[UPDATE] Special Interview - Transforming Advanced Japanese Technology, such as FeliCa and QR Code, into International Standards

International standards and technical standards play an extremely important role in the commercialization of technology and the development of new products that offer enhanced added value for users. In addition to the development of technology, Sony has also focused its efforts on standardization initiatives. This policy reflects the company's determination to provide enhanced benefits to consumers by effectively incorporating the added value created by technology into a wide range of products and services. Setsuo Harada, who heads Sony's Standards and Partnership Department, has earned widespread recognition for his contributions to the development of international standards based on advanced Japanese technology, including technology for contactless IC cards, such as FeliCa, and the QR Code. In October 2008, he received the 2008 Prime Minister's Award for the Industrial Standardization Project.

In the past, many Japanese companies, including Sony, excelled in the strategy known as "de facto standardization." Their approach was to create products far more attractive than those of their competitors, enabling them to win such overwhelming market share that their products gained recognition as unofficial standards. However, it is becoming increasingly apparent in recent years that this no longer ensures survival in either domestic or overseas markets. The turning point came in 1995, when Japan signed the Agreement on Technical Barriers to Trade (the TBT Agreement). Adopted by the World Trade Organization (WTO), the TBT Agreement requires that existing international standards be adopted as national standards wherever appropriate. Its purpose is to prevent the evaluation procedures used to ensure compliance in individual countries from becoming barriers to global trade caused by the proliferation of different standards. Under the Agreement on Government Procurement, which was also introduced by the WTO, international standards must also be applied to industrial products procured by government agencies. These changes ensured that companies ignoring international standards could no longer gain large shares of international or even domestic markets.

Harada first became involved in Sony's international standardization activities in 1991. In 1992, he established the Technology Standards Committee with the support and encouragement of then Deputy President Ken Iwaki. Standardization organizations were subsequently formed in the United States in 1992 and in Europe in 1993. Sony now had an international standardization structure spanning Japan, North America and Europe.

"No other company in the world had an organization like this," recalls Harada. At that time, most companies in Japan and throughout the world relied on de facto standards to attain market share. However, Harada had already concluded that de facto standards would not guarantee survival in the 21st century and was among the first to recognize the importance of international de jure standards established by international standardization organizations. He established an internal organization to coordinate Sony's response and began to visit departments within Sony to raise awareness of the importance of international standards. Harada's vision of the 21st century steadily gained acceptance throughout the Sony.

One of the most notable examples of Sony's international standardization efforts relates to the Near Field Communication (NFC) technology that it developed in collaboration with Philips Semiconductor (now NXP Semiconductors). The FeliCa contactless IC card technology, which is used in passenger ticketing systems, including East Japan Railway's Suica system, and e-money systems, such as Edy, is a subset of NFC technology. The use of contactless IC cards had been increasing gradually until the technology was adopted by East Japan Railway for its Suica system a few years ago. Since then the pace of adoption has been extremely rapid. FeliCa technology is currently used not only in the Suica and Edy systems, but in a variety of other contactless IC card applications. However, this success would not have been possible if Sony had not been granted an international standard for its technology.

Because of the WTO Agreement on Government Procurement, FeliCa needed to be recognized as an international standard before East Japan Railway could adopt it for its contactless IC card system. Unfortunately, Sony was forced to abandon its attempt to register FeliCa as an international standard for contactless IC cards, in part because of opposition from European companies. Harada refused to give up, however, and instead tried another approach. He decided to seek approval for FeliCa as a standard not for contactless IC cards, but for Near Field Communication (NFC) technology. This time he was successful, and the way was open for East Japan Railway to adopt FeliCa. Harada's determination to gain approval for FeliCa as an international standard was driven by his awareness that adoption by East Japan Railway would be more significant than its adoption by an ordinary company.

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