Lessons of the Motorola-Hitachi Battle
Pride goeth before a fall, they say, and so might underestimating Motorola. That twist on the Bible arises because Motorola and Hitachi are involved in a high-stakes legal tangle that says a lot about the competitive world to come.
A federal appeals court in Austin, Tex., ruled March 29 that both Schaumburg, Ill.-based Motorola and Tokyo-based Hitachi had infringed on each other’s patents in producing microprocessors--powerful devices that contain the guts of a computer on a single chip--and ordered them to stop selling the products.
Now the companies have until June 18 to settle the case by licensing each other’s patents; Motorola reportedly used memory circuits that Hitachi had patented, Hitachi used Motorola’s processor technology.
The case is important because the microprocessor in question, the Motorola 68030, is the heart of the Apple Macintosh and also computers of Sun Microsystems, Hewlett-Packard, Unisys and others. The expected settlement will avert a serious threat to those companies.
Beyond that, the case is significant because “a claim by a Japanese company in the microprocessor area has been upheld for the first time--which signals a degree of innovativeness,” says Michael Borrus, director of the Berkeley Roundtable on the International Economy and author of “Competing for Control--America’s Stake in Microelectronics.”
And that has aroused emotions on both sides of the Pacific. On one side there is fear--that Hitachi might win access to Motorola’s microprocessor technology. “The microprocessor is one product where U.S. firms are totally dominant, and let’s keep it that way,” says an electronics industry executive.
But across the Pacific, the case is arousing “overweening pride in Japanese companies. They believe that the U.S. is in serious decline, and even a Motorola isn’t as powerful as it used to be compared to a Hitachi,” says Sheridan Tatsuno, head of NeoConcepts, a consulting firm in Fremont, Calif., and author of “Created in Japan” a book about Japanese ambitions to achieve computer industry leadership in the 1990s.
“They are determined to do in computers in the 1990s what they did in semiconductors in the 1980s,” says Tatsuno, referring to the fact that NEC, Hitachi and others took leadership in memory chips away from U.S. companies.
The challenge is serious. The computer business worldwide, at $150 billion in sales, is five times the $30 billion semiconductor business--and computers are the key to just about every other industry.
So what should be the U.S. response? Cool heads and skilled hands. U.S. industry should continue developing new products and keeping up with changing technology--as it has been doing. And Americans should check their emotions, because fear is uncalled for.
The fact is, Japanese companies have been trying for years to make gains in computers and haven’t gotten very far except in their home market. U.S. computer makers hold a healthy lead in all other markets.
Sure, competition will heat up. Having benefited from a government-industry research project, Japanese computer makers will offer innovations in artificial intelligence and parallel processing in the next few years.
But so what? U.S. companies possess those innovations, and more. “Japanese companies will make products, and if they sell them, good luck to them,” says Neil Davenport, president of Cray Computer of Colorado Springs. That’s the new company of inventor Seymour Cray, who two decades ago founded Minneapolis-based Cray Research--still the world leader in supercomputers.
Davenport’s point: Competition should be met with confidence, especially when there’s a lot to back up the confidence. For all the talk of short-term thinking, for example, U.S. companies in electronics, computers, pharmaceuticals and biotechnology spend more on research and development than the companies of every other nation.
And there’s no better case in point than Motorola, a company with $10 billion in sales, that invests proportionately more in R&D; than Hitachi, which has $49 billion in sales. While the current court case involves one of its microprocessors, Motorola is producing more powerful, faster-operating versions that are free of patent questions.
Having made itself as strong in manufacturing as any Japanese company--reducing production time for a cellular phone from a week down to two hours--Motorola sells phones in Japan. And it sells semiconductors, having strong enough technology of its own to form a joint venture with Toshiba, a competitor of Hitachi.
Why did such a paragon infringe a patent? Because it ran afoul of Japan’s patent laws, which are very different from those of the United States. That’s not an excuse, simply a sign of things to come: Japanese patents will be a new factor to reckon with in global competition.
The upshot: That Japanese companies, as Sheridan Tatsuno writes, are becoming more creative and inventive, should put U.S. industry on its toes. But that Japanese companies are puffed with “overweening pride,” as Tatsuno also reports, should bring a quiet smile. Pride goeth . . .
