Round 11: Folly of Neverending Attempts to Create a Made-in-Japan Global Standard

"IC tags," one of the hottest topics in the world of information technology, have been attracting much media attention lately. The idea is to write data onto a semiconductor chip called IC tag attached to various commodity items and read the information via radio signals, thereby utilizing the device for inventory management and security. A radio frequency identification tag system called Auto-ID, which has been developed mainly by the Massachusetts Institute of Technology (MIT), has been acknowledged as an international standard. For instance, it has been adopted by Wal-Mart Stores Inc., a giant U.S. retailer. In Japan, too, the MIT-based Auto-ID Center opened its lab at Keio University and the actual use of this particular tag system has been spreading.

Against such a backdrop, however, there emerged a new project called Ubiquitous ID. No specifications have been set and only two companies are working on it. But University of Tokyo Professor SAKAMURA Ken, who heads the project, has been calling for government involvement saying that Japan does not need to follow the U.S. standard and that creating Japan's own standard serves its national interests. This is tantamount to saying, "Let's create Japan's own government-designated codes because the existing barcode system is American."

This is not the first time that Mr. Sakamura has tried to whip up nationalism in such a manner. With the TRON (The Real-time Operation System Nucleus) project, which he began to promote some 15 years ago, Mr. Sakamura attempted and failed to create a "made-in-Japan" standard for computer operating systems that is different from MS-DOS, which was already established as the international standard at that time.

Recently, Mr. Sakamura launched the T-Engine Forum, a project to promote the standardization of TRON systems. As an embedded operating system, however, Linux is already becoming an international standard and there is little chance for TRON, a Japanese local standard, to become a global one. Earlier this year, "reconciliation" between the TRON group and Microsoft Corp. made news. Yet, the tie-up between the two groups is nothing but an "alliance of the weak" targeted at the Japanese market because Microsoft's Windows CE, which is to run on the T-Engine platform, would have a minor presence as embedded software.

The Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPHPT) reportedly plans to support moves to create a "made-in-Japan global standard" in the field of home information appliances, allocating spectrum in the 5 gigahertz (GHz) range exclusively for that purpose. Such a move, however, is bound to invite international criticism because the 5 GHz band has been designated by the International Telecommunication (ITU) for unlicensed uses.

In the past, the Japanese government used to pump massive amounts of money into such "Hinomaru" (the name of Japan's national flag) projects - those to enhance national prestige. In particular, a series of large-scale projects sponsored by the former Ministry of International Trade and Industry (MITI, currently the Ministry of Economy, Trade and Industry or METI) mobilized a range of Japanese manufacturers to develop new technologies with an aim to catching up with and overtaking the United States. The Very Large Scale Integration (VLSI) project, a MITI-sponsored program in the 1970s to develop advanced semiconductor technology, has been cited as one of the most successful. Projects implemented from then onward, however, have mostly ended in failure.

* Character and Pattern Telephone Access Information Network
** Ministry of Posts and Telecommunications (currently MPMHAPT)

As to the TRON project, MITI orchestrated a range of domestic electronics manufacturers to jointly develop a new computing platform and have it adopted as a standard for computers for educational purposes. As it turned out, however, Matsushita Electric Industrial Co. was the only one actually trying to develop a TRON-based computer and the then Ministry of Education (currently the Ministry of Education, Culture, Sports, Science and Technology) was upset when no products came on market. When the Office of the U.S. Trade Representative put the TRON project on its "Super 301" watch list in 1989, participating companies were quick to withdraw, finding a good excuse to abandon the already "half-dead" project./p>

Making this into the story of how the "made-in-Japan standard" was crushed by external pressure is tantamount to fabricating history. Moreover, it would prevent people from seeing the true lesson that technology development is bound to fail when the government intervenes. Up until the 1970s, when mainframe computers were in their heyday, the direction of technological innovation was reasonably predictable and it was possible for a government to set standards for companies to follow. In today's IT industry, however, technological innovation is proceeding rapidly in the world of personal computers and it is impossible for any government to set a standard. It is, instead, up to consumers across the world to decide what should be a global standard.

It is a myth that MITI's industrial policy brought Japan's postwar high growth. Out of Japanese companies, only competitive companies such as automakers and home electronics makers have secured their place by winning global competition on their own. METI, as the ministry is called today, seems to have learned from past failures and it no longer promotes large-scale projects. It appears, however, that MPHPT is still haunted by the illusion that industrial policy can make a difference.

The primary reason why all these projects which fixated on a "made-in-Japan standard" failed is that such a standard is created only in a way that is convenient for the supplier with little consideration given to consumers' convenience. From a consumer's viewpoint, it does not matter whether a certain standard has been made in Japan or elsewhere. Regardless of where it comes from, a standard would become mainstream if it is good and would disappear if it is hard to use. Particularly, in the world of the Internet, industry standards are being developed as "open standards" - a set of conventions that are agreed by community consensus, not owned by any one entity - and therefore it is impossible for any particular country to hold hegemony. Although the leading developer of Linux is Finnish, no one calls it a "made-in-Finland global standard" and Finland is not necessarily gaining advantage over other countries.

The second reason for the failure is the inability of those promoting "made-in-Japan" projects to look at the global market. Even if Japan creates a "Hinomaru standard," which cannot be accepted by consumers in other parts of the world, it would do no good to be driven by an antagonistic mindset of, for instance, trying to fight back by establishing a unique Japanese standard for home information appliances because the U.S. has taken the lead in personal computers. Such an attempt would not result in any viable business as exemplified by the CAPTAIN and Hi-Vision projects. In the past, the PC-9800 series personal computers were able to hold as a local standard. In today's IT industry where companies are exposed to fierce global competition both in technology and prices, it is no longer possible to establish a standard exclusive for Japan.

Companies tend to be preoccupied with local competition, because Japan happens to have a sizable domestic market. But their counterparts in Taiwan and South Korea - whose domestic markets are smaller in size - have been setting their eyes on the global market from the very beginning. As a consequence, Japan has been left behind despite the fact that Asia, as a whole, has grown into the world's largest supplier of semiconductors and personal computers. Currently, China is embarking on a nationwide campaign to promote Linux. Should Japan continue to stick to its local standards, Japan might once again fail to secure its place in the field of home information appliances while the rest of Asia grows into the supply center for the world market.

In the IT world where both technology and market are quick to change, most technological innovations are bound to fail. What is important is for the government to learn from past failures in industrial policies and try not to repeat the same mistakes, instead of mobilizing a number of domestic companies to carry out national projects and trying to protect them from failing. It is about time for the government to stop intervening in the development of element technologies and leave it to consumers to decide what is good for them.

* This is an English translation of a Japanese article that appeared in the Nov. 8, 2003 issue of Diamond weekly magazine.