The Strategic Growth of the Digital Household Technologies Industry

ABSTRACT

Over the past few years, the digital household technologies industry has undergone rapid growth with the Japanese industry claiming a large world market share. With increases in both capacity investment and employment in domestic factories, this industry is expected to lead the way for Japan's future economy.

Nonetheless, there are many concerns about the successful growth of this industry : Won't the market for mere analog alternatives become easily saturated? As key components become digitized and standardized, won't the market be taken over by low cost Asian products? Won't the market for key software and semi-conductor components be monopolized by major foreign companies, making them into low-profit products? Won't the shares for key devices like display panels be captured by Asian companies that boast high levels of capacity investment? Finally, will Japan be able to maintain its supporting industries, its competitive bullpoint, as technology outflow germinates competition abroad? Concern about all of these questions is mounting.

Thus, in advancing its digital technologies industry, it is important that Japan take the following actions: While Japan continues to assume a leadership role in standardizing key components such as system LSIs, companies should begin selling outwardly, vending their components and manufacturing OEM products, as a way to redeem the expenses for development and capacity investment. The standardization of basic parts and software, moreover, should be done in conjunction with the dominant companies, business forums being an ideal venue for this type of cooperation, so that the outlay of excessive licensing fees can be avoided. While domestic production should be nurtured through national and local government support of top-runner businesses, some defensive measures should also be taken to protect the national industry. These measures should include minimizing the technology outflow from supporting industries to foreign companies, guarding special technologies through the black boxing of know-how, and cutting off brain drain, thereby maintaining Japan's technological distinction, by offering better employment benefits to employees with important expertise and know-how. Finally, companies should work to generate new demand through the creation of new digital functionalities using the online distribution and transmission, via broadband, of patent protected killer contents like moving images.

As Japanese corporations continue to lead the digital household technology market, the implementation of the measures outlined above will be necessary if they are to maintain their competitive edge and ensure industrial growth in the long-term.