|Author Name||NOBEOKA Kentaro (Faculty Fellow, RIETI / Professor, Research Institute for Economics & Business Administration, Kobe University) /ITO Munehiko (Research Institute for Economics & Business Administration, Kobe University) /MORITA Hirokazu (Research Institute for Economics & Business Administration, Kobe University)
|Creation Date/NO.||March 2006 06-J-017|
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The Japanese digital home electronics industry provides DVDs, digital cameras, flat-screen TVs and many other major products which were developed through innovations in Japan and provided for the world market. Nevertheless, the value added and profits realized from these products are being limited by rapid declines in their market prices (commoditization). This paper analyzes the mechanism and present conditions of the commoditization of digital home electronics, and offers some recommendations for Japanese firms.
The mechanism of commoditization is discussed from three perspectives: (1) modularization, (2) establishment of an intermediate goods market, and (3) the topping out of customer values. In particular, discussion of the establishment of an intermediate goods market, both theoretically and empirically, as a core concept linking modularization with commoditization is a novel approach.
The recommendations include (1) pursuing a platform leader strategy to gain stable revenues from module sales, (2) the need for strategies that break through the contradictions in pursuing both module and finished product sales, and (3) the pursuit of symbolic value for customers.