The decline of the Japanese electronic industry

The past few years has seen the remarkable decline of the once-prominent Japanese electronic companies.  From Toshiba to Sony to Panasonic, most of the big Japanese electronics companies have been unable to adapt to changing technology and consumer preference, and, increasingly, foreign competition.  In the 1980s,  Japanese imports were some of the best-built and most advanced devices available.  As we saw in our reading of Neuromancer, many thought that it was only a matter of time before Japanese electronics completely overwhelmed everything else.  Sony's Trinitron TV was regarded as the industry standard.  Their Walkman was the portable music player.

Much of this, however, has changed.  Sony's debt has been downgraded again to just over "junk" status, reflecting a lack of confidence in their ability to grow and continue paying their bills.  Sharp has already been downgraded to the lowest level, and may even receive a bail-out from the Japanese government.  Clearly, the times have changed for these once profitable companies.  What happened?  In large part, it's due to competition from competing countries from competing countries.  Many of the Japanese electronic companies were enormous; upon succeeding in one market, many kept spreading out and establishing a presence in more and more different fields.  As a result, they were very slow to adapt to change, and when consumer preferences changed, they were unable to keep up.  Perhaps most prominent is Samsung Electronics, which a decade ago was seen as a manufacturer of undesirable low-cost electronics.  That has changed enormously, however, with Samsung's Galaxy smartphones and tablets some of the most coveted around.

While many of the Japanese companies tried (and failed) to adapt to newer technology, there were a variety of other issues they faced as well.  Another was the rising value of the Yen, which made Japanese exports more expensive than products produced in other countries.  Other Japanese countries were too slow to move in to new markets (particularly the mobile market).  When Apple launched the iPhone and Samsung and HTC jumped on the Android train, Sony was still trying to work with Ericsson.  Overall, time has not been kind to these giants.  Many are trying to re-structure to remain competitive; Panasonic recently announced that businesses that couldn't earn at least a 5% profit margin had no place there.  Other companies have turned away from the consumer market, instead focusing on supplying parts to other manufacturers (such as Apple and Samsung).

While it's uncertain what is going to happen to these Japanese companies in the immediate future, it is clear that their long-term outlook is not very good.  Most of them have been hemorrhaging money, unable to come up with captivating new designs.  Perhaps some of them will succeed, but what is clearest is that the Japanese electronics industry will likely never rise again.  In their wake, I expect to see American, Chinese, and Korean companies capture the stage.