October 6, 2004 6:28 AM PDT

Can Japan rule the consumer electronics realm?

TOKYO--If Japan can return to something like the glory days it enjoyed in the 1980s, when it ruled the consumer electronics market, it would do so partly because of groups like the Bro Dra.

The Bro Dra are obsessive followers of "broadband dramas," soap operas from South Korea that can't be seen on regular Japanese TV but which can be captured on broadband networks, said Kunio Nakamura, president of Matsushita Electric, during a keynote speech during Ceatec, a large IT show taking place here. Trends like this give Japanese companies an early, ground-level view of how to deliver future services and products, Nakamura said.

Despite the long recession and the entry of several manufacturers from around the world into consumer electronics, Japan seems to be well-positioned to regain its place in the industry, several executives at the conference asserted.

"The champion of the narrowband was the U.S., and it was mostly on the PC," said Kunitake Ando, president of Sony, naming companies like Amazon.com, eBay and Yahoo as examples of North American know-how. "Now, it is used as a vessel for communication and entertainment, and that is the strength of the Japanese industry."

The difference between how companies from the two countries often operate can often be seen in how they approach the consumer, Ando said. U.S. companies succeed often by focusing on price and reducing it constantly. By contrast, Japanese companies try to engage consumers emotionally or at least surprise them with somewhat unexpected advances. As an example of that, he pointed to Sony's plans to come out with a Handycam that can take on high-definition video on Oct. 15.

Japan will also be able to leverage its background in semiconductors, miniaturization and product design, Ando asserted. Unlike manufacturers from other parts of the world, Japanese companies often make a substantial portion of their components.

The government is fairly active in promoting the industry as well, Nakamura said. Like South Korea, Japan has sketched out a multiyear plan for the IT industry that involves a heavy investment in broadband deployment. Right now, it's estimated that 100 percent of Japanese schools are online, and there is a PC for every 10 students. There is also push to increase the adoption of RFID tags for paying freeway tolls, which could eliminate traffic congestion and pollution.

Additionally, local consumer patterns help, Nakamura added. Approximately 90 percent of cell phones have cameras. For the rest of the world, the figure is about 20 percent. Roughly 80 percent of desktops have embedded TV tuners, a concept only just gaining ground in other parts of the world. Another product catching on is T Navi, which lets consumers surf the Web or shop on a TV, a revitalized version of many of the TV-Web programs that floundered in the last decade.

"T Navi users also use a PC but will use the TV to get things done," like getting directions quickly or checking movie times, Nakamura said.

Potholes in the path
For Japan to recall its glory days won't be easy, and several roadblocks will have to be cleared. One potential obstacle is broadband content delivery. Although Japan has one of the more sophisticated national broadband networks in the world, regulations limit services like pay-per-view TV. A Japanese reporter at the convention asserted that Japan is No. 1 when it comes to being the most inconvenient country in which to obtain broadband content.

Historically, film studios and producers have been wary about letting their content get swapped on home networks, but that appears to be changing rapidly, according to Louis Burns, vice president of the desktop platforms group at Intel, who spoke with CNET News.com at the convention. Piracy can likely never be eradicated, but the idea of allowing millions of households to pay for movies at home has begun to sound appealing to many, he said.

Some major content producers may announce support for copy protection standards touted by the technology industry over the next few months, Burns said. Different content efforts will be tried in different geographical markets. In Japan, Intel is working with a company to create a library of about 1,000 movies available for pay-per-view at home.

"The whole industry is turning about," Burns said. "You will start to see the content industry target the E PC." The E PC is a computer that looks like a VCR and is meant to slide into entertainment racks where the device can serve as a nerve center for stereos, TVs and other equipment.

It is a marked change from the past. Two years ago, the studios and electronics companies went after each other "with pointed sticks," Burns said.

A symbolic moment in the thaw occurred in January, at the Producers Guild Awards dinner in Lost Angeles, Burns asserted. James Cameron, director of "Titanic" and other big Hollywood films, received an award sponsored by Intel. In this speech, Cameron began to talk about the dangers of piracy but then added that unlike the film companies, film studios need to figure out how to take advantage of new mediums, Burns said.

Revelations Entertainment, founded by actor Morgan Freeman, has already announced that it will simultaneously release a film on the Net and in theaters in 2005.

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