1st September, 2009 - Huw Thomas, Intralink’s Tokyo-based Director of Consumer & Industrial Electronics, explains why new opportunities are emerging for technology companies targeting the Japanese market

Sony’s recent announcement that it will abandon its BBeB (BroadBand eBook) standard in favour of ePub (electronic publication) digital book format is significant in more ways than one. The move will boost consumer confidence in the nascent e-book phenomenon and accelerate the much-touted growth in the market, but it also signals a broader policy decision by the consumer electronics giant to move away from proprietary standards, thus opening the door to technology suppliers that support industry-endorsed standards.

Sony’s strategy has traditionally been to build walled gardens around its electronic products. Since its early triumph with the iconic Walkman in 1979, the company has consistently asserted proprietary standards for their products in the marketplace, but on too many occasions has lost out to rivals by fencing itself into a corner. Famous defeats include BetaMax to JVC’s VHS for analogue video devices in the 80s, ATRAC (vehicled by the MiniDisk) to MP3 in the more recent digital audio wars, and the Memory Stick to the SD (Secure Digital) memory card format championed by Panasonic, SanDisk and Toshiba.

Sony has always been a hard nut to crack for ambitious western technology companies. Putting aside the usual cultural and linguistic challenges of selling to the Japanese, Sony’s tendency to work with proprietary standards has been an additional, and often insurmountable, barrier to selling to the company. But this change of direction, coupled with extreme economic pressures, is likely to make Sony – and indeed other Japanese OEMs – more receptive to outside technologies, creating new licensing and sales opportunities for western technology companies.

Sony’s decision – overdue in a global marketplace with growing competition from countries like Korea, Taiwan and mainland China – comes at a time when other leading Japanese companies in the consumer and electronics sectors are looking hard at their product development strategies. These companies have been in-licensing core and non-core technologies from overseas suppliers for many years, but this is likely to accelerate in the light of pressures to compete more effectively with their Asian rivals, in part by reducing the time-to-market of new products. It is this ‘need for speed’, combined with pressures to slash internal R&D costs, that is driving demand for innovative, ‘turn-key’ solutions from outside suppliers, among them venture-backed companies from the West.

Japan is not for the half-hearted, but in spite of the hard times – and because of the economic realities facing many of Japan’s companies – new opportunities are emerging for western technology companies. Like the rest of the world, Japan will recover from the current downturn, but for many would-be newcomers to this market, the time to take the plunge is now.