Jim Coyer’s Weblog

The IT Split – Why Japan’s tech industry bombed while America’s boomed. By Robert?Shapiro

There are some intruiging points raised in this article, and I’ve wondered myself why Japan’s technology-driven economy hasn’t produced a “major” player besides the usual consumer electronics powerhouses. As someone who has worked in a Japanese technology company, I can certainly attest to the capabilities of Japanese engineers and managers.

Shapiro lists some amazing facts:

- IT companies contributed 8% to GDP, but 30% of US growth from 1995 to 2000.

- Whereas in 1988, Japan and the US each controlled 40% of the semiconductor market, now the US has 55% with Japan holding just 25%

- US companies control 67% of global PC sales, and 80% of servers; Japan holds less than 5% in each.

And he claims that this is largely due to divergent strategies and organization techniques across companies in each country. In explaining both Japan’s slide in the semiconductor and PC/server businesses, he finds fault with Japan’s strategy of spreading its R&D too thin instead of specializing. In software, Japan holds no global leadership positions because its software groups typically live in large conglomerates, and focus on custom applications, often that are bundled with (and therefore subsidized by) hardware.

These explanations seem plausible, but I can’t really comment on whether or not they are true causes for Japan’s noticeable absence from the world stage of technology. Wireless is a strong exception. Still, I can attest to what Shapiro points out, at least in the software business. I had the good fortune to work in a small entrpreneurial software firm that was very small, nimble, and incredibly efficient. With a handful of people, Kamejima Sangyo (later AILogic) competed with much larger firms – almost all of which were subsidiaries of major Japanese keiretsus.

There are some things I think Shapiro broadly misses. Wireless promises to be a key growth engine of the future for IT, and Japan’s content providers, application developers, handset vendors, carriers, and most importantly, its endusers – are farther along than their counterparts in the US. However, wireless will be only one piece of future IT growth, so it will be interesting to see how Japan grows out of its current position.

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