An Idea Whose Time Has Come

At the turn of the century the great Japanese vertically integrated tech companies thought things were going their way. With worldwide defence spending reducing and rising prosperity the future was consumer electronics and they were the masters of consumer.

Matsushita from Osaka and Sony in Tokyo bestrode both Japan’s consumer electronics industry and the world’s, and others like Hitachi, Toshiba, NEC, Fujitsu et al could make every component in their products from silicon to screen.

No one else in the world, although Samsung was later to gain it, had their comprehensive, verticalised manufacturing firepower.

Then along came the horizontal model: – buy best-in-class components from wherever they may come and assemble off-shore.

Bingo! Japan’s consumer industry supremacy was scuppered by a neat idea.

Apple was the great exemplar of the horizontal model.

And then, Apple changed. In 2008 it bought PA Semi and, by 2012 was using in-house designed CPUs.

In 2012 it started designing customised GPUs, based on the Imagination architecture, but customised for Apple.

It has started designing power management ICs and sensors, it may well be designing audio ICs, RF ICs, modems and processors to replace x86s in iMacs,

Suddenly, after a decade and a half, the vertically integrated monoliths are being proved right – but it’s too late for them. They are falling apart at a rate of knots. The government bail-out boys are being called out every month.

There is nothing so powerful, they say, as an idea whose time has come.


Comments

11 comments

  1. Well Fred he apparently did a 38-under-par round the first time he played golf and never needs to go to the loo – the Japanese will love him.

  2. Well Jamo, the Japanese tech companies seem to be in so much shit they’d probably welcome Kim Jon-un.

  3. Ha Ha SEPAM, very droll.

  4. You’re right The Baron, I was thinking just of consumer electronics.

  5. “No one else in the world, although Samsung was later to gain it, had their comprehensive, verticalised manufacturing firepower.”

    IBM? DEC?

    Of course they aren’t around in those guises anymore because they didn’t have a diversified offering and wheels came off the giant machines when their sole markets dried-up as other technology (the Killer Micros in their cases) displaced them.

    The dangers of having a massive resource supporting a narrow (big, but narrow…) market of limited offerings. Not like App… oh… wait…

  6. SecretEuroPatentAgentMan

    Speaking of Sony, any thoughts about putting Howard Stringer at the helm?

    • Of course he’s done it once already. Japanese industry may not want another Gaijin coming in after what happened at Olympus a few years back after Michael Woodford came in as CEO.

  7. Some like Mitsubishi were well diversified from the beginning, into shipbuilding chemicals et al. Others like Toshiba made very bad diversification decisions. Some like Sony made investments into content production and distribution. Who knows what was the right strategy ?
    In Europe Siemens seem to be doing very well without component businesses. It’s a shame Philips are no longer in Consumer Electronics but they appear still to be successful. Perhaps select European global companies have fared better ???

Leave a Reply

Your email address will not be published. Required fields are marked *

*