Lessons from Sony’s fall

There used to be a time when a Sony television was a coveted item. It was only about 10 years ago. Back in the days of analog televisions, Sony and other Japanese sets were synonymous with quality and reliability. Today, Japan’s television industry is unattractive and uninteresting. The latest performance and management strategies of the Japanese companies signal the end of their era. Japan’s leading television makers such as Sharp, Panasonic and Toshiba have announced they are pulling out of overseas markets to focus on the domestic market. Sony spun off its television business last year for a possible sale. Last year, the global market share of Japanese TV manufacturers fell to 20 percent, third behind China’s 23 percent.

The Japanese television crisis is not news. The decline was signaled when a Taiwanese company became the biggest shareholder of Sharp Corporation three years ago and Japanese television makers saw big losses. Sony’s challenge was the 4K UHD TV. If existing UHD TV offers a quality of “seeing real,” the company said, 4K TV is “being real.”

But before content caught up with resolution quality, other companies caught up with the technology and Chinese companies released 4K TV at full HD TV prices. The comeback failed as improved technology that was less than complete innovation was not enough to turn the tide. Japanese TV makers clung to their analog assets and failed to quickly convert to digital technology, adding yet another footnote to Arnold Toynbee’s warning about the danger of settling for the memories of triumph.

Japan’s situation is a chilling reminder not just because of Toynbee’s warning. It clearly demonstrates the limits of winners who were followers rather than creators. The United States may be struggling in the manufacturing sector while competing against followers like Korea and Japan, but it remains the unchallenged leader in never-before-seen innovation. Japan, which had been a successful follower, has become feeble as the paradigm changed. Korean companies are the leaders in the television industry today. But Korean companies are faced with the challenges of overcoming the limits of being a follower industry as any device with a screen can double as a television with Internet and an OS.

What’s also noteworthy is the “narrow-mindedness” of Japanese industry, failing to respond to the global market transformation while focusing on internal competition. Sony was overwhelmed by the great success of its flat-screen television, the Vega, and failed to transition to digital television. When S-LCD, a joint venture with Samsung, saw losses, Sony immediately sold all its shares. Panasonic adhered to PDP TV, which it had developed, and Sharp, the pioneer of the LCD screen, isolated itself by allowing only LCD panels on its brands. The exclusion strategy, rather than expanding market size, brought down Japan’s television industry. Japanese companies may have thought that getting ahead of domestic competitors would make them winners in the global market, failing to see how Korean companies were coming from behind.

When it comes to innovation and expandability, Korean companies should be better than the Japanese. But the childish competition between Samsung Electronics and LG Electronics, as seen in the case of damaging a display washing machine at a store in Germany, is reminiscent of the narrow-minded competition among Japanese television makers. An LG executive damaged a door of a Samsung washing machine, and Samsung filed a lawsuit. Then LG released a video of the incident. Foreign media report the case as if it were an opportunity to underestimate the Korean electronics industry. But winning the contest between the two Korean companies doesn’t mean becoming a winner in the global market. Chinese companies are fiercely chasing from behind. Korean companies need to learn from the collapse of the Japanese television industry.

JoongAng Ilbo, Feb. 25, Page 30

*The author is an editorial writer of the JoongAng Ilbo.

by Yang Sunny