By comparing the differences and similarities in the development of computers, semiconductors, and software within the single Japanese context, this article looks for patterns of fitness between different technological paradigms and institutional frameworks. Japan's postwar history suggests that a hybrid strategy of national champions and R&D consortia enabled the government to target computers and semiconductors through a policy of controlled competition and cooperation. Partly because of this public–private partnership, in the 1980s Japan's information technology industry established strong international competitiveness. The major force was a small group of large firms characterized by a high degree of vertical integration and a wide range of technologies and products. As the new paradigm of microcomputers emerged, however, Japan's advances in hardware provided little impetus for developing packaged software, and the country's strength in mainframes even constrained the growth of the microcomputer industry. In Japan, both the firms and the government overlooked the new trends of disintegrating complementary software from hardware and of developing microcomputers independent of mainframes and minicomputers. In addition, the industry structure of multiple computer champions led to a fragmented environment for hardware and software architectures. The prominence of Japan's large computer vendors also inhibited the growth of smaller independent software houses. In this new era, the country as a whole did not recognize in time new information rules such as de facto standards, network externalities, and increasing returns. The recent explosive growth of the Internet and multimedia represents another new paradigm of digital convergence. Japan's experiences in targeting computers, semiconductors, and software suggest that, to a significant extent, vertical integration just gives way to horizontal integration and government involvement to market mechanisms.