Is the Galapagos Effect stunting the tablet market in Japan?

March 2, 2012
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To understand why Japan did not come up with the iPod, iPhone or even the iPad you only have to observe men at work in Tokyo streets. Six men collected branches sawn off a tree on the sidewalk while another 10 wielded traffic batons around a hole in the road.

This is how Japan does things: inefficiently, collectively; sending wave after wave of sledge hammers to crack a single nut.

So unusual are business practices here say experts that, compared to Western methods, Japan is more like the Galapagos islands, producing equally unique products and ideas that thrive only in Japan.

Meanwhile, however while Japan was busy cracking the hardware and consumer electronics nut, Apple stole a march with superior design and, more importantly, adaptive, humanist software.

“Japan is full of clever people,” says Gerhard Fasol of the Tokyo consultancy Eurotechnology Japan. “But they just didn't understand the importance of software. There’s lots of hardware know-how and, with another attitude, they could have beaten Apple or created a rival to Google.”

Galapagos tablet, Galapagos Effect

The limitations of living on economic Galapagos islands have not been lost on the Japanese.

When  Sharp produced a selection of new tablets, it came with (very uncharacteristically for Japan’s sober tech industry) a joke name for them. It was “Galapagos.”

Perhaps tired of hearing that Apple had now inherited Sony’s mantle as number one global gadget provider and that Japan was failing behind because of its insulation, Sharp announced that its new rage of tablets and smartphone were to be christened “Galapagos”, as a tongue in cheek tribute to such Japanese “insular” genius.

Over a year later, the joke has gone very sour. Sharp recently pulled two of the three Galapagos tablets it had launched in December 2010 without replacements.

All other Japanese tablet sales are struggling here and abroad, at least partially because of the country’s tablet isolation, according to experts.

“Unlike iPad they have not got 50% of the market, anyway. Which is ironic because on the supply list for the iPad, 20-30 suppliers are Japanese," says Fasol. "Japan certainly has the know-how and technology to build a winner. But they did not know how.”

Sharp’s experience shows that Japan may not even be capable of building a rival to the iPad, as the Koreans have, for good reason.

“Part of the unpopularity of the Galapagos can likely be attributed to its strange name, high price, and poor user experience as compared with rival devices (such as the iPad),” says analyst Hiroki Kamata on his Japan Ebook 2.0 Forum.

Once mighty electronics, now fading

Japanese electronics companies have similarly failed to ignite the world with previous outings, and are now paying the price. The nation was once undisputed titan of the electronics world with combined sales of US $600 billion — equal to the economy of the Netherlands.

Amidst weak demand and a painfully strong yen, Panasonic, Sony and Sharp Corp expect to lose US $17 billion this year. The figures expose the beating given to Japan's electronics industry by foreign rivals led by South Korea's Samsung Electronics.

Outmoded management practices haven’t helped Japan beat Apple either. Japan’s bosses, often kicked upstairs on the basis of seniority and not merit, may not have understood the IPad even if their own company produced it, says blogger and former distributor for Apple Japan, Hideki Onda. Tokyo’s bureaucrats are the same, he notes.

“The good days walked out the door and no one noticed, because we were never told of the danger; rather, missed a golden opportunity to carry the innovation fire and spread it forever,” he says explaining the government’s role in crushing technological change.

He goes on to argue that Japan’s Galapagos status was good for business for a while as no one could successfully export phones, or other such gadgets here.

Japan was a closed market in many respects, so local companies with local products thrived. Apple and Amazon have changed all that.  

That home market is now shrinking as the birthrate declines dramatically, and now Japan has no other choice but to compete globally to survive.

Tablets were part of that new strategy, thus far the magic touch has eluded Japanese business—no matter how many waves of sweat executives send at the problem.


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