The 22nd Installment
“Thoughts on Amazon Kindle’s Landing in Japan”
by Junfu Chen,
Assistant Professor, Masters Program of Innovation for Design and Engineering
Recent articles in the Nihon Keizai Shimbun newspaper have had eye-grabbing headlines like “Electronic distribution waves hit the publishing industry,” “The publishing business is changing,” “Regaining ground lost by Internet book sales” and “E-book free-for-all.” These articles cite the epicenter as Amazon.com, a major Internet sales company in the United States. On October 19, 2009, the company launched its e-book display device Kindle in 100 countries, including Japan, and this seems to have significantly impacted publishing and other related industries in Japan.
Kindle is a superb product, adopting a black-and-white electronic paper method for rewriting the screen, allowing books, newspapers, magazines and other contents to be downloaded in 60 seconds via the third-generation mobile phone network. Sales of the product have been buoyant since its U.S. launch in the fall of 2007. The current release in Japan and other countries is the second-generation Kindle.
However, as is well known, Internet distribution of publications has been attempted in Japan, exemplified by KDDI which began distribution of book contents via its EZweb in 2003, and Sony which launched its e-book device LIBRIe in North America and Europe before the entry of Amazon.com. According to a report in Nikkei Electronics magazine on disassembled products, the first-generation Kindle was a mere aggregate of components for performing the basic functions of an e-book device. Elaborate design concept only began with the second-generation product, even though the first-generation products of Japanese companies were already designed in such a way.
In short, Kindle should not be a surprising innovation for Japanese companies, in terms of business model, product innovation, technological capability or product development capability. Despite this, the conventional Japanese content industries sounded alarm at an event similar to the return of Commodore Perry’s black ships, while electronic device companies that had withdrawn from the e-book device market returned. Some manufacturers have also begun developing colored electronic paper, and declared they will make inroads into the market with more advanced technologies, though they have not yet officially expressed their intent to participate.
It is not hard to understand the sense of danger pervading the contents industries and enthusiasm in the electronic device industry regarding technological innovation. But how could an Internet sales company like Amazon.com successfully develop contents as well as the hardware to play them on? Why did Japanese companies fail to develop this wonderful business model? Why are Japanese companies far behind overseas companies in terms of impact from innovation and profit, even though they excel in scientific and technological abilities and product development abilities? It seems that we should deeply consider these issues.
The purpose of innovation management is to bring about maximum added value for society and business, through technologies and products. There have been two conventional perspectives on innovation management. One looks at innovation as a commercialization process that continually follows technological development, and the other places emphasis on the value chain involving market, organization, strategy and business development, with technology at the core. A knock against the former is that it overemphasizes technology as the major factor leading to innovation, preventing the systematic nature of innovation from being understood. On the other hand, the latter encompasses the numerous elements of innovation, but tends to underestimate technological factors. Though both have their pros and cons, they offer effective perspectives when addressing the above and other issues concerning innovation.
In view of the above, it is recommended that students who are interested in innovation use the case of Kindle’s landing in Japan as an exercise, and compare it with innovations attempted by Japanese companies. Analyses on familiar examples not only help deepen knowledge about innovation, but could also help find clues for Japanese companies for breaking through their current situations.