There is some truth in this article but it misses some of the really key factors.
1) Value of the Yen. The Yen is seen as a safe haven and has been at almost ridiculous levels (considering trade balances and government debt) at least since late 2008. This is crippling exports (and/or profitability) in these price sensitive markets (TV's, computers, phones) as even though much production is abroad they still have massive cost bases in Japan.
2) Development of Korea. LG and especially Samsung took the place of the aggressive upstarts driving down prices and then building up the quality as Japan once did to the West in markets such as cars. It will be interesting to see what China's development does to Korea in 15-20 years. So far the aggressive pricing from Korea has kept Chinese TV brands from prominence but that may not last.
3) As Japan prospered and incomes rose it became uneconomic to manufacture commodity items there. Outsourcing and offshoring production damages the feedback and development loop between production and design that enables efficient optimum design of products. Also they narrowed the parts of the supply chain that they supplied to focus on the high value ones that could still be profitable but that costs control and foresight into important developing areas. e.g. Samsung could develop LCD panels in exact form factors to fit their devices and to use them as structural elements in TVs getting a jump start on Sony. (Sharp had[has?] their own panels but the quality wasn't uniformly high and they were overly dependent on their home TV market anyway).
4) There is very little profit in many electronics items. TVs especially are not a source of profits (maybe Samsung makes some but it is hard to tell from their annual reports). Aggressive and falling prices, unstable panel supplies and the fact egos and ecosystems are on the line means that the once stable profit source of CRT TVs has been replaced by an LCD bloodbath. Even in mobile phones only Apple and Samsung are really making money (along with a number of component suppliers getting their slices).
I think it's also an issue that many Asian companies haven't figured out how to add value with software the way a company like Apple does. Apple can ask a big premium on their tablet and phone devices based on the exclusivity and capabilities of iOS. Certainly lots of innovations could still be achieved in (e.g.) the television markets by creating great software for these products. We still don't have really "smart" television sets.
This is the reason why I think the rumoured Apple television set will be a big hit with very nice profits when it finally arrives.
The key is to differentiate with the competition and if you can't differentiate on a hardware level, then you have to do it on a software level.
> I think it's also an issue that many Asian companies haven't figured out how to add value with software the way a company like Apple does.
I think you can completely remove 'Asian' from that sentence. Few companies ANYWHERE have figured out how to add value with software like Apple does.
I'm still highly sceptical of "smart" TV although I am a big believer in easy UI and attractive content. My own long term view (since about 2002) has been the TV control will move to a handheld touchscreen display (a tablet) removing most or all of the UI from the main display.
I also think there are good reasons why Apple hasn't entered the market. It will be hard, even for them to make money there. Also to deliver what is accepted as a TV requires significant localisation to broadcast and cable standards. Apple may be able to go with HDMI and internet connections only but that isn't something that many other companies would get away with. I don't think that they will make real money if they do come although they could still hurt Samsung which might make it interesting to them.
There are three main phone/tablet OS's out there from Apple, Microsoft, and Google which are all US companies. The real question though is why did Google have to step in with Android vs Samsung / Sony / LG etc already having a high quality OS? They had been making quality feature phones for a while, but somehow never made the jump and said the hardware if fast enough for something close to a desktop OS.
I think Apple were exceptional with brilliant vision of how a smartphone should work and the ability to develop from a clean slate without having to support existing platforms before the initial launch. They also left out many features competitors had which I think would have been harder to do with an existing product line.
Google had by that point been sucking in huge volumes of software talent. Once given the iPhone as a template they could develop quickly and then iterate further improvements but they are also exception. They are also a software company and critically a web services company rather than a broad electronics company. They are far from infallible (GoogleTV).
Microsoft were years late to the party despite existing mobile OS. They are also a massive (although fairly broad) software company. They also saw an almost existential threat in iOS and Android devices. They still may fail to reach a position of power in this market.
For a platform to reach the point of positive feedback between developer and consumer feedback needs scale. It isn't surprising that the offer of attractive, cost free platform with developer support was attractive and competition (in the software space) killing. Unless you were confident that you could win in the software space why wouldn't you take Android?
That only five platforms (Symbian and RIM being others) emerged is not surprising, less may survive. Given that who would you expect to have the scale, commitment and capability to develop the best mobile platforms?
Apple is an outlier even among US companies; I don't think there's much to be gained by asking "why aren't Asian companies like Apple".
I think in the case of a lot of electronics (e.g. TVs) the market has been commoditized, which is usually permanent. The big profit margins are gone, and they won't be coming back.
No, but it's interesting to ask why, for instance, Sony lost its position as the number 1 cool gadget inventor. There are many reason for this, including politics and sticking to proprietary technology for too long, but I agree that a lack of focus on software is a big reason.
The PC market is commoditized as well, but that hasn't stopped Apple from capturing the high end (and increasingly the low end with the iPad).
I think you are right, economic factors have made a big difference. The Yen, the liquidity trap, the disproportionately old population and resulting humongous government debt are the main culprit.
It is impressive that Toyota has manage to survive.
People say that Japan is good at hardware but not at software. I own multiple Samsung products and their software is downright embarrassing yet the company is thriving.
They all have excellent hardware but if I for example use the 'smart' part of my 'smart TV' it is unresponsive, crashy and generally a terrible experience. My Samsung blu-ray player takes seconds to respond to button presses and integration between my Samsung devices which is promoted heavily by them is not reliable and the user interface is terrible.
Yet Samsung manages to dominate and actually make decent devices when the mostly rely on other's software (Google).
IMO the difference between Korea and Japan can be explained by economic factors not technical ability.
What's interesting is that the value of the yen has plunged in the last month or two, due to hardcore quantitative easing by the BoJ. The first signs of change are maybe, just maybe, in the air.
What's also interesting is that Sony's recently released Xperia Z Android phone has sold quite well.
Samsung has long bought in additional panels on the spot market in addition to using their own production. The higher end TVs tended to get their own panels and I think they found it wiser to mop up any bargains in the spot market rather than let competitors undercut them drastically.
I think that shows:
1) How many TV's Samsung is selling.
2) How desperate Sharp is for cash.
What isn't clear from that article is whether these are high or low end product and how profitable it is.
1) Value of the Yen. The Yen is seen as a safe haven and has been at almost ridiculous levels (considering trade balances and government debt) at least since late 2008. This is crippling exports (and/or profitability) in these price sensitive markets (TV's, computers, phones) as even though much production is abroad they still have massive cost bases in Japan.
2) Development of Korea. LG and especially Samsung took the place of the aggressive upstarts driving down prices and then building up the quality as Japan once did to the West in markets such as cars. It will be interesting to see what China's development does to Korea in 15-20 years. So far the aggressive pricing from Korea has kept Chinese TV brands from prominence but that may not last.
3) As Japan prospered and incomes rose it became uneconomic to manufacture commodity items there. Outsourcing and offshoring production damages the feedback and development loop between production and design that enables efficient optimum design of products. Also they narrowed the parts of the supply chain that they supplied to focus on the high value ones that could still be profitable but that costs control and foresight into important developing areas. e.g. Samsung could develop LCD panels in exact form factors to fit their devices and to use them as structural elements in TVs getting a jump start on Sony. (Sharp had[has?] their own panels but the quality wasn't uniformly high and they were overly dependent on their home TV market anyway).
4) There is very little profit in many electronics items. TVs especially are not a source of profits (maybe Samsung makes some but it is hard to tell from their annual reports). Aggressive and falling prices, unstable panel supplies and the fact egos and ecosystems are on the line means that the once stable profit source of CRT TVs has been replaced by an LCD bloodbath. Even in mobile phones only Apple and Samsung are really making money (along with a number of component suppliers getting their slices).
[Former Sony employee.]