Sunday, December 13, 2009

Evolutionary cycles

I yesterday went shopping for an LCD television for a friend of mine. I went to Richer sounds (a splendid and rather uncharacteristic British retailer known for selling high quality electronic merchandise at low prices from relatively unfashionable locations where the rent is low, providing fine customer service and treating employees well), and I ended up buying a Sharp TV. Interesting company, Sharp. People sometimes think the name is a little odd. For what it is worth, the company originally made mechanical pencils for engineering purposes, and they wanted to make it clear that they were very sharp. (True story).

Japanese companies seem to divide into two kinds. There were pre-WWII monoliths - the so called zaibatsus. American policy after the war was that these were far too powerful and that they were to be broken up into smaller companies. This American policy failed. They zaibatsus were theoretically broken up into smaller units, but they retained a complex arrangement of holding companies and cross shareholdings in which management control largely remained in place even though the companies had theoretically been split up. They evolved into post war industrial groupings known as keiretsus. These companies remained politically well connected, and when Japan attempted to grow its exports through government directed industrial policy, these were the benificiaries of it. These keiretsus included Mitsui/Toshiba, Mitsubishi, Hitachi, Matsushita (Panasonic), and others.

As I said, these well connected companies were recipients of government largesse, and those who would wish to praise government industrial policy would tend to construct a story that this led to Japan's industrial success in the 1970s and the 1980s.

But of course, the story is more complex than this, There is a really good book about this, We Were Burning : Japanese Entrepreneurs and the Forging of the Electronic Age by my compatriot Bob Johnstone. The interesting part of the story is that although the keiretsus did benefit from the growth of the Japanese electronic industry, they were not where its innovation came from. The companies that were the heroes in this regard were small, non-existent or unfashionable in 1945, or were disgarded or disdained pieces of broken zaibatsus, In particular, we are talking companies like Seiko-Epson, Canon, Yamaha, or even Sanyo or Honda or Suzuki. (The Japanese government tried to micromanage the car industry, but the motorcycle industry was seen as less interesting, and so that is where the interesting companies ended up coming from).

In electronics, in the 1970s, Sharp's research was led by Sasaki Tadashi, whose enthusiasm earned him the truly glorious nickame of "Dr Rocket" - personally I would almost kill for such. In that era Sharp pretty much invented the electronic calculator and the LCD display. Sharp remains a leader in LCD display technology to this day.

To the extent, that in this day of LCD television, Sharp is the only Japanese company worth mentioning in this market. Sony - a company that rode a totally unique route between the keiretsu and the post war upstart, but which in the end did a better job of selling itself as a brand than an innovator - was the undoubted leader in the era of CRT televisions, but (perhaps as a consequence) totally missed the transition to flat screens. A lot of fancy televisions are sold today under the Sony brandname, but these were generally actually made by Samsung, or (in certain high end cases) by Sharp. The only Japanese company that actually makes televisions today is Sharp. The company that always was the great innovator: the company that Sony pretended to be.

Which is why I was happy to buy such a set for my friend.


AlanL said...

"the company that Sony pretended to be."

... although I admit to having greatly enjoyed Morita-san's [founder of Sony] memoirs - especially the story of hiring top calligraphers to apply iron oxide paint super thinly and evenly by hand to paper tape for prototype tape recorders in bombed-out sheds in the ruins of 1946 Tokyo.

(Also, I still have a Sony CRT TV from the last Trinitron generation. I see no reason to replace it, since I doubt I would get a picture anywhere near as good from any flatscreen technology I would be willing to pay for)

Rob Fisher said...

I have a Samsung television. Presumably its panel is made by Sharp. I had thought that it probably used, say, a Broadcom chip for video processing but with software developed by Samsung, and even the circuit boards and plastic exterior made by Samsung. But it is probably more complicated than that and perhaps Sharp do more than just the panel.

Michael said...

Rob: A Samsung would be made by Samsung. An LG would be made by LG. The Koreans are the leaders. It's the Japanese brands that are often just rebadged machines from elsewhere. In particular it is Sony.

Alan: I was perhaps a little harsh on Sony: the company has of course done fine things, but it has lost its way in recent times.

And the last generation of Trinitrons probably have the best pictures of any TVs ever made, particularly if you can get one of the high definition models which were not generally sold in Europe. However, CRTs are heavy, bulky, and max out at 40 inches, alas.

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