Why Smartphones Still Elude Japan Inc.

Ever wondered how did Japan lose a game it was set to win? Japanese companies eventually realized it, it is the galapagos effect. But first we need to step back and consider what lead us here.

Japan makes reliable, affordable and competitive products in almost all categories, in cars obviously without a doubt if though lacking in flair and character. Cars that compete on a world scale and are the sweetheart of every goat herder and rebel fighter in war torn regions. Japanese cars compete in every category in every market and there seems no stopping them, or is there? galapagos effect.

In nature, competition breeds stronger living beings. When it is compete or die, you either compete or die. In many market segments, the Japanese competed and triumphed but not in computer software, hardware and not in smartphones. Why?

It is no prize that Japan Inc. treats software as if it was manufactured goods, as if it were hardware and not software. There are many cultural reasons for this and it goes back to something quintessentially Japanese, a philosophy known as monozukuri. Monozukri works for everything from pots and swords to cars and camera, but software is none of them and this approach simply produces bad software if at all.

But software while only one aspect it is a very important aspect of what makes a smartphone a smartphone, but that doesn't explain why Japan Inc still struggles with smartphones. Samsung and HTC, have no software developing experience, they use Google's Android or Microsoft's Windows, just like all Japanese smartphone makers, yet it is the Japanese companies who are finding it hard to compete selling hardware that runs the same software. Can it possibly be, the one thing Japanese people always excelled at, making stuff, is something they can't compete on with the Asian upstarts who grew up and matured emulating Japan?

Actually the reason is very simple and it goes back to the galapagos effect. Japan for the longest of time had a closed market. Whether through tariffs or the adoption of proprietary technology that made the cost of entry to foreign competition too high. For a while, it didn't matter, Japan lead the world in cellular technology and had some of the most advanced flip-phones in the world, but they were only for sale and only sold in Japan. The infrastructure required for them didn't exist elsewhere.

Japanese companies through idiocy or malice created their own technological bubble that sheltered them from foreign competition, they only had to compete with each other. Japanese flip phones grew ever more sophisticated with terrestrial TV access and fast Internet access but only supporting a subset of HTML to fit the smaller screens and the phone's keypad input. MMS was never developed, instead a custom email system was developed, in its place. Brilliant technologies that were all made obsolete and useless right around 2007.

When the iPhone came and then Android followed, the technology wasn't in the hardware. The hardware was very simple and plugged in, into existing networks in North American and Europe. The brilliance was in the software, that can be changed, altered and made better without having to replace the device. Apple, Samsung, HTC and everyone else except the Japanese improved quick because they were competing against each other world wide, in their home markers and in their competitor's home market.

Japan Inc was missing, too Japan-focused, too Japan-centric, still making phones that wont work or appeal to anyone outside Japan. Even when using American OSes (Android or Windows) they still managed to make something no one outside of Japan would want. Soon people in Japan stopped wanting them too. Sony, and only Sony, is making a comeback, why? It competes globally.

This is not about Japan, or something specific to Japanese people, sure they don't understand software but so does the Koreans and Taiwanese. The real issue is, when you lock yourself (or your country) to foreign input, whatever it maybe, you have already doomed yourself to extinction, you might win some time by keeping it locked longer but unlike the galapagos islands inhabitants, humans migrate and learn about the outside world. Protectionism and trade barriers only make your industry weaker. Competition improves the breed.

The world is becoming cosmopolitan, yet at many times Japan is very Japan-centric, as if the rest of the world doesn't exist. This will only continue to create a weaker less globally-competitive Japan. And I'm not the only one who thinks so, Japan's environmental ambassador to the UN also thinks so. I attended a lecture given by him, he encouraged Japanese students to make foreign friends to learn about the rest of the world. Japanese are very lacking in their understanding to anything outside of Japan, no wonder in things that are very trend and fashion sensitive like smartphones they are completely useless.

What about cars someone might ask, they are still competitive there. While I'd like to leave that for another blog post, I'll just leave you with this. The cars carry Japanese nameplates but they are a collaborative effort with R&D centers around the world. Honda, for example, designs and manufactures more cars in America than in Japan.