu Ltd. The Finnish company provides handsets that operate on networks run by NTT DoCoMo Inc., Japan's largest mobile-phone carrier, and third-ranked Softbank Corp.

Japanese consumers expressed "little" interest in replacing their phones in the third quarter and opted for standard models instead of pricier ones, Gartner said in a report earlier this week.

Nokia employs about 400 people in Japan, Jonsson said. The discontinuing of mass handset sales will affect about 10 percent of its workforce there. The company plans to continue its research and development operations in Japan.