An Empirical Study of Contrasting IoT with IT: Evidences of Differences Drawn from Japanese Experiences

Abstract

By contrasting IoT (Internet of Things) with IT (Information Technology), various evidences of the difference between them are discovered by our empirical and case studies. For empirical evidence, a comparison is made between the personal computer as representing a case of IT and the automobiles as representing a case of the future IoT, since the self-driving of cars is discussed quite frequently nowadays. Based on their patenting behavior, the degree of modularization is measured, and effects of digitalization on modularization are found out to differ between PC and automobile industries. Similar modularity analysis is employed to sub-module suppliers, and they are found out to be integrative rather than modularly structured, because analogue technologies are essential at the level of sub-module supplying. Through our modularity analyses, it becomes clear that a digitalization brings about a modularization, and will eventually bring an IoT evolution. In order to illustrate the evolutionary process from digitalization to internetworking via modularization, we will investigate a chronology of the machine tool development in Japan ever since 1975. In order to illustrate the evolutionary process of becoming interconnected, we will make a study on a construction machinery manufacturer, i.e. how a manufacturer can go downstream into a service innovation. These case studies will show clearly that the process of upgrading of ITs into an IoT evolution is incremental by its nature and is additive in its essence, i.e. the value is added constantly. Therefore, an essential feature of IoT innovation is “creative accumulation” rather than “creative destruction.” In this context, IoT innovation might be favoring some Japanese companies in terms of its components module suppliers as well as its system integrators. For an illustration of the Japanese competiveness of IoT module suppliers, two case studies of mobile sensors and of actuators are conducted. Through these case studies, the M & A (merger and acquisition) is found to be effective in terms of adaptive capacities of extending their core competences into changing fields of technology applications. This finding is far from the conventional wisdom about past Japanese strategies in which an extension was made by technological diversification rather than M & A. For the concept of creative accumulation to be implemented in the context of IoT evolution, a cautious strategic positioning rather than that of being different is necessary and effective. This argument is confirmed by case studies of Japanese strategies in terms of management of international M & A, of going downstream into a service innovation, and of R & D strategy of securing an independence from dominant suppliers. This is a good evidence that this IoT environment might come to favor again the emerging style of management by some Japanese companies. In order to summarize these evidence-findings, at the end of this paper, a comparison in perspectives on innovation is made between IT and IoT innovations. And it is discussed that IoT innovation is going beyond the Schumpeterian formulation of innovation.