Lessons from Apple's rise, Elpida's fall (Japanese electronics companies now falling behind)

Focus Taiwan ^ | 03/23/2012 | Y.F. Low

[SeekAndFind]

Driven by robust sales of smartphones and tablet computers, Apple Inc. has secured its position as America's most valuable company, with its share price rising to US$522 per share last Friday.

By contrast, Japan's once-mighty electronics firms have experienced a rapid fall in recent years. The country's largest DRAM maker Elpida Memory Inc. finally filed for bankruptcy protection on Monday.

The rise and fall of these two companies provide food for thought for Taiwan, which mainly engages in contract manufacturing.

According to U.S. analysts, Apple reaps a 58 percent gross margin on the sale of each iPhone. The costs paid to its suppliers and contract manufacturers in Taiwan, however, account for less than 1 percent of the profit made.

In this huge supply chain, Apple has maximized its profits with control over its brand, research and development, and marketing. Obtaining only meager profits, the company's suppliers and contract manufacturers in Taiwan are facing accusation of running "sweatshops."

Samsung of South Korea is one of Apple's major suppliers, and at the same time, its competitor. In the last three years, Samsung's brand value has been ranked far ahead of Sony's and it has become a new model for Asian businesses.

In addition to support from the Korean government, Samsung's success can be attributed to its attention to R&D, branding and talent cultivation.

Elpida's fall, meanwhile, was linked to its failure to embrace the global consumer shift to smartphones and tablets.

Since 2000, Japan's five largest electronics firms have lost two-thirds of their value and are losing market share to Samsung and Apple. According to the Economist, the fact that too many Japanese firms make similar things and fail to adapt to changing times is a problem in the industry.

This sounds the alarm for Taiwan's hi-tech makers. They need to speed up their transformation and develop high value-added products in order to stand out from the competition. They

[SeekAndFind]

See also here:

http://www.economist.com/node/21547815

EXCERPT:
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IN TOKYO’S posh Ginza shopping district the Apple Store is packed, but the nearby Sony showroom is as lifeless as a mausoleum. In recent days the largest Japanese gadget-makers said they expect to lose a combined $17 billion in the financial year 2011. Panasonic alone expects to lose $10 billion. Meanwhile South Korea’s Samsung enjoyed profits of $15 billion and America’s Apple hauled in $22 billion.

Since 2000 the big five Japanese electronics firms have lost two-thirds of their value (see chart). What ails them? High costs and a strong yen don’t help. Nor does a recent legal change that bars them from claiming certain tax credits they had counted on. But the sickness runs deeper.

[SeekAndFind]

[the invisib1e hand]

simple. Apple made information technology work for people, not the other way around.

for PEOPLE. Get it? P-E-O-P-L-E. As in, human beings. You see, the whole function of commerce is to meet people's needs. PEOPLE's needs. P-E-O-P-L-E. Now then, class: what is the purpose of commerce? Is it to make profits? Is it to crush the competition? Is it to gain market share? No, it's to ____ _______ _____.

Class dismissed.

[James C. Bennett]

At the risk of sounding racist, and heavily related to your reasoning, I think it comes down to interface design and this has a lot to do with culture.

Apple’s design team, particularly with regard to human interaction, is unparalleled. The Japanese, for some weird reason, love physical minimalism in design, but their interfaces are sold on the maxim of “more confusing, the better.”

[The Antiyuppie]

I remember in the 60’s, just about the only good things you could get from Japan were some cameras and anything made by Sony. Their radios and TV’s were absolute wonders. Sony did well until the 80’s but IMO their innovation and quality declined after that. I was repairing my brother’s Sony CD player of the 90’s and it was at least as crappy as everyone elses. Any attempt that Sony has made recently to “innovate” has actually been to “make proprietary” in a ham-handed way, without adding any value.

[the invisib1e hand]

OMG you racist.