PCM 046, 022-031 Toughbook 11/7/02 2:58 PM Page 22 his article is about how one company man- uct. They did everything right. The right niche, access to every facility, and I found everyone be- aged to create a successful product in a the right team, vision, perseverance, and proba- ing very forthcoming in answering every ques- Tvery difficult market. The company is Mat- bly a degree of luck. Everything clicked, and in tion, even the difficult and uncomfortable ones. sushita and the product is the Toughbook line of one of those rare instances where everything But first let me present a brief overview of ruggedized notebook computers. Toughbooks are falls into place, the Toughbook became one of the Toughbook line for readers who may not al- sold business-to-business into corporate and a the true success stories in mobile computing. ready be familiar with the Toughbooks. Tough- number vertical markets. The installed user base At Pen Computing Magazine, we have been books are “niche” products. The line includes is currently about half a million. The Panasonic following the Toughbook line almost since its in- notebook computers that range from slightly more Computer Solutions Company, Matsushita’s US ception and, over the years, have reviewed every sturdy than standard notebooks all the way to distributing arm for the Toughbook line, is grow- model. So when we got an invitation to take a very rugged notebooks for use by the military and ing much faster than the industry average. And closer look at just exactly how Panasonic man- other markets where toughness and reliability they make money. They are profitable. aged to do it, we jumped at the opportunity. My are mandatory. They fill the market where com- How can that be? subsequent travels took me to Japan where I vis- puting power is needed, but where standard con- To give you an example of how difficult it is ited Panasonic facilities in Osaka, Kobe, and sumer products just can’t make it. Utilities come to succeed in the PC market, just look at IBM it- Tokyo. I also examined Panasonic’s stateside to mind, insurance, healthcare, telecommunica- self, the company that introduced the PC in 1981. service facilities in Kansas. Panasonic was ex- tions, transportation, the government, field serv- Hundreds of millions of PCs have been sold since tremely cooperative and gave me a chance to ice and sales. That’s how it started. Panasonic then, yet IBM soon lost the leadership in the mar- examine every aspect of the process, and talk to later found that corporations also were getting ket it created, and IBM never really managed to everyone involved. I had almost unprecedented tired of the very high failure rate of notebook com- make much of a profit on PCs. And neither did puters, and so they built high-reliability Tough- most of its competitors. Clearly, creating a mar- books for that market as well. And recently, the ket and selling mass quantities of good products line has been augmented with additional prod- does not guarantee success. Not even if a com- ucts such as wireless displays and a handheld pany has the resources of an IBM, and if the computer. In terms of sales, the Toughbook line products are of good quality and provide value. is relatively small, perhaps US$300 million a year. Enter a relatively small team within the gi- So how did the Toughbook come about, and ant Matsushita company of Japan. In a veritable how could it happen within a giant industrial com- case study of excellence they conceived of a way plex like Matsushita, a no-nonsense manufac- to succeed in the PC market where others could turing company famous for no-nonsense prod- not. They did that by analyzing the market, find- ucts? How could it happen in an almost US$60 ing a niche, and then building just the right prod- The Pentium 4-equipped Toughbook CF-72 billion company that cranks out refrigerators and by C. H. Blickenstorfer TOUGH as Panasonic’s computer factory near Kobe cranks out 300,000 computers a year a Nails l Panasonic’s Toughbooks — s g A high tech success story t s d s a 22 PEN COMPUTING MAGAZINE October 2002 www.pencomputing.com PCM 046, 022-031 Toughbook 11/7/02 2:58 PM Page 23 FEATURE Mysterious Japan Rising out of the mist, the islands of Japan welcome travelers with an intriguing mix of ancient tradition and avant-garde high technology. A trip to visit one of Japan’s industrial giants, the Matsushita Electric Industrial Company, reveals how East meets West to create a unique line of computers – the Panasonic Toughbooks – that represent the very best of two worlds. Historic Osaka Castle began as a temple around 1496, eventual- ly grew into a fortified structure and a self- governing temple- town. Today, it is the symbol of Osaka and dominates the land- scape from miles around. A bit of water won’t hurt a Toughbook 01 The famous Shinkansen bullet train www.pencomputing.com October 2002 PEN COMPUTING MAGAZINE 23 PCM 046, 022-031 Toughbook 11/7/02 2:59 PM Page 24 microwave ovens with the same cold efficiency Toy- ota employs to crank out Camrys and Corollas? A company that perhaps lacks the playfulness and marketing savvy of arch rival Sony but makes up for it with a blue collar work ethic that’s second to none? The answer is that it was extremely unlikely to happen. It came about because a man and his team of enlightened individuals had a vision, and made that vision a reality by skillfully tapping into all the resources a giant industrial complex could provide. What that team did is the exact opposite of the way things are done today. They did not farm out the en- tire design and manufacturing to OEMs or contract manufacturers. They did not go on a shopping spree to gather together the cheapest components from the lowest cost suppliers. They did not delegate and farm out everything until they, like most US comput- er companies, were merely marketers. Instead, they WE DIDN’T SET OUT TO MAKE JUST ANOTHER COM- PUTER. WE SET OUT TO MAKE Numerous test machines like this one are used to put each component of a Toughbook through its paces. Numerous test machines like this one are used to put each component of a Toughbook “ SPECIAL COMPUTERS FOR SPECIAL JOBS AND MAKE THEM BETTER THAN ANYONE ELSE. I THINK WE SUCCEEDED.. Yoshi Yamada, father of the Toughbook, flanked by his top lieutenants, Mr. Hide Harada and Mr. Toshiyuki Takagi ” E 24 PEN COMPUTING MAGAZINE October 2002 www.pencomputing.com PCM 046, 022-031 Toughbook 11/7/02 2:59 PM Page 25 Workers at Panasonic’s impeccably clean computer factory near Kobe turned a perceived weakness into a strength. All Toughbooks are conceived, designed, built, and test- ed right there at Matsushita’s own facilities. When they needed special batteries, they simply stopped by Matsushita’s battery division. When they needed optical drives, well, Matsushita makes the best. When they needed a special case, Matsushita is a leader in manufacturing processes and one of the world lead- ers in magnesium casting. And then they put it all to- gether right there at the most impressive Panasonic Computer manufacturing plant outside Kobe, Japan. The result is the real thing. Just like a Toyota is the real thing and in a league of its own, a league that the Kias and Daewoos and Hyundais of the world aspire to but cannot reach. Like Toyota, Matsushita is the real thing. 290,000 worldwide employees, 14,000 prod- ucts, 320 companies, and an annual budget of US$4.4 billion for research and development alone. Things weren’t always that good. Panasonic tried it the conventional way first. They made portable PCs in the early 1980s but couldn’t make a profit. Be- tween 1983 and 1990 they were a channel OEM, mak- ing computers for other companies. In 1992, Pana- sonic decided to change the focus of their PC operation and go for corporate and ruggedized sales to government, corporate and a number of special vertical markets. At Pen Computing Magazine, we’ve seen many rugged products over the years. They ranged from computers that looked more like science projects, to honest but underfunded efforts, to the real thing. With Matsushita’s resources, it’s clear that the Toughbooks falls into the third category. I began my tour of Matsushita’s Panasonic fa- cilities with a visit to the Matsushita Hall of Science and Technology, which is part of the company’s Moriguchi City complex in Osaka, Japan. The hall is a combination of Matsushita history, its many current concepts and products, a number of technology demonstrations, and a peek at future products. All in all, there are about 300 technologies and products, all Engineers at work at the IT Products Division in Moriguchi City/Osaka www.pencomputing.com October 2002 PEN COMPUTING MAGAZINE 25 PCM 046, 022-031 Toughbook 11/7/02 2:59 PM Page 26 Mr. Masayuki Kitabayasi, General Manager of the Kobe computer factory MAKING chosen to highlight the company’s dedication to re- search which, as a brochure points out, “is for the happiness of mankind.” This sounds flowery to West- ern ears, but it is very much in sync with my impres- sion from earlier visits to Japan. The Japanese view technological progress as something that increas- es happiness and well-being and generally and gen- uinely improves society.