Japan's Computer and Communications Industry:
The Evolution of Industrial Giants
and Global Competitiveness
by Martin FransmanOxford University Press, 1995; ISBN 0-19-823333-7
reviewed by John Drake
Japan's Computer and Communications Industry is a comprehensive, methodological examination of the institutions, corporations, industries, and policies that have shaped Japan's modern information and communications (IC) sectors. In the course of eight years of research and over 600 interviews with industry and government leaders, Fransman has -- in addition to accumulating voluminous facts and revealing anecdotes -- developed a methodology and "theory of firm" that enables him to tackle the evolution of Japan's computer and telecommunications industries in a rigorous "real world in real time" manner.
Each of the nine chapters is essentially self-contained, taking a specific market focus. Of particular interest to the typical Computing Japan reader will be chapter 4, "The Evolution of the Japanese Computer Industry." A major theme of this chapter is the influence that IBM exerted on the Japanese computer industry until the early 1990s. Fransman analyzes the roles of the telecommunications industry and the national government in developing and ensuring the survival of today's computer giants like NEC, Fujitsu, and Hitachi, and the factors that enabled the major Japanese companies to stay in the mainframe race in the early 1970s when American firms like General Electric and RCA were forced to pull out. The chapter closes with an examination of the winds of change -- the emergence of Japan's PC and packaged software markets.
Other industry-focused chapters analyze Japan's telecommunications switching industry and optical-fiber industry. Corporate-focused chapters look at the evolution of NEC, the future of NTT, and NTT-competitor DDI. The final chapter (aptly entitled "Conclusion") wraps up the analyses and tries, with modest success, to draw together the various pieces and offer a prognosis on the future of Japan's IC companies vis-a-vis their Western rivals. There are also seven appendices, the most interesting of which I found to be "The Strengths and Weaknesses of Japanese Information and Communications Companies."
Fransman is a firm disciple of the "where you stand depends on where you sit" school. A major premise of the book is that we can't properly analyze the present or envision the future of Japan's computer and telecommunications sectors unless we fully understand their past. Overall, the book deals with five basic sets of questions, and seeks to reach an awareness of the evolution of the Japanese IC industry as a basis for answering those questions. The sets of questions that Fransman addresses are:
* Why and how were Japanese IC firms able to catch up with (or, in some cases, overtake) their Western rivals?
* Why have Japanese corporations, some among the largest in the world, remained dependent primarily on the domestic market?
* Why are the major Japanese "computer" companies actually universalist system producers (with wide-ranging competencies in computers, semiconductors, and telecommunications) while their US counterparts are far more specialized?
* What has been the role of government, particularly MITI and the pre-war Ministry of Communications, in the Japanese success?
* Can Japanese IC companies become competitive in the global market?
The relative paucity of Japanese names among major players in the world computer and telecommunications arenas is not a function of lack of expertise or getting a late start. As Fransman notes, the first microprocessor was invented by Ted Hoff in Intel in 1971. It was only five months later that NEC developed Japan's first microprocessor. So in the early 1970s, technologically speaking, there was very little gap. Yet Intel went on to dominate the world market, with an almost 80% share today. The biggest Japanese company has about a 1% share. Why? (You'll find the answer in chapter 4.)
If you're looking for an easy read, look elsewhere. This is a complex book, both in terms of depth and breadth of coverage, and its 540-plus pages are packed with more facts, figures, and analyses than can comfortably be digested in a single reading. The result of Fransman's strict methodological approach, however, is a detailed-yet-lucid explanation of how Japan's information and communications industry came to assume its present form, and why Japan's IC corporations and government entities have performed (and reacted) in the way they have.ç
Japan's Computer and Communications Industry went on sale in Japan in mid-October; price ¥5,980.
