Today, just four years later, high-definition television has become an example not of Japanese dominance but of a remarkable comeback by American firms in a wide range of high-tech industries such as computers, microprocessors and telecommunications. At the same time, HDTV stands as testimony to the occasional fallibility of a ,Japanese system of industrial development that, as the ’90s began, seemed rarely to misfire. More than anything, it proves that in business, as in anything else, things change, and sometimes radically. In the 1990s. despite all the gloomy predictions as the decade began, it is the United States that has now seized critical advantages in some of the world’s most promising new markets. Right now, Japan’s version of HDTV represents nothing less than “obsolete technology,” says Peter Wolff, a Kidder Peabody technology analyst. Tetsuo Kawamoto, a senior engineer at NHK, the quasi-public Japanese television network that oversaw Tokyo’s HDTV effort, wouldn’t go that far. But he does concede that “the United States is now a step ahead of us.”
What happened? How did Japan blow what appeared to be an insurmountable lead across a broad front of technologies, and how did the United States get back in the game? In Tokyo, those are now questions asked with increasing urgency in boardrooms and ministries. “I keep asking our government to speed up the creation of an Information Highway, like America is doing,” says NEC president Tadahiro Sekimoto, “but they aren’t paving attention.” Part of the reason for this dramatic turnabout will seem familiar to American executives who lived through the 1970s and early ’80s. Many Japanese companies believed their press clippings and thought their dominance was ensured.
Success began to breed complacency. “We are too comfortable doing the same things–the things everyone else is doing,” says Tsuyoshi Hirata, executive vice president at Mitsubishi Electric. In computers, that meant almost an entire industry in Japan–with the major exception of Toshiba–patterned itself after IBM, certain that if they overcame the American giant they would be No. 1. But when the bottom fell out at Big Blue, it hardly meant good news for Fujitsu, Hitachi or NEC. It meant they were as vulnerable to desktop powerhouses like Apple and Compaq as IBM ever was.
THE AMERICANS’ INCREASING assault on the Japanese market makes sense. According to a startling new analysis of global competition in electronics, the consulting firm McKinsey & Co. reports that U.S. computer makers today are quicker to market with more successful products–they have also become just as productive as their Japanese competitors. True, American companies–in computers as well as in other high-tech segments–have been aided by traditional corporate culture in Japan. It simply does not allow Japanese companies to slash the head count as American companies can to lower costs. But there is much more to America’s new competitiveness. It has a lot to do with “the virtuous circle the U.S. industry now finds itself in,” says Junichi Saeki, a Tokyo-based director of the market-research firm Dataquest.
As the race toward the Information Superhighway in the United States accelerates, the day draws nearer when PCs and television sets may merge into the so-called information appliance. That means big American high-tech firms like chip-maker Intel (dominant in microprocessors, the brains of computers), software producer Microsoft (the dominant maker of operating systems for PCs) and AT&T (vast resources in telecommunications and computer networking capability are all now pushing toward a reasonably coherent technological vision of the future. They and other companies, whether competing or cooperating, are now all in the same technological loop. That enables them to react instantly to innovations or problems that come up, a cycle “which only reinforces their strong competitive positions,” says Saeki. “Unfortunately for most Japanese companies, they are now outside this virtuous circle looking in, and it is not yet clear how they can get in.”
The strange turn of events in HDTV over the last few years only compounds Japan’s current problems. In the 1980s, NHK’s engineers, working closely with Japan’s major electronics companies, began to perfect an “analog” transmission system for HDTV: it would take existing broadcast signals from satellites and run them through a decoder to produce the strikingly clear images for which HDTV is famous. Throughout that period, NHK’s Kawamoto says, “we kept one eye on developing a digital-transmission system.” That is, a system that transmits information the way a computer does, in binary code. But the perception that there were formidable technical barriers to making digital transmission work for television imagery persuaded NHK and Tokyo’s Ministry of Posts and Telecommunications to keep their HDTV focus on the more conventional analog system.
Then, in June 1990, the game changed. NHK’s Kawamoto admits that he and his colleagues were “very surprised” when they heard news of a remarkable breakthrough. A U.S. cable-TV equipment maker, General Instrument, figured out away to transmit TV signals in computer language–a development that NHK thought “was a pretty long way off”, Kawamoto says. The triumphant mood inside the Japanese development effort evaporated. A year later the FCC in Washington began tests to determine which HDTV standard the United States–the world’s biggest TV market–would use. Though NHK participated, it was already clear that it would not be Japan’s analog system. And for good reason. By moving to a digital network, the United States was Playing to its technological strengths. Since digital data can be manipulated, suddenly the prospect was that an HDTV receiver could be more than just the passive boxes made and sold by Matsushita and Sony. It could someday be an “interactive home information appliance.” It would be linked by fiber optics laid by the phone companies, made easy to use with sophisticated software, powerful computer chips and one easy-to-use master control box.
That future is not guaranteed, not by a long shot. But remarkably, it is closer in the United States today than it is in Japan. The Japanese, almost inevitably, will catch on. For instance, the McKinsey study still acknowledges Japan’s awesome overall manufacturing and technical strength. Japan also has some time. The ideal vision of the Info Highway is at least a decade away. But now Japan’s is, remarkably, a come-from-behind fight. Four years ago no one would have believed it–and that fact alone should keep U.S. firms from succumbing any time soon to the complacency that success seems to breed. Things do change.
