Why Japan Stopped Innovating
The Japanese electronics industry once stood atop the world but has been overtaken by competition from China and South Korea. The innovation that once characterized Japanese manufacturing is now nowhere to be seen. A talk with Miyazawa Kazumasa, the Sony engineer behind the VAIO computer series and the Edy digital currency, to find out why.
The interviewee, Miyazawa Kazumasa, discusses the failure of Japanese consumer electronics companies to innovate and create devices like smartphones and tablets. He points out that Apple’s market capitalization is much higher than Sony’s, indicating the success of Apple’s products compared to Sony’s
Sony’s failure with the Memory Stick Walkman
- Sony released a Memory Stick Walkman that played downloaded music but was poorly received.
- Sony’s digital rights management, powerful copy-prevention technology, and use of proprietary ATRAC technology were significant factors in the failure.
- In contrast, Apple used the MP3 format with laxer copy protection and prioritized convenience and usability.
Differences in business model
- Sony’s approach was top-down, where a single manufacturer engineered everything.
- Apple’s approach was more distributed and relied on outsourcing production to China.
Japan’s failure to adapt to the globalized market
- Japan’s manufacturers lost their competitive advantage as production became distributed more broadly, and designing products without owning factories became possible.
- Japan failed to adopt open standards, outsource production and embrace horizontal industries.
Japan’s consumer electronics companies could not innovate and create devices like smartphones and tablets due to various factors, including a focus on copy protection and proprietary technology, a top-down manufacturing approach, and a failure to adopt open standards and outsource production to China.
CEO of Soramitsu. Lecturer in industrial engineering and management at the Tokyo Institute of Technology. Born in 1956, Miyazawa earned his graduate degree from the same university. He joined Sony in 1980, where he was involved in the creation of the pioneering Edy smart card. Served as executive director of Edy’s operating company bitWallet and later as executive officer of Rakuten Edy before joining Soramitsu. Publications include Kakushite denshi manē kakumei wa Sonī kara Rakuten ni hikitsugareta (Rakuten Supplants Sony as the Leader of the Cryptocurrency Revolution), and Soramitsu, Sekaihatsu no chūgin dejitaru tsūka “Bakon” o jitsugen shita sutātoappu (Soramitsu, the Start-Up that Created the World’s First Central Bank Digital Currency, the Bakong).
Miyazawa Kazumasa
The article is “Why Japan Stopped Innovating.”