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Akihabara, in central Tokyo, is often known as ‘Gadget City’. Street
after street echoes to blaring music advertising shops selling the latest
consumer electronics gadgets: washing machines that run on fuzzy logic,
ever smaller autofocus cameras, super-wide TVs, buttonless VCRs, this year’s
personal stereo design. What sells in Akihabara today will be on sale in
a few months’ time in shops around the world in New York, London and Los
Angeles.

And, equally, what does not sell in Akihabara almost certainly will
not sell anywhere else. The Japanese are gadget-crazy; if they won’t buy
it, who will? The trouble, for companies like Sony, Matsushita (parent of
JVC, Panasonic and Technics), Sharp, Canon and Sanyo is that right now not
much is selling in Akihabara. The salesmen yell, but people pass by. Sony’s
new MiniDisc players (and its almost invisible rival, Philips’s Digital
Compact Cassette) are barely moving.

In busier times, the salesmen wouldn’t have to yell – they’d be too
busy counting out change. But having bought one TV, VCR, camcorder, personal
stereo, hi-fi, PC, washing machine, does a household need another? Consumer
electronics corporations know they don’t, and desperately want to find the
next big product. The camcorder was the last one, and that was a few years
ago. Sega, one of the two giants of the games industry, has found only slow
sales of games for the new medium, CD-ROM. Nintendo, the other contender
in the games market, is ‘still evaluating’ them.

For the past 15 years, the industry has scarce-ly had to think as success
followed success. There was the Walkman, the VCR, the CD, the camcorder.
Now, though, people are stumped. Ask executives to predict what will be
selling 15 years from now and they look blank: 15 minutes would be a more
reasonable time frame. Everything is stalled, awaiting the discovery of
the great tie-up that will unite everything – computers, communications,
entertainment and recording. As obsessively as tramps awaiting Godot, they
are waiting for the arrival of multi-media – or, as one American observer
caustically calls it, ‘that zero-billion dollar industry’.

The reason for the bile is that multimedia is about as revered, and
sought after, as the Holy Grail has among medieval knights. In the same
way, products and applications claiming in some way to be multimedia, or
to use it, are as plentiful as splinters of the True Cross. Most are about
as authentic.

So what is multimedia? ‘People just say the word, but I can’t tell you
what it is,’ admits Munehiro Umemara of Sega. And at Canon, research manager
Takashi Nakagiri says: ‘We’re working on creating multimedia products .
. .’ before adding, ‘though nobody knows what it is.’

The general idea is that multimedia marries digital technology with
visual or aural data to create some whole which the user can control: movies
where you decide the ending each time you watch it or computer enyclopedias
that offer information as text, video and sound. But some have tried to
claim that games consoles which play music during the game, or frequency-controlled
light shows hooked up to music outputs, are ‘multimedia’. The purists, and
the debt-ridden public, remain dubious.

Some people in Japanese consumer electronics companies openly admit
that they wish that they knew what multi-media was, and that they had some
products. Akira Nagano, head of Matsushita’s public relations, says: ‘Sooner
or later the computer will come into the household, and that should combine
with audiovisual stuff. Then we’re confident of catching up.’

Targets without aim

Matsushita’s research and development teams reckon that the domestic
and office computer of the late 1990s will have a 64-bit microprocessor
(at the moment, most are 16 or 32-bit), 64 megabytes of RAM (most current
models have up to 10 megabytes) linked to a high-definition screen with
twice as many lines as present ones (1250 rather than 625). ‘That’s our
target for the 1990s,’ says Nagano. ‘Though we don’t have a concrete concept
for what it will do.’

But some companies do have a more solid grasp and are drawing on multi-media
for some of their new products – without saying so. Sharp stands out.
It has made early versions of its Newton, a sort of portable personal organiser-cum-computer-cum-telephone,
for Apple; more sophisticated versions are in the pipeline. The Newton can
quite clearly be labelled a multimedia product. But Shoei Kataoka, executive
director of Sharp, has some other tricks up his sleeve. Take, for instance,
Sharp’s latest camcorder, the Viewcam, announced last October and on sale
since spring at a price of 210 000 yen (about £1310). It seems gimmicky:
rather than following the scene through an eyepiece, you watch it on a
small screen. It has sold well – Sharp says it now has 25 per cent of the
camcorder market, a dramatic increase on the 5 per cent or so before the
Viewcam’s launch. But to Kataoka, that’s only the beginning.

‘The Viewcam can have multimedia applications,’ he explains. ‘After
all, it’s a display terminal. But I don’t think the Japanese consumer knows
about its potential for multimedia.’ But now Sharp is selling an attachment
that plugs into a socket – easily overlooked – on the machine, and turns
it into a portable TV. Future versions could plug into computers too, or
act as go-betweens. To Kataoka, multimedia is what you make it. ‘A high-tech
product always has a rather short life – we try to improve it. Take the
electronic organiser. The fundamental idea is a cal-culator. We developed
it to have more functions.’

However, he has no illusions about what making money out of multimedia
really requires: ownership of the software. ‘Frankly speaking, we (Sharp)
are very poor in software. We have been oriented towards hardware so far,
but we now realise that software is getting to be very important in industries
related to informations, so we have a plan to strengthen our software.

‘Other Japanese companies have the same weakness. Why? It’s a very important
question, but difficult to answer. Perhaps because so far we’ve been keen
on manufacture but not the application, on the use of the device. But to
make the best use of a device the software is important. Also, so far we
(Japanese companies) have mostly produced stand-alone devices, but now we’re
very conscious that the networked system is important.’

In this, you would expect Japan’s two best-known ‘software’ companies,
Nintendo and Sega, to be ahead of more traditional manufacturers. For
two companies so closely allied in the public perception, the contrast
between their headquarters could hardly be greater. Nintendo is based in
Kyoto, a quiet city of ancient palaces, shrines and gardens. There is a
car park and a spacious office block. Inside, the design suggests Zen: everything
in its place and time. On the office roof is a tennis court and a view of
a Buddhist temple on a nearby hill.

Sega sweats away in the middle of bustling Tokyo. The road outside its
offices is constantly jammed with traffic because of a level crossing 50
metres away. The offices are open plan, with a constant buzz of conversation
and stickers all over the walls. Very Sonic, very young. Nintendo’s president,
Hiroshi Yamauchi, considered moving the company to Tokyo about ten years
ago but decided not to.

At Nintendo subtlety is the rule. It gives the impression of being in
positive retreat from new technologies, while Sega trumpets ideas like multimedia
and virtual reality, and the widening of its international links with
the phone company AT&T and the American entertainment company Time-Warner
(which has not greeted Nintendo warmly since losing a legal battle over
whether Nintendo could call a game called Donkey Kong without infringing
copyright on the film King Kong).

Talk to Hiroshi Imanishi, Nintendo’s general manager (and second-in-command
to Yamauchi), and he sounds disdainful of CD-ROMs, interactive networks
and almost anything developed after about 1987, multimedia included. ‘Everybody
says there should be a multimedia age coming soon, but we can’t see any
picture of it. We can’t see what they are trying to sell, or what they are
talking about. We always try to stand in the same place as the public.’

Imanishi has a stern, patrician air about him. It’s clear that the decisions
now filtering down from the top of the company are aimed at protecting profitability.
Nintendo is the fourth most profitable company in Japan – despite only
employing only a few hundred people. That has been achieved by acting principally
as a quality control agent on its software suppliers and extracting a large
royalty for doing so. Getting more closely involved in developing new technologies
that might get left on the shelf would bring substantial financial risk.

Talking to ¿ìè¶ÌÊÓƵ, Nintendo sounded reluctant to try. ‘For games
designers, CD-ROM is attractive, but it also has defects,’ Imanishi says.
‘People advertise CD-ROM as the next generation. I just can’t see that.
We’re evaluating if they can be really useful for games or not, to be really
big business or not.’

Well, then, what about the Nintendo network, in which the concealed
com-puter-compatible socket under every Nintendo console could be used to
link all the machines to the telephone network, allowing nationwide interactive
games, home banking, betting, and more? ‘True, we have computer terminals
around with a port so they can be connected to the phone network,’ says
Imanishi. ‘But the question is, is there any software application for it?
So far Nintendo has only been about games, but we haven’t been able to come
up with any games for the network. In Japan we have done some stockbroking,
home banking, betting, between remote areas. But can we get good software
that people are willing to pay for? In principle, we’re already in position
to expand around the world. But those questions have to be answered first.
Though we are looking at perhaps using satellites.’

Multimedia futures

So what does he see Nintendo doing in 2010? ‘By then, the multimedia
age must have arrived. But there are two important points to solve: first,
the value of software. In video games we don’t compete on how cheap the
cartridge is, but on what its added value is – how much people enjoy themselves
using it. People have to realise that software is very valuable, and software
is vital for multimedia.

‘Secondly, hardware manufacturers tend to be the ones advertising multi-media.
But they think hardware should be expensive, and software cheap. As long
as they’re trying to dictate the software’s cost, multimedia can’t happen.’

But this passive approach does not seem to be bearing fruit. Before
Sega launched its 16-bit Genesis console for Christmas 1989, Nintendo had
97 per cent of the $5.3 billion games console market in the US. Now Sega
has 40 per cent overall; analysts believe that it has 60 per cent in the
16-bit market, and it is already planning a 32-bit version, possibly for
release next year.

And Sega is moving quickly towards even newer technologies. In July,
it signed a deal with Martin Marietta, the American defence and aerospace
company, and W Industries, a British designer of virtual reality systems,
to work on joint projects. Some of the fruits of Sega’s in-house work on
virtual reality can be seen in an amusement park southwest of Tokyo, past
Yokohama. At the centre of a huge room filled with the ersatz sounds of
motorbikes and shooting, and the very real squeals of pleasure of children,
is a row of eight video screens, each about 1.5 metres square. In front
of each player is what looks like the shell of a Formula One car. Climb
in, pay 500 yen and you and seven others can start racing around a virtual
racetrack, which you view as if from a car cockpit. Suddenly you’re Nigel
Mansell. As the car bucks and tilts with the camber of the road on the screen,
you speed up and brake and steer, aware all the time that the cars in front
of you are being driven by unpredictable people, not a programmed computer.
And with Sega investigating networking in a joint venture with AT&T,
it might not be too long before cut-down versions are available in the home,
with multiplayer games where the players don’t leave their living rooms.

The subtlety of Nintendo, though, is that while Imanishi was being dismissive,
the company was tying up a deal to develop a 64-bit virtual reality system
with Silicon Graphics (which worked on the special effects for Jurassic
Park) and MIPS Technologies, an American chip manufacturer. The intention
is to have it in arcades by 1994 and in homes by late 1995.

But both companies could face serious competition much sooner. Trip
Hawkins is a Californian who founded one of the most successful independent
games companies, Electronic Arts. Now he has founded 3DO, which is licensing
the design of superfast consoles that will play games, CDs, films (on CD),
show digitised photographs and, in time, link to VCRs, computers and the
phone network. Matsushita was one of the first to buy a manufacturing licence.

Once 3DO starts selling the consoles, priced at about $700, in the
US this Christmas and in Akihabara and the rest of Japan next spring, Hawkins
reckons that Nintendo and Sega will be pushed out of the home market. ‘To
make a good cartridge-based games machine (like Nintendo’s and Sega’s) you
basically have to give a computer a lobotomy,’ he says. ‘You can’t make
a good CD player from that.’ In comparison, the 3DO machine is more like
a member of Mens on smart drugs, with a video image processor, two dedicated
graphics processors, a sound processor, 32-bit central processor, double-speed
CD-ROM player and multi-tasking operating system. Even the demonstration
models using incomplete games software make standard games consoles look
as agile as doorstops.

Time to go home

But 3DO, Sega and Nintendo are not the only companies who think that
the home will increasingly be the only consumer battleground worth fighting
over. The mainstream electronics companies have seen how the focus of attention
has changed from the office to the home. For example, Matsushita reckons
the household of the future will be computer-controlled, so you can call
the kitchen before leaving work and tell it to put the rice on. The company
once toyed with the idea of a little cleaning robot which would lurk in
your living room, appearing while you were asleep or out to vacuum and clean
up. The idea stalled when the researchers looked at their own tiny houses
and decided there would be no room for it. Japanese people wouldn’t want
it, ergo, the world wouldn’t. It’s a reminder that Japanese logic is not
infallible.

But still the home is attractive, especially to those companies which
normally invade it all the time. NTT, the Japanese equivalent of British
Telecom, and NHK, the public broadcasting company, have enormous research
laboratories working on projects whose basic premise is that in future Japanese
will want their homes linked by fibre-optic cables to every business in
the country, able to receive high-definition pictures from all over the
world which they will display on 40-inch wall-mounted flat screens. NTT
even has a demonstration house to show off the appropriate technologies.
But it conveniently ignores the fact that NHK’s Hi-Vision high-definition
screens belly-flopped in the market: only a few thousand have been sold.
Nor has NTT’s provision of high-speed digital lines been taken up by any
more than a few companies. Like consumers in Akihabara, they look at what’s
on offer and decide it isn’t solving their problems.

Robots, though, look more promising because the technology is advancing
fast enough to make them small and affordable enough to take on new roles.
A government-funded project coordinated by Seiuemon Inaba, the 68-year-old
founder and president of the world’s largest robot manufacturer, Fanuc,
intends to produce robots small enough to be injected into the arteries,
Fantastic Voyage style, to clean up fatty deposits and other damage on the
walls of the major blood vessels. That would require machines no bigger
than a millimetre in diameter. A concurrent aim is to produce robots about
5 millimetres in diameter which could be swallowed, in order to inspect
and cure diseases of the throat and intestine.

‘This requires machining technology that no company has at present,’
says Inaba, whose company usually makes machines ranging in size from a
chair to a truck. ‘It gives me a headache, being president of this project.
If I was forty years younger I would be very keen to develop these things.
In fact, our young researchers are very excited.

‘It’s not a question just of shrinking parts – the machining is entirely
different. Some companies think the way to do it is to grow them by semiconductor
technology, but I’m doubtful about that, privately.’ The indication that
he thinks it can be achieved, and that it is a worthwhile goal, comes through
what he won’t say: how Fanuc is tackling the problem. ‘After three years,
we have a grasp of what we’re doing,’ he says evasively. ‘This year will
be vital.’

No doubt the hawkers in Akihabara would agree heartily. Except they’re
busy shouting: ‘Prices down! Buy now! . . .’