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Silicon Samurai by Tom Forester, Blackwell Business, pp 215, £19.99

Turning the Tables by Daniel Burstein, Simon & Schuster, pp 248,
$21 David P. Hamilton

Long before Japan’s economy went flat and its stock market and corporate
profits really headed south, its major technological pillar – the amazingly
successful electronics industry – was showing signs of strain.

You might date the slide back to 1989, when a judge in the US ruled
that Intel could legally deny its Japanese rival, NEC, the right to clone
future generations of its microprocessors, so scaring the Japanese out of
that market. The same year, memory-chip prices started a long, slow slide
to a quarter of their peak value, just as chip makers such as Toshiba had
made massive investments in their production. At about the same time, Sony
began pumping out new products with increasing desperation, only to see
its digital audio tape players, the digital still camera and high-definition
TV flop with resounding splats.

For many in the West, several years of this kind of thing have reduced
the once terrifying Japanese menace in electronics to the Japanese irrelevance
– a collection of companies too slow to follow new technological trends,
unable to decide what to make, and overly focused on low-profit hardware
at the expense of newer, hotter fields, such as software and multimedia.
It’s a world in which the firms that were supposed to take over the computer
industry do not make PCs, their microprocessors or software; in which Sony
and Matsushita are letting US and European companies take the lead in developing
new products; and where US companies have seized back world leadership in
semiconductors.

While such observations are reassuring, particularly to political conservatives
eager to defend the status quo, they do not answer two fundamental questions.
Is the decline of Japan’s technological giants a temporary one? And what
lessons should Europe and the US learn in the meantime? Into this breach
have stepped Tom Forester and Daniel Burstein, authors of two books that
try to make sense of all this.

Forester, a lecturer at Griffith University in Queensland, Australia,
unfortunately does not try very hard. In fact, Silicon Samurai is nothing
short of bizarre, since Forester writes as if he either does not know or
does not much care about the decline of Japan’s technology sector.

For instance, he heaps praise on Japan’s 25-year investment in high-definition
tele-vision – a fiasco that saddled Japanese companies with products built
to an immediately obsolete analogue standard – as an example of uncanny
foresight that poses a huge threat to the West. At the same time, he disparages
the surprising US breakthrough in digital high-definition broadcasting as
‘untried and untested’ and so unlikely to succeed. He insists that ‘Japanese
software producers will soon dominate their own market’, when in fact Microsoft,
Lotus Development and their American competitors are on the verge of annihilating
what’s left of Japan’s PC software industry.

Where he’s not flat wrong, Forester is plain sloppy. For instance, he
attributes an observation to ‘Japanese journalist Bungei Shunku’, which
is the name of a monthly magazine, not a person. By the time Silicon Samurai
winds up few readers will care much what he has to say.

Burstein, who focuses on the US-Japan relationship in general rather
than on technology in particular, fares much better. He begins by conceding
the difficult state into which many Japanese industries have fallen, and
credits many American firms for retrieving from Japan the lead in areas
such as telecommunications and semiconductors by improving quality and efficiency.

Yet those successes are not the whole story, and Burstein points out
that Japan’s underlying strengths are likely to serve it well over the long
term, even if its companies are at a disadvantage now. Given Japan’s prowess
in basic manufacturing, a highly educated workforce, and unwillingness to
lay off workers for the sake of corporate efficiency, ‘even the best among
America’s corporate stories of recent years is rarely an unqualified success’,
he writes.

Take, for instance, the much heralded next generation of consumer electronics
– so-called multimedia devices that are supposed to marry computers, televisions
and telephones. A variety of firms in the US, such as AT&T, Apple Computer
and smaller start-ups such as 3DO and General Magic have clearly set the
pace in designing and marketing multimedia devices. Yet when it comes to
manufacturing, these ‘successful’ companies have turned to the skills of
firms such as Matsushita and Toshiba.

Such a division of labour, which could amount to exporting manufacturing
jobs to Japan, is not necessarily healthy. That’s why Burstein recommends
a Machiavellian strategy in which the US encourages Japan to invest in local
product development and manufacturing facilities, beefs up its own spending
on technology development and pushes its own companies to invest in the
manufacturing base. In short, he says, the US should welcome rather than
fear Japanese investment.

Turning the Tables does get a bit mushy when Burstein puts forward a
rather naive proposal for a US-Japanese ‘economic com-munity’. This giant
free-trade zone, he says, would combine the strengths of both societies,
harnessing Japanese skills and investment to rebuild US manufacturing while
giving Japan a shot at world leadership and better access to American creativity.

He may also understate the extent to which changes in Japan – including
its recent political upheaval and a budding inclination to concentrate on
consumer rather than producer interests – could undermine the very strengths
he lauds. Nevertheless, his book is a fascinating primer on the state of
Japanese affairs, and a fair warning to anyone inclined to take Japanese
decline as a permanent state of affairs.

David P. Hamilton reports on technology in Japan from Tokyo for The
Wall Street Journal.