Japanese IT Companies Find World Stage Elusive

Opinion: Japan's high-tech companies haven't enjoyed the success of the country's auto makers.

This was supposed to be the time when Japans technology-driven economy would hold the prime spot in much of the worlds business. The country, lacking natural resources, bet on technology, exports and a worldview of industrial development. With the Think Globally, Act Locally theme, the big Japanese companies would be in the forefront of worldwide development.

It didnt exactly turn out that way. Despite heavy financial and educational investments, the prime-mover slots do not belong to Japanese companies. The future fast-growth technologies will more likely come from China and India rather than Tokyo. However, after 10 years of slow or no growth for Japans economy (the second-largest in the world), there are now some signs of modest growth and a lot of positive re-examination on the part of Japans high-tech vendors.

Why has Japans auto industry been able to do so well, but the big tech companies have not? Where should future resources be placed to win an equal place at the technology table? Why is it that many of the big tech names in Japan have not been able to translate their presence in Tokyo to large markets outside the country? The answers to these questions are complicated, but I think a second effort by Japan Inc. is in the offing, and the chances for success the second time around are better than they were the first time around.

With these thoughts and questions in mind, I set off last week for Tokyo. My initial observation was a positive one: Japanese high-tech companies are as dedicated as ever to finding their footing on the international stage. For many, the most important part of the stage is the U.S. market, where, despite years of trying to gain market share, companies such as Hitachi, Fujitsu and NEC remain minor players rather than market leaders. The difference this time is that the U.S. market is maturing to two alternatives: open-standards-based systems and Microsoft-based systems.

The development of computing standards allows Japanese high-tech companies to aim at a real target rather than bet on someone elses proprietary formats. The widespread adoption of standards-based systems allows a level playing field and a broad market opportunity, both of which are well-suited to the re-entrance of players able to bet on the future instead of riding the tail wind of a proprietary marketplace. Trying to outdistance an opponent that has a proprietary lock on its customers and knows ahead of time what the next set of products will require is nearly impossible.

In the Windows market, Japans high-tech vendors are recognizing that 64-bit computing—which was again championed by Bill Gates last week—will eventually start a new upgrade cycle among customers. The rise of 64-bit computing is not important as a software issue or a hardware issue; it will be important as a systems capability, which will finally allow the robust, scalable, secure computing environment that customers have wanted but have often found only in a closed world. The vendors that take advantage of 64-bit systems by offering those interlocked hardware and software systems will be the real winners in this next stage of computing evolution.

My suggestion to those Japanese IT vendors looking for a winning strategy in the marketplace this time around is to emulate Toyota rather than Sony. Toyota stayed with its core strengths of building automobiles and thought about what customers would want five, 10 or 20 years in the future rather than worrying about chasing their competitors each year. As a result, Toyota has a hybrid lineup at exactly the same time that the worlds economic and political realities are demanding hybrid vehicles. Meanwhile, Detroit and the rest of the automotive world are playing catch-up to Toyota.

Sony, rather than playing to its main strengths of widely available, first-quality audio and digital products, headed out on a content-generation strategy that took it far from its core capabilities; its a strategy from which Sony is still trying to recover. Whether the Hitachis and Toshibas can do for IT what Toyota has done for automotive technology remains to be seen, but the opportunity is once again in front of them.

Editor in Chief Eric Lundquist can be reached at eric_lundquist@ziffdavis.com.

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