Why Apple isn’t Japanese

This article came out in 2007, just after the original iPhone was released, before the iPad came out, before Apple became one of the most valuable companies in the world.

What has changed in Japan? Not much.

DoCoMo, the company first referenced, was reportedly in negotiations for the iPhone, but talks fell through. My guess is that they wanted to mess with the iPhone, like most carriers do with their feature phones and Android smart phones. (Just remember, Android is open). I wrote a blog post last year about Japanese cell phones where I pointed out that DoCoMo’s moderate overseas success with licensing the i-mode network model they developed for the Japanese market was due to bleeding money from customers with packet charges and direct-to-carrier billing for online services.

Nothing they did was innovative for customers, and in fact the point of i-mode was to route phones through the carrier’s servers so that they could charge for access to services and push their selected online vendors. A side effect of this was the creation of a virtual cul-de-sac that had no direct access to the wider internet. The only “plus” for customers was perhaps the creation of targeted, vastly simplified sites that were more or less usable on what were essentially feature phones with a rudimentary browser.

The early effort expended on these private networks impeded the later adoption of smartphones with better online capabilities since it wasn’t in DoCoMo’s interest to make all that infrastructure and capital investment obsolete overnight. When I was first looking at business phones (what would later be called smartphones) DoCoMo offered a single model, while SoftBank, with more recent and less extensive investment in a private network similar to DoCoMo’s, offered several, including 3 or 4 that were compatible with most worldwide networks.

Softbank, which did get the iPhone in 2009, is run by a Chinese national, not Japanese. Their market share has increased, and their profits have gone up significantly following the introduction of the iPhone. Meanwhile, the best-selling smart-phones at DoCoMo are the Korean-made Samsung Galaxy line. I haven’t seen a single Japanese-made smart phone. There are no Japanese computer OSs or smart phone OSs. Again, in that earlier blog post, I talked about the Galapagos effect and why Japanese-made software doesn’t translate well.

In a Businessweek article last year, What is Sony Now?, I noticed two major problems that I think are shared by other Japanese companies. Sony is supposedly a hardware company, but they make more money from their insurance division than their electronics, games, movies, or music divisions.

Outside Japan, PS3 sales are a poor 3rd, behind Wii and Xbox 360. Japan is the only market I’m aware of where PS3 sales are higher than 360 sales. Part of the reason for this is because like many Japanese companies Sony focuses on Japan first, everywhere else second. It might work for Nintendo, but that’s probably because Nintendo focuses on a small set of products, while Sony’s sprawling hardware lines and tangled content divisions often work at cross-purposes, when they’re not trying to cram the kitchen sink in next to the shoe-racking game in their latest TV set.

This systemic problem was also highlighted by the difficulty that Stringer had in integrating the various divisions at Sony. When he came on as chairman and CEO in 2005, he didn’t even realize how factionalized the company was, nor that he wasn’t really in charge despite his title. He had huge problems getting the content guys and the engineering guys to talk to each other. That is also typical of Japanese organizations; sometimes there’s no one really in charge at the top. Divisions tend to exhibit group loyalty. Division heads have power.

At the time that article was written (Nov. 2011) Stringer stated that he wasn’t needed in Japan after the huge earthquake and tsunami hit in March. That, to me, shows that even 6 years later, he wasn’t really in charge of anything. Sure, sometimes leaders know that they need to let their deputies take care of things without interference, but if you’re not necessary in a crisis like that, then you’re really completely unnecessary. Period.

A NY Times article from April of this year mentioned several missed opportunities in what should have been Sony’s areas of strength, and the problems that Stringer’s replacement, Kazuo Hirai, faces in trying to get the right hand to talk to the left even after Stringer spent several years trying to break down barriers between division fiefdoms. That article also points out that these problems are not unique to Sony, but are probably endemic to Japan, an opinion I share.

As pointed out in the Daily Beast article, Nintendo is considered an oddball company in Japan. Of all the Japanese tech companies, I’d consider Nintendo to be the most Apple-like. With the Wii, they looked at a completely different market segment and created a completely different interface. Unlike the other gaming companies, they aimed to make a profit on the hardware, not just the software licensing. They put all their focus into a small number of products that they apparently obsess about. The recent gimmicky 3DS (why not 3D too?) and upcoming Wii U (do we still have room for a frikkin’ laser beam in our big-assed does-everything controller?) seems to me to be a break with that customary tight focus, so we’ll see how that plays out.

Panasonic used to have a domestic brand, National, that they consolidated under the formerly overseas Panasonic brand, probably in part because their divisions were too diffuse and they needed to focus in order to lose less money. Why were they losing so much money? Here’s an example: their laptops are shitty. According to a friend who is forced to use one as his work laptop, the exhaust from one similarly specced to my MacBook Pro is hot enough to burn your hand. And it’s heavy, and loud, and has about half the battery life. For comparison, I only ever hear my fan start when I’m transcoding video. Oh, and he’s had to have one of them replaced already since the brand-new machine he took on a business trip became unusable in the middle of it.

In one of the first teardown videos of the first MacBook Air, a group of Japanese engineers exclaimed about the large number of screws. They said that they could make it cheaper and with fewer assembly steps, and so save money. They were impressed by the custom battery, but again audibly wondered at the cost of the part.

In use, one of the most common items of praise for the Air was that it felt “solid” despite its thinness. Maybe there was a reason for all those screws. I doubt it could have been made that thin without a custom battery either.

This is a prime example of the problems endemic in Japanese businesses: an inordinate focus on details, with no strategic or overall view to provide a context for the details to fit into. Apple sweats the details, but they always keep a clear focus on a goal. Whenever someone asks why Apple products don’t have X, the answer is almost certainly either because Apple considers X to be unnecessary to the envisioned role of the product, or because feature X could not be implemented well yet.

Without a strategic, goal-centered view, it’s impossible to determine which details are worth the attention and which are irrelevant, which is why I think Japanese companies are foundering now. The structure of virtually all Japanese companies does not support leadership roles. It does not support innovation. It does not support strong and clear decision making.

Most Japanese businesses are process-oriented. They are extraordinary at refining and streamlining production, but without a good design as a starting point and a clear set of features to implement, things fall apart.

The factionalism in Japanese organizations prevents sharing information, sometimes leads to pet projects being grafted onto current products, and can result in extraneous feature creep. At worst, this can kill a project. At best, it delays production, stifles innovation, and waters down vision.

Management is made up of people with seniority. Lateral transfers are more common than in the West. So even if managers were capable of making good decisions about their field of expertise, they aren’t usually in charge of that division. There is very seldom anyone in overall control of the company.

So why wasn’t Apple Japanese? I don’t think a company like Apple could ever be started here. Apple is an outlier even in the West, and was shaped by Jobs’ obsessive focus on what was most essential to get the job done. Even in meetings, he demanded focus and intensity, and would omit people who were unnecessary. In Japan, something like that would never happen, not even under a Japanese version of Jobs.