JIN-525 -- 5 Things We Learned In 2010

[jin at mailman.japaninc.com]

J at pan Inc Newsletter
The 'JIN' J at pan Inc Newsletter
A weekly opinion piece on social, economic and political trends in Japan.
Issue No. 525 Friday, December 24, 2010, Tokyo

5 Things We Learned In 2010

1. Facebook is the new Google, Google is the new Microsoft

There's no rule that one or two tech companies should always command the
spotlight, but that seems to be the way things work out. This year the two
companies competing head-to-head for your attention were Google and
Facebook. But the cool tech cachet that once characterized the simplicity
and user-first ethos of Google has been replaced by a company burdened by a
high stock price that must be protected at all costs, and overloaded with
billions in cash reserves begging to be used for multi-billion dollar
acquisition attempts (Twitter, Groupon, both failed), expensive experiments
(robotic cars), and mega real estate purchases (New York building for $1.9
billion). Meanwhile, as the company's Android OS successfully penetrates the
mobile space in the same way Windows once spread like a hardware-agnostic
virus, the company's primary product, search, flounders under the weight of
an extremely complicated search tool laden with so many features, simple
search has now become a test to see if you're as smart as Google's engineers
at managing complexity.

On the other side of Silicon Valley, Facebook continues its march toward one
billion users, and its CEO has captured the imagination of the mainstream
with sticky user experiences and relevant services consumers can use "now"
rather than an endless array of "beta" products designed for engineers to
love and end-users to ignore (yes, we mean you, Google). At this point it
seems clear that Google's lack of focus, ironically fueled largely by its
success and growth, has put it into the conservative, sloppy generalist
position usually occupied by Microsoft.

2. Zuckerberg foolishly buys into the China hype

Facebook founder Mark Zuckerberg is smart to brush up on his Mandarin, and
his recent visit to China will likely help him to understand what the
competition looks like on a much better level. But while China is
undoubtedly Asia's biggest growth engine in terms of pure numbers, the more
transparent and easier to penetrate markets of Japan and South Korea offer
far more near-term opportunity for the likes of Zuck.

3. Clone Wars: Groupon is more feature than product

Groupon's group buying model is a hit. The problem is that the company's
business model contains little in the way of "secret sauce." The easily
duplicatable model has been cloned many times over in Japan, Korea and
China, and the clones are doing quite well. It's not that Groupon lacks
Asia-market-savvy, it's just that its business is too easy to copy.
Historically, in the tech business this means that your company's strength
is more of a feature than a full-fledged product (which is why Google came
knocking). Groupon should enjoy these halcyon days, because the clones wars
won't end any time soon.

4. Japan is not prepared to go international, yet

Despite the public pitches to internationalize and use more English in Japan
by the CEOs of Rakuten, Softbank, and Uniqlo, based on the lukewarm response
domestically, it now seems clear that the Japanese business community is
quite content to continue operating in Japanese, secure in a warm Galapagos
bubble of predictability and process. The situation may seem static, but
Japan will change it's position when the pain point becomes unbearable.
Which leads us to...

5. South Korea, not China, is Japan's top business rival

If you're South Korea, you're more than happy for the world to tout China as
the major Asian tiger to be on the watch for—all the better to give the
ascendant giant time to gather more strength. In almost every
respect—culturally (movies, music, fashion), language (Korean students seem
to have a knack, that far surpasses their neighbors, for attaining near
native-levels of English proficiency), and technology (the list of wins is
quite long)—South Korea is poised to become the new fresh faced dynamo of
Asia, a position that Japan has enjoyed for some time, at least in the eyes
of the West. From automobiles, to software, to hardware, if Japan intends to
keep its position as the region's tech leader, it would do well to focus
more attention on South Korea than China.

-Adario Strange
adario at japaninc.com

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