Why is Japan So Weak in Software?

Updated: November 20, 2024

Asianometry


Summary

Japan's digital trade deficit in 2023, importing more software licenses and services than exporting, is a growing concern. MITI's efforts to boost the computer industry led to collaborations with IBM, but challenges with joint ventures and technology transfers arose. The adoption of reverse-engineering from IBM by Japanese companies helped them compete against American counterparts, although legal issues and a shortage of skilled software programmers posed challenges. Various projects like BTRON and the SIGMA project aimed to improve Japan's technological landscape, but faced obstacles and limitations. The rise of smartphones like the iPhone impacted the global expansion of successful services like NTT DoCoMo's I-Mode.


Japan's Digital Trade Deficit

Japan ran a digital trade deficit in 2023, importing more software licenses, cloud, and other services than they exported. The deficit is growing, with the 2023 amount being twice that of 2015.

Developing Computer Industry

MITI, Japan's economic policy ministry, aimed to develop the computer industry in the 20th century. IBM played a significant role, entering Japan in 1925 and later facing challenges with joint ventures and technology transfers.

Japan Software Company

In 1964, IBM introduced the System/360, prompting MITI to sponsor the Super High-Performance Computer Project. Japan Software Company was created to develop common language software but failed to achieve its goals and closed in 1972.

IBM's Unbundling Impact

IBM's unbundling in the US led Japanese computer-makers to set up software subsidiaries and adopt IBM's specifications through reverse-engineering. This approach helped Japanese companies survive technological lag against American competitors.

The IBM Spy Case

Japanese companies illegally used reverse-engineered IBM software, leading to a spy case in the 1980s. IBM confronted Japanese firms like Fujitsu and Hitachi, resulting in settlements and fees that affected their competitiveness.

Japanese Software Crisis

Japan faced a software crisis due to a shortage of qualified software programmers and reliance on imported software. The government proposed amendments to copyright laws to address the issue.

BTRON and SIGMA Projects

BTRON aimed to create an open operating system, but faced challenges and collapse. The SIGMA project focused on Unix workstations, leading Japanese companies to transition to Unix and customize it heavily.

PC-98 and I-Mode

NEC's PC-98 dominance was challenged by foreign-made software and hardware in the 1990s. NTT DoCoMo's I-Mode mobile internet service became popular but failed to expand globally, impacted by the rise of smartphones like the iPhone.

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