Japan: computers next?
There is no longer any doubt. The race is now on to see which nation - the United States or Japan - controls the space-age technology of the future, the computer and information processing fields. The stakes are enormous, since many experts believe that the total electronics-based society now coming into play will be the ''second industrial revolution,'' adding up to sweeping changes in national defense, manufacturing, and living styles.Skip to next paragraph
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At present the US is far out front in computers, given its commanding leadership in software, the electronic instruction that tells computers what to do. But it is clear that Japan - through a maze of formal and unofficial working arrangements among its government leadership, industry, and banking - is determined to accomplish in the area of computers and information processing what it has already done in consumer electronics and automobiles. That is, to wrest outright world market dominance in the 1980s.
Japan will have enormous technical and social hurdles to overcome to win this competition - ''battle'' may be a more precise term in light of the almost singular concentration on strategy and targeting involved. With an aging work force and rising consumer and union demands, Japanese officials will be hard pressed to hold down costs while expanding output. But the ability of Japan to galvanize its literate and hard-working population to meet such a challenge should not be taken lightly by US firms or the American public. To do so would be to ignore what happened throughout the 1960s and 1970s, when Japanese consumer electronics industries one by one challenged and shot ahead of their US counterparts. That also finally occurred in autos in 1980 when Japan became the world's leading manufacturer, toppling the Detroit-based US industry that had been king of the carmaker hill for more than 70 years.
Although MITI, the Japanese Ministry of International Trade and Industry, has lost some of the vast power it had in the 1950s and 1960s (largely because it lost its right to license companies to deal in foreign exchange), it still has tremendous influence in the economic life of the nation.MITI is currently propelling the drive to shift Japan from dependence on costly resource-based manufacturing industries such as steel, ship-building, chemicals, and aluminum to dominance in the high-technology area. It is doing this through a combination of generous no-interest loan programs to industry, research on a fifth-generation computer that can ''think'' and follow oral commands, and computer software development. Ample amounts of research and investment funds are also available within the private sector thanks to Japan's high savings rate.
The reasons for this profound change in national strategy are clear. As noted by Business Week in a recent special report on Japan, Japanese political and economic leaders have concluded that the resource-poor island nation must shift away from industries where oil and production costs are high into the one area that can capitalize on the nation's skilled work force. That is high technology.
The key to Japan's potential success is precisely its sizable lead in semiconducters and consumer electronics, including personal computers. From such a base, assuming that Japan can achieve at least equality with the US in computer software, it may well be able to underbid US computer firms like IBM in the world market. Not possible? Remember, it did just that with General Motors.
There is, of course, nothing intrinsically undesirable about strong Japanese leadership in computers, nor in good-natured competition between Japan and the US. Such competition should keep both national industries on their toes, and spur new technology. Moreover, the two nations are close trading partners and firm allies. Americans have amply demonstrated their high regard for the quality and price of Japanese products through their eager purchases at the sales counter.
On the other hand, there is another aspect to the computer competition that must not be overlooked by the American political and industrial leadership. If Japan (or any other nation, for that matter) were eventually to win the computer contest, this would present enormous implications for the US defense field. Computers play a vital role in advanced weaponry, and the US cannot afford to fall behind in so strategically crucial an area.
Will the US lose the computer war, as it lost the consumer electronics and car wars? Not necessarily. The US is still far out front in basic technology and innovativeness. But the outcome of the contest will also depend on the degree to which the US political, business, and union leadership are willing to work more closely together to achieve common ends. More financial resources will have to be made available for research and development. US firms will have to be more willing to slash prices abroad to hold markets. Perhaps most important, management and stockholders will have to take a longer view than just that of short-term profits. Japanese computer-related firms are now planning in time frames of a decade or more - just as Japanese car firms did with their products.
Will American companies heed the lesson?