Japanese electronic brands lose luster

Dan Bobkoff Dec 21, 2012

Japanese electronic brands lose luster

Dan Bobkoff Dec 21, 2012

To see just how bad things have gotten for Japanese electronics, head to the Sony store in midtown Manhattan. There appeared to be more staff than customers. And, outside, talk to anyone and you can see how much things have changed.

“My phone is Apple and my computer is Samsung,” says Kristi Vizza, who was passing by.

Then, there’s Troy Alan, who standing outside Sony’s window. In one hand, he held an iPhone. In the other, he clasped an iPad mini. He was just there, he says, waiting for a friend who works in the Sony building.

Ouch. And, it’s not just Sony suffering.

This year, Panasonic expects to lose $10 billion. The market value of Sony, Panasonic and Sharp combined is a fraction of Apple’s. Their debt is considered junk.

“At least one of these companies might go bankrupt,” says Gerhard Fasol, who heads consulting firm Eurotechnology in Tokyo.

It’s easy to find places where each company went wrong: Sony lost out to the iPod. Panasonic made too many products. Sharp’s Japanese-made TVs were too expensive. But how could an entire sector in an entire country decline?

“Japan is sleepwalking to oblivion,” says Michael Woodford. He was briefly CEO at Japanese camera-maker Olympus.

He says the country’s electronics companies have few new ideas because their aging management doesn’t promote creativity.

“You need people to be a bit crazy, a bit wacky,” Woodford says. “But the nail which sticks up in Japan, they say, will get nailed down.”

In a business environment that favors big companies, there are few startups to keep the Sonys and Panasonics on their toes.

“Japan does not have that natural selection process as part of its business culture,” says Richard Katz, editor of the Oriental Economist Report.

He says the Japanese government is reluctant to let companies fail. “They constantly try to merge three sick companies into one larger company that’s even sicker.”

The Japanese government is currently propping up one of the country’s big chipmakers. Sharp may be the next firm seeking a bailout.

Some argue that Japanese culture has made the companies less nimble.

“The Japanese social code makes it very difficult to fire workers if they’re redundant,” says Michael Zielenziger of Oxford Economics.

And, Japan’s companies have missed some big opportunities by focusing on the market at home. Nowhere is that more obvious than in cell phones.

Ride the Tokyo subway or walk around a city, and it’s like a timewarp. Whether teen girls or salarymen in suits, many use flip-phones. Years ago, these were state of the art.

“The Japanese were far ahead of the Americans from the consumer standpoint in their ability to send text messages and download videos,” Zielenziger says.

But even though Japan had those technologies before the West, Zielenziger says it didn’t export them. And, as phones went smart, TVs went flat, and music went digital, Samsung and Apple swept in.

“They’ve really stolen a march on most of the innovative technology we once thought the Japanese had a real advantage with,” Zielenziger says.

It’s not all doom and gloom. Canon and Nikon still lead in higher-end cameras. But increasingly some of Japan’s most storied brands are being reduced to making parts. Sony, for one, supplies the iPhone’s camera. That’s not where the big money is.

And, back outside the Sony store in Manhattan, one rare passer-by, Richard Deweese, had recently bought a Japanese TV —  though it was a Panasonic, not a Sony. Asked why he chose Panasonic, and he says, “Because Apple didn’t make one.”

And, not to pile on here, but as a sign of the times, Sony recently put its fancy New York headquarters up for sale.

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