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Epson's precision goal to capitalise on intellectual property

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Lia Timson

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Epson president Minoru Usui models Epson'€™s virtual reality glasses, based on its projector and sensing technology.

Epson president Minoru Usui models Epson'€™s virtual reality glasses, based on its projector and sensing technology. Photo: John Davidson

Steve Jobs must have been very admired in Asia. First China's Xiaomi Technology Founder Lei Jun began emulating his style, now a stalwart of Asian electronics has taken a leaf out of the late Apple co-founder’s book.

“From the earliest days at Apple, I realised that we thrived when we created intellectual property. If people copied or stole our software we’d be out of business."

Quoted in the book that bears his name by Walter Isaacson, Steve Jobs was speaking of the need to protect against software piracy.

In the case of Seiko Epson Corporation president Minoru Usui the lesson applies to determining the company’s true point of difference, and doing away with anything in which it has no proprietary competitive advantage.

Mr Usui joined the printer manufacturer fresh out of university, a top science graduate with great promise. After 25 years as a technology researcher and executive with a company whose name is a play on ‘son of electronic printer’ (son of EP-101, a successful model number), he has began to apply the precision of the electronic components he invented to reshape the 70,000-plus employee corporation.

Little known outside Japan but for its projectors and printers, and Seiko watches, Epson is one of the largest makers of electronics in the world. 

Now it’s undergoing a rebirth in the promise of wearables and robots, all the more interesting for Mr Usui’s single-minded discipline.

Since taking the top job in 2008, in the middle of a global financial crisis the Japanese call the ‘'Lehman Shock'’, Mr Usui has doggedly divested from product lines which, despite bringing in strong revenues, did not carry Epson proprietary technology. In other words, if the product is not dependent on unique intellectual property that is too hard or too expensive for others to imitate, it has to go.

“Anyone can make copies. We do not produce products by simply assembling over-the-shelf components. Anyone can put smartphones and tablets together by assembling them. We have no intention of going down that path," he said.

"Our strengths lie in our ability to create, manufacture, transform and finish the products."

Mr Usui himself led the development of Micro Piezo precision core technology when looking for an alternative to laser printing. It allows quartz to “pump” elements on the surface of silicone wafers to eject ink in a jet effect, hence the term inkjet.

The company is now further applying the technology to as many products as possible, including 3D and textile printers, while the rest, including robots, are also made by hard-to-copy machines built in-house. The company claims rivals can't replicate its processes, from mould manufacturing to line automation.

"If you assemble products you have to make lots of them to make them cost-efficient, the problem is that every other company can do the same and it becomes commoditised - we aim to make products others cannot imitate. Our idea is to go to the very top of the market and stay there."

But the market wasn't so convinced of Mr Usui's precision core strategy in the face of electronic competition from giant Korean and US brands and overall sales took a dive in the three years that followed his business realignment. It was only last year it garnered confidence and sales began to recover.

He told IT Pro he wants to use the company's inkjet and sensing technology - now in robots, smartglasses, fit bands and myriad other gadgets, to change people's lives - be it by printing textiles or monitoring their health - and change manufacturing with 3D printing and by automating anything that doesn't require human intelligence.

Trevor Clarke, partner and lead analyst with Tech Research Asia in Japan, said high-tech innovation is where Japanese firms have performed well over the last few years and continues to be a point of differentiation for the country, especially in manufacturing.

"In stark contrast, those in consumer markets where commoditisation is prevalent have been burnt badly. Think Sony and Sharp with their TV businesses. So it makes sense for Epson to focus on technologies where it has hard-to-replicate expertise, and which present opportunities in growing markets."

Clarke cited robotics and wearables - where Epson has its own Moverio glasses and software development program, as good opportunities for the company, although it is up against established and more agile businesses in Apple, Google and Samsung. 

"In wearables in particular there is already a strong consumer or at least consumerisation flavour to most devices and applications, even in healthcare. So while it will be a growing market globally, price competition will mean margins won’t be high for very long and long-term sustainability of any technology-based advantages will be rare.”

“The challenge I see for Epson is that while it wants to be known for more than printers and projectors - and it does have capabilities in many fields - it hasn’t yet been able to articulate a compelling vision beyond these markets, especially to the global audience it needs to win over.

"Great engineering needs a great story for it to be really successful. This has been an issue for many Japanese firms (particularly those in the established printing business) as they look to diversify and grow beyond the domestic market where brand perceptions can be much stronger and very different from overseas reputations."

The writer visited Epson's installations in Japan as a guest of the company.

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