Electrical Machinery Industry Overview
11, 01. 2004
Rapid Recovery in Business Performance Being Seen Since Around 2003 through Success in Digital Consumer Electronics Products
According to the Ministry of Economy, Trade and Industry and others, the size of Japan's electrical machinery market in 2002 was at 6.9488 trillion yen. 218,000 people were employed in the industry. This market includes what the industry calls "white goods" (large household appliances such as washing machines and refrigerators), consumer audio-visual equipment, lighting equipment and personal computers. With a total production value that accounts for more than 10 percent of Japan's overall machine industry, it can be said to be one of Japan's major industries.
Refrigerators which compete for effect, such as energy saving and lap needlessness to food, in a home-electronics store
Although it may differ according to how one defines the electrical machinery industry, there are basically nine major manufacturers in Japan. They are: Hitachi, Ltd., Matsushita Electric Industrial Co., Ltd., Sony Corporation, Toshiba Corporation, NEC Corporation, Fujitsu Limited, Mitsubishi Electric Corporation, Sharp Corporation, and Sanyo Electric Co., Ltd. Pioneer Corporation is sometimes also included in the list. World ranking in terms of net sales placed Hitachi top among Japanese electrical machinery manufacturers in 2002 at No. 3 in the world. Sony, Matsushita, Toshiba and NEC were also among the global top 10.
Business Performances Make Turns for the Worse upon the Collapse of the IT BubbleWith the collapse of the so-called "IT Bubble" in Japan in 2001, Japanese electrical machinery manufacturers saw unfavorable performance in the sales of telecommunications equipment and semiconductors. Performance turned to the worse, and there was a stream of electrical machinery companies that posted massive deficits. However, business performance has been making a rapid recovery since around 2003. Behind this is the popularity of digital consumer electronics. Digital consumer electronics are sophisticated versions of conventional consumer electronics products and incorporate advanced digital and electronic technology. Japanese electrical machinery manufacturers are aiming for new dramatic growth by using digital consumer electronics as leverage.
The "Three New Digital Sacred Treasures" of Japanese Households Gains Popularity at a Rapid Pace
The "three new digital sacred treasures" of Japanese households are digital cameras, flat-screen TVs and DVD recorders with hard disks. The term "three sacred treasures" originally referred to the "three holy treasures" of the Japanese imperial family that have been passed down over the ages. In post-war 1955, the meaning of the term was extended to refer to items that were highly treasured by Japanese families at the time: refrigerators, washing machines and television sets. The term, "three new digital sacred treasures," was born in 2003 through a major boom in the sale of the aforementioned three new types of digital devices, such as the digital camera.
With the advancement of technology and as a result of mass production, the price of digital cameras fell rapidly while performance was enhanced bringing about picture quality that was close to that of conventional film cameras. This brought about a trend from around 2003 in which general consumers began to switch from film cameras to digital cameras. Manufacturers that are especially strong in this field are Sony, the consumer electronics maker, and Canon Inc., the biggest precision manufacturer in Japan. Other companies displaying strength in the field are consumer electronics makers Matsushita and Sanyo, camera manufacturers Olympus Corporation and Nikon Corporation, and Fuji Photo Film Co., Ltd.
Japanese Manufacturers Have a 90 Percent Global Share in the "Three New Digital Sacred Treasures"
There are two types of flat-screen TVs: liquid crystal display (LCD) TVs and plasma display panel (PDP) TVs. Sharp is demonstrating overwhelming strength in LCD TVs, while Matsushita and Hitachi are strong in plasma TVs. Sony, Toshiba, Pioneer and others are chasing these companies from behind. LCD TVs with screen sizes in the 30-inch level are selling, while hot selling plasma TVs center on those with 40-inch screens or larger. DVD recorders with hard disks (HD), another one of the "three new digital sacred treasures," are often simply referred to as a DVD recorder. Unlike VCRs that use videotape as the recording medium, DVD recorders have the capacity to record television programs digitally on its HD, which can then be burned on to a DVD. These recorders became a major hit because users can not only record a large amount of TV programs but also edit or cue up programs with ease.
It is said that Japanese manufactures have a 90 percent share of the global market in these "three new digital sacred treasures" (digital cameras, flat-screen TVs and DVD recorders). In many cases, advanced function semiconductors - something that Japanese manufacturers are displaying strength in - are contained in these digital consumer electronic products. Japan's Renesas Technology Corporation and NEC Electronics Corporation are among those companies that excel in such semiconductors which are called system LSIs.
Mobile Phone Use Explodes with the Launch of i-mode Services
Electric shops street at Akihabara, Tokyo where many shoppers come and go
Another product that should not be forgotten is the mobile phone, the functions of which advanced extraordinarily in the Japanese market. In 1999, Japan's NTT DoCoMo, Inc., a telecom company, launched its "i-mode" service which enabled subscribers to use the Internet with their mobile phones. This triggered the accelerated advancement of mobile phone functions, so much so that not only is Internet connectivity an ordinary function of a mobile phone today but functions for enjoying applications such as games is also starting to becoming the norm. Meanwhile, transmission speeds are accelerating.
With the addition of digital camera functions, the shipment of mobile phones has become brisk. Today, many of the latest mobile phones come equipped with digital camera functions that are capable of taking photos of 2 million pixels or more. People use the camera functions of their mobile phones on a daily basis. As a result of increased functions, there has been an increase in mobile phone terminals that weigh more than 100 grams, and in most cases, they come equipped with large LCD screens.
Sony Launches the PSP, a New Handheld Game Console, in December 2004
The spread of new videogame consoles is also advancing. PlayStation 2, sold by Sony subsidiary Sony Computer Entertainment Inc., became a world-wide hit. Meanwhile, the battle in handheld gaming is escalating. Sony and Nintendo Co., Ltd. had released handheld game consoles in Japan, which are popular primarily among boys of elementary school age or in their teens. (In fact, it is not unusual to see young men on the train in Japan passing their time by playing a game on their handheld game console.) With such circumstances in the background, Sony released the PSP (PlayStation Portable) that is loaded with a small disc drive in December 2004. Meanwhile, in direct competition with Sony, Nintendo released the Nintendo DS, a new handheld game console with two screens.
Growth Continued for a Long Time after World War II around Telecommunications Equipment
Japan's electrical machinery industry originally developed around telecommunications services. In 1869, government-use telegraph facilities were set up between Tokyo and Yokohama. With this as a trigger, electrical manufacturers began to focus on telecommunications equipment. For a long time after World War II, Japan's electrical machinery manufacturers continued to grow around telecommunications devices. Companies such as Matsushita, NEC and Fujitsu actively cooperated with the NTT Group , Japan's largest telecommunications group, and focused their efforts on developing models for NTT.
Three Key Points towards the Future