Whats the difference between Apple/IBM vs Sony/Panasonic/NEC?

Gerhard:

Profit and growth. Apple and IBM grow and are highly profitable. Sony, Panosonic and NEC have no growth and no profit for 15 years – read here: http://www.eurotechnology.com/2013/05/20/japans-big-8-electronics-giants-fy2012-results-announced/
for more detailed analysis, read our Report on Japan’s electronics sector

Answer:

Gerhard, we know about the difference in profitability and growth. The question is, what made such a difference in profitability and growth

Gerhard

there are many down-stream issues, e.g. acquisition of cloud startups, execution etc. Much of this is summarized in an excellent talk by Masamoto Yashiro, which I have written up here: http://www.fasol.com/2013/10/19/masamoto-yashiro/

There are:
1. superficial reasons, like YEN-rate, interest rate, global recession etc
2. execution and management issues, the kind of stuff you learn at Business Schools
3. the big underlying issues

the big underlying issues are brains (=hardware) and education (=operating system and software for those brains).

There are many fantastic Japanese companies. In a free market, its no surprise that companies are born and others die. Its called Schumpeter’s creative destruction. In a way its more surprising that companies can survive so long with a long-dead business model.

Have you heard about the German company AEG? AEG built the electricity system for Tokyo a long time ago – thats why Tokyo has 50Hz and Osaka has 60Hz. AEG disappeared about 30-40 years ago. There are still some companies today licensing the AEG brand, which is still famous, however, the traditional AEG company disappeared with bankruptcy in 1980. You can read about this here: http://www.csmonitor.com/1982/0812/081250.html

it says:
“Plagued by bad management throughout the 1970s, West Germany’s 10th largest employer overextended itself and became involved in too many loss-making enterprises. It invested heavily in the wrong kind of nuclear technology and its domestic appliances business fell prey to growing competition in a stagnant market.
In the last four years, it posted operating losses of 4 billion marks ($1.6 billion) and despite massive injections of credit from the banks in 1979 and again last year, it did not recover. Mr. Duerr partly blames the worldwide recession and high interest rates for the failure.”

Sounds familiar? thats AEG in 1980.

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