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How Akihabara went from consumer electronics mecca to capital of ‘Cool Japan’

7 Comments
By George Lloyd, grape Japan
Photo: ElHeineken, CC BY 4.0, via Wikimedia Commons

Akihabara has changed a great deal in the last 25 years. Back in the early '90s, when Japanese electronics makers dominated the world and the bubble economy had yet to pop, every other store was selling consumer electronics and the billboards of Akihabara were crowded with advertisements for products made by Sony, Panasonic and Sharp.

Fast forward 30 years, and those household names are conspicuous by their absence. These days, Akihabara's billboards advertise world-famous gaming companies, anime series and manga characters. Consumer electronics stores are outnumbered by shops selling toys, gaming consoles and computer software. Any retail space left over goes to maid cafes and CBD-infused decaffeinated coffee retailers.

How did this happen? Why did the bottom fall out of electronics manufacturing in Japan? And how did Akihabara go from being a showcase for its electronics makers to becoming capital of "Cool Japan?"

The very idea that Japanese brands would one day lose their domination of the global consumer electronics market would have been unthinkable in 1990. But the advent of the internet stole a march on Japan's household names.

All the same, Japanese companies were well placed to capitalise on the advent of the laptop computer and the smartphone. Some of them were producing mobile phones capable of surfing the internet a decade before the iPhone. The first company to attach a camera to a mobile phone was not Apple, but Sharp.

But Japanese manufacturers failed to market their innovations abroad or radically rethink their designs. As a result, Japan was eventually invaded by smartphones made by Apple (American) and Samsung (Korean). Japan was said to be suffering from the 'Galapagos syndrome.'

Starting in 2012, the electronics giants that once made Japanese proud – Sharp, Panasonic, Toshiba and Sony – were one by one downgraded to so-called 'junk' status by ratings agencies.

In their stead, American companies like Google, Twitter and Apple have become the household names of the internet age. South Korean companies like LG and Samsung dominate the market for consumer durables and electronics, churning out everything from flatscreen TVs to vacuum cleaners. These days, Samsung makes more profits than the top 15 Japanese electronics makers combined, and Sony’s market share is 1/30th of Apple’s.

For a time, Japanese commentators argued that this needn't matter. The name on the box might be that of a Korean or American company, but the hi-tech components in their products were still made by Japanese companies. The products themselves were no longer "Made in Japan," but most of them had "Japan Inside."

Unfortunately, that argument no longer holds water. While 70% of the components of an iPod were made by Japanese electronics makers in 2005, they made up just 20% of the components of an iPad in 2010.

In "Whatever Happened to Japanese Electronics? A World Economy Perspective," Steven Vogel of UC Berkeley cites figures that show that Japanese manufacturers’ share of DRAM semiconductor production worldwide dropped from 76% in 1987 to just 3% in 2004. Their share of production of the liquid-crystal displays used in phones and TVs has taken an even more dramatic nosedive, going from 100% in 1995 to just 5% in 2005.

Witnessing such dramatic decline, commentators said that Japan was a country struggling to adapt to the demands of the 21st century. Its economy was too hierarchical to respond effectively; Japanese society had become closed-minded, its people too rigid and uncreative, they said.

But that's too gloomy a prognosis. It's certainly true that Japan's rigid social structure and strong work ethic were perfectly suited to the catch-up phase of industrial development. A lot of the credit has gone to Japanese management, but the excellence of Japan’s organizational capacity is striking and has its origins in village life, and the values inculcated in villagers. Japan urbanized relatively late, when village virtues were still the norm, and after the war, the country's manufacturers used them to build an unbeatable workforce.

Walking the streets of Akihabara, you can't help but conclude that Japan has done remarkably well to adjust to life in the post-industrial era. Its electronics makers are still in business. They might have shifted much of their production to countries with lower labour costs, but they still have unrivaled reputations for quality and can still count on the loyalty of a huge domestic market.

Besides, manufacturing prowess is less important than it was a generation ago. Consumer electronics are not as valuable as they were in the '90s, and many of their functions have been incorporated into laptops and smartphones. What matters these days is the service economy. Content creation and intellectual copyright are king, and Japan has become a major player by exporting cultural products like manga and anime.

These days, games makers like Sega and Nintendo are worth more than the company that makes the TV you play their games on, as the billboards of Akihabara attest. Japan's consumer electronics makers might not feature in the top ten anymore, but its anime, manga and games are world-beaters.

This is good for the 'Cool Japan' brand, which pays rich dividends through the tourism business. Before the novel coronavirus grounded international flights, the tourist trade was a success story, with the number of foreign visitors rising to 34m a year in 2018. Many of them flocked to Akihabara. Japan's consumer electronics manufacturers might have lost market share to their foreign rivals in the first decade of the 21st century, but its 'soft powerhouses' have more than taken up the slack.

Source: Data from "True Crime Japan: Thieves, Rascals, Killers and Dope Heads: True Stories from a Japanese Courtroom," Paul Murphy, Tuttle 2016, p.55

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© grape Japan

©2021 GPlusMedia Inc.

7 Comments
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Some products from Japanese manufacturers are good quality but the main reason why japan is falling behind with consumer electronics is the lack of innovation. Other companies are having more innovation and prices are more competitive.

3 ( +4 / -1 )

Japanese companies have always been better at hardware - making it smaller and better. The industry shifted from hardware to the web and software. The use of English and the freedom to innovate have always been easier in the West. Technologies like 1Seg TV and Suica should have gone global but didn't. Japan Inc. still has cash, large tech entities and lots of young talent. Whether it is capable of bringing them together or not, only time will tell. GAFA's innovation has almost come to a halt and there are loads of new things to be done online. The opportunity is still there. Will Japan tap their own youthful innovators, or just hand over large amounts of cash and buy in products?

There are other reasons why Akiba has changed.

The move to SMDs (surface mount devices) that are an absolute pig for hobbyists to solder, hit the hobby electronics market globally. There was also a move away from the use of basic ICs and analogue tech to the use of programmable controllers, the code on which was often a commercial secret.

To prevent large companies from you-know-where reverse engineering tech, increasing attempts were made to 'seal the box'.

Remember TV repairmen? Nowadays, stuff is junked if a component stops working. Heck, you can't even change the battery in some portable devices. You are regarded as a criminal if you hack a controller chip to produce third party ink cartridges, breaking the extortion racket of companies that sell printers for peanuts and make their money from overpriced ink.

None of that built-in obsolescence is good for the environment and it has also damaged hobby electronics. That results in fewer technically able kids and graduates.

In the 80s ROM disassemblies (the source code of computer firmware) were published and we could build peripherals to attach to computers that manufacturers had not thought of. Today that would get you a visit from corporate lawyers. Magazine-based designs and kits were released that were as good as the stuff you could buy as consumer products.

Destroying the hobbyist market comes at a cost.

Thankfully there are still some sectors in operation and even some retro interest in valves (mostly sourced from China). But toxic corporate-led shifts in products, such as trying to kill FM radio in favour of digital, do not help. An FM radio can be built with basic components and works for a long time on an AA battery. You learn more as you build more complex radios. Digital radios eat batteries and defined by their chipsets.

The Raspberry Pi and other systems have helped, but if there are fewer interesting ways into electronics for youngsters, how will they learn and get interested. There is more to tech that writing apps. Without hobbyists, the market for components dwindles.

Akiba is not guilty of promoting change. Retailers just follow the mainstream trends. There are fewer electronics hobbyists about and I doubt schools prioritise it.

Some of this is the natural evolution of markets in a globalised system. Manufacturing moves to places with cheaper labour. Service sectors, IP, the creative and tourist sectors replace them.

But we do need to foster the educational 'way in' to the industries that we rely on, promoting inspirational activities that can get kids interested. Sealed boxes may satisfy the lawyers, but do too much consequential damage to society.

4 ( +5 / -1 )

Some products from Japanese manufacturers are good quality but the main reason why japan is falling behind with consumer electronics is the lack of innovation. Other companies are having more innovation and prices are more competitive.

They are? They're welcome to try to break into the videogame console market then. At the moment, it's dominated by two Japanese companies and stale ol' Microsoft. To the point where most people would struggle to name a console or portable from the last thirty years that didn't come from Microsoft, Nintendo, or Sony. It's actually Nintendo's slightly different (to put it in crude terms, childish) take on gaming that has fuelled their success from the early 1980s right up to today. That is innovation.

Earlier this year, What HiFi published a roundup entitled "Best AV receivers 2021". Seven models were on the list, the manufacturers were - in ascending or descending order, who cares - Denon, Sony, Denon, Denon, Denon, Sony, Yamaha. Not a single maker from another country.

Japan continues to do well in mass market audio and high end audio, Chinese manufacturers have come in and offer a lot of cheap and some expensive products, including true high end. That's a major challenge, but it is to all audio manufacturers worldwide, and the North American and European makers are also aware that they can't ignore Chinese audio any more. Audiophiles are buying it, and that's likely to increase, not die out.

Japanese manufacturers are crucially important in digital photography, having survived the transition from film photography where others didn't. They're still dominant in standalone (non-phone-based) cameras, which you can see if you drop in to DPreview.com.

And digital watches. Do I even need to mention who owns that market? It's one company, so far ahead of all the competitors that everyone knows who I mean.

There's nothing to stop other companies busting into consumer markets currently dominated by Japan - as you say, they can innovate or price-compete their way in.

-1 ( +0 / -1 )

It’s simply a problem of money distribution. Those decades ago, many people could afford the products offered there. Now most people can’t neither buy a sophisticated expensive camera nor a game console nor drink a coffee with the maids. And if the mass has not the money, they also have no time to invent, study, learn about necessary innovations. They only run from one part time job to the next. That’s why I say, turn the rudder, go back to those decades, make new innovations and a healthy bubble economy again. But you guess it, nobody wants to hear that. Becoming poorer and more stupid is also an option....

-1 ( +0 / -1 )

Lately Akihabara is starting to look less and less like the Mecca of "cool japan" and more and more like a new Kabukicho. The sheer number of touts for the various maid cafes is really getting out of hands. And the types of "cafes" are getting dirtier too.

0 ( +1 / -1 )

In those days actors like JT Lee and Jack Chen were very popular.

-1 ( +0 / -1 )

I've worked in Japanese hi-tech companies. They are not fun. They are sterile, robotic-like facilities, and the employees are treated as such: commodities. I would never recommend them to my worst enemy.

0 ( +1 / -1 )

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