Why is Japan So Weak in Software?

Summary

This video explores Japan's digital trade deficit and the absence of major software companies like Microsoft or Adobe. It delves into Japan's historical efforts to develop its computer industry, the impact of IBM's dominance, and the challenges faced by the Japanese software industry, including its reliance on reverse-engineered software, the lack of a vibrant startup culture, and the effects of the real estate bubble burst. It also examines projects like BTRON and SIGMA, and the rise and fall of the PC-98 and i-Mode, concluding that Japan's software landscape remains dominated by custom packages and imported products.

Takeaways

• 📉 Japan experienced a significant digital trade deficit in 2023, importing much more in software and services than it exported.
• 💼 Japan's electronics hardware companies are globally recognized, but the country lacks major software industry players like Microsoft or Adobe.
• 🛡️ MITI, Japan's economic policy ministry, historically tried to develop the computer industry, including software, in response to foreign competition, particularly IBM.
• 🔄 The unbundling of IBM's software and hardware in 1969 allowed Japanese companies to adopt and reverse-engineer IBM's software specifications, leading to a dependency on IBM's technology.
• 🚫 Reverse-engineering IBM's software was considered theft, leading to legal confrontations and adjustments in how Japanese companies handled software.
• 📚 Japanese universities faced a shortage of qualified computer science professors, which contributed to a lack of skilled software programmers.
• 💼 Software engineering was not seen as an attractive career in Japan due to poor pay, lack of career progression, and unfulfilling work.
• 🌐 The lack of a vibrant startup culture in software development contributed to Japan's lag in the global software industry.
• 🛑 The collapse of the BTRON project, an attempt to create a domestic operating system, was a setback for Japan's software industry.
• 📉 The real estate bubble burst in 1990 negatively impacted the Japanese economy, affecting the software industry's ability to adapt to a cost-conscious environment.
• 🎮 Despite challenges, Japan's gaming industry stands out as a bright spot in the software sector, with talented programmers and innovative products.

Q & A

What was Japan's digital trade deficit in 2023, and how does it compare to 2015?

In 2023, Japan's digital trade deficit was about 5.5 trillion yen or $37 billion, which was twice the amount it was in 2015.

Why is there a question mark over Japan's software industry despite its strong hardware companies?

Japan's hardware companies like Sony, Fujitsu, and Panasonic are iconic, but the country lacks major software companies like Microsoft or Oracle, which is a significant concern for its digital trade.

What was MITI's approach to developing Japan's computer industry in the 20th century?

MITI, Japan's economic policy ministry, aimed to develop the computer industry by supporting domestic companies and mandating joint ventures with foreign companies for technology transfer, primarily to compete against IBM.

How did the Super High-Performance Computer Project influence Japan's software industry?

The project led to the creation of the Japan Software Company, which aimed to produce a common language software and standards. However, it failed due to unrealistic goals and lack of outside sales.

What was the impact of IBM's unbundling of software and hardware on the global software industry?

IBM's unbundling in 1969 allowed small software companies to compete with IBM, leading to the creation of the software industry as we know it today.

How did Japanese computer companies respond to IBM's unbundling in Japan?

Japanese computer companies used the opportunity to set up software subsidiaries and 'adopt' IBM's specifications through reverse-engineering, creating 'IBM-compatible' mainframes.

What was the significance of the IBM Spy Case in the 1980s?

The IBM Spy Case highlighted the illegal use of reverse-engineered IBM software by Japanese companies. It led to arrests, stirred up tensions between the US and Japan, and eventually resulted in settlements where Japanese companies agreed to pay licensing fees and respect IBM's IP rights.

Why did Japan face a 'software crisis' in the 1980s?

The software crisis was due to the dependence on foreign software, the lack of domestic alternatives, and the need for qualified software programmers, which was exacerbated by poor university training, unattractive job prospects, and a lack of software startups.

What was the TRON project and why did it fail to take off?

The TRON project was a domestic OS initiative to create an open operating system independent of Microsoft and Intel. It failed due to a lack of applications, slow adoption, and external pressures such as being listed as a potential trade barrier by the US Trade Representative office.

What was the goal of the SIGMA project, and did it achieve its objectives?

The SIGMA project aimed to improve the productivity of Japanese programmers by developing standards and applications for Unix workstations. It did not fully achieve its goals but did contribute to the transition of major Japanese companies to Unix platforms.

How did the 1990s recession in Japan affect its software industry?

The recession led to a decline in the ability of customers to afford expensive software modifications, impacting major Japanese mainframe makers. It also challenged long-held principles at MITI and highlighted the need for a more globalized approach to software.

What was the PC-98, and why was its fall significant for the Japanese software market?

The PC-98 was a hardware-accelerated version of MS-DOS capable of handling Japanese language, which dominated the domestic PC market. Its fall allowed foreign software and hardware to enter the Japanese market, leading to Microsoft's domination and preventing domestic software makers from mounting a significant challenge.