Japan's Computer and Communications Industry: The Evolution of Industrial Giants and Global Competitiveness

By Martin Fransman | Go to book overview

3 The Evolution of the Japanese Telecommunications Switching Industry

CHAPTER OVERVIEW

The chapter begins with an examination of the transition from electromechanical crossbar switching to electronic space-division switching. The introduction of the latter in Japan is compared with that of the world leader, AT&T. How far behind were the Japanese? How did they manage to catch up?

Attention is then turned to the development of digital time-division switching which, together with events in the USA, created new market opportunities for the world's major switching companies. How did the responses to the new technologies and markets of companies like AT&T, NTT, Northern Telecom, NEC, and Fujitsu compare? How was Northern Telecom able to succeed in the US market, and why did the Japanese companies fail?

NTT's co-operative development of its two digital switches, the D60 and D70, is then analysed. How did the form of organization for this development--controlled competition--work? What were the costs and benefits for NTT and its suppliers, NEC, Fujitsu, Hitachi, and Oki? How did NTT go on to use these switches to help develop one of the most modern digitized telecommunications networks in the world?

In the following section, the importance of competences, the company's concept of the company, and national innovation systems are examined. This examination involves a detailed comparison of ITT, NEC, Fujitsu, Ericsson, Philips, and Motorola. The influence of national systems of innovation is analysed by comparing the Japanese and US systems analysed earlier with those of France and Britain. Why did the French system produce the largest central office switching company in the world, Alcatel, while in Britain the leading companies' switching activities were in effect absorbed by Siemens?

What have been the effects of corporate competences, structure, and strategy on corporate performance in the case of central office switching companies? How strong have the earliest corporate entrants been compared with later comers? These questions are examined on the basis of the major companies.

The final section contains an analysis of the decision-making process involving NTT's co-operative development of the next-generation ATM (asynchronous transfer mode) switch. What were the main determinants of the crucial decisions? In developing this switch, NTT transformed controlled competition so as to include Western companies. How did they respond to Japanese trust-based obligational relationships, co-operating with Japanese companies which were simultaneously competitors in global markets?

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