Even Sony can't save Japan

Japan's army of young high-tech consumers is giving out to an aging population of tech non-buyers

In this story: Corporate 'outsiders' Dismal forecasts RELATED STORIES, SITES

By Kristie Lu Stout
CNN.com Writer

TOKYO, Japan (CNN) -- Burdened by its debt and a change-resistant leadership, there's not much good news coming out of Japan -- even from its pioneering consumer electronics sector.

Japan's high-tech success stories like Sony and NTT DoCoMo are outnumbered by slumbering corporates that have failed to adopt new technology.

On top of that, even the country's celebrated youth market may soon lose their high-tech consumer kick to an increasingly aging population of technology non-adopters.

Corporate 'outsiders'

Japanese pioneers NTT DoCoMo and Sony are lauded for their efforts in innovation and increasing efficiencies, and share a background rooted in "outsider" status.

NTT DoCoMo is led by a group of radical castoffs from parent company Nippon Telephone & Telegraph.

In a country that in mid-1999 had more high-tech toilet seats than PCs, NTT DoCoMo spawned a 20 million strong market of mobile Internet subscribers.

Sony was once branded as a misfit for not conforming to companies connected with the keiretsu -- groups of firms linked through long-standing contractual agreements.

But despite its enduring success, Sony has yet to inspire its mainstream counterparts into action.

"The economic problem does not lie with Sony, but with the small and medium sectors in the economy," says Richard Gibbs, chief economist at Macquarie Bank.

"These are the firms most reluctant to take on new technology and new opportunities."

Japan's small and medium sized enterprises are also limited by a keiretsu-like characteristic.

"I think mainly they are family-based companies in many respects," says Gibbs.

"In many ways, they are constrained because of the tight working relations they have with major manufacturers."

Dismal forecasts

Manufacturers of cell phones, gaming devices, digital cameras and DVD players are facing dismal sales forecasts that even Japan's spend-happy youth market cannot consume into health.

"Digital consumer equipment will see much less growth this year compared to year 2000," says Kunsoo Lee, senior consumer electronics analyst at WestLB.

"The people who buy these products first in the market already have the products. The next stage are the late adopters and they probably won't buy," says Lee.

Japan is also confronting another bombshell to consumption patterns, an aging population that is not looking to spend.

Analysts say the country's demographic patterns will help neither sales of high-tech products nor the search for bold new economic solutions.

Young people can rouse a revolution, but young people in Japan are dwindling not only in number but also in spirit.

"The LDP power structure is increasingly out of touch with the young, educated and mobile sector of the population," says Dibbs.

"I suspect the upper house election in July will only enforce the disillusionment."

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