Low-end, Game consoles, Secondary Markets, Displays and AI

The Asahi Shimbun Interview Part 3

Horace Dediu / Takeshi Narabe & Dylan Weir / Asahi Shimbun Interview, April 2026

Takeshi Narabe • 16:20
[Y]ou also mentioned about the Japanese companies, overshooting, performance oversupply was also one of the reason that Japanese electronics giants were outmaneuvered by Apple: the insistence on in-house component manufacturing and a critical absence of software and service-led business as you mentioned now.

Horace Dediu • 17:02
It’s a tough one. I think I know what you’re getting at, but I think the puzzle there is that you try to make things better and you think by making things better you’re going to be more successful and that was another observation by Christensen that sometimes you if you listen to your customers they’ll ask you to do things better because that’s all [the customer] can imagine.

I think the canonical example for me would be the game consoles. […]Every new generation was more powerful and the way [the platforms] would decide how to improve it would be by talking to their customers and who are the best customers?

They are those who spend the most on games and the most on consoles. and they would survey those [customers] and [the customers] would always say “we need more performance in terms of refresh rate or, I don’t know, how many dimensions of performance there are in games–i’m not particularly a user.

So the problem is that it’s not just Sony but Nintendo, Xbox, everyone in the gaming industry was listening to the gamers and the most prolific and demanding gamers were those who spent the most money.

But if you compare mobile gaming to console gaming, it was always worse on all those dimensions. But if you [instead] measure how much time people spend on on mobile games, initially it was quite small, but over time it grew and grew and the number of people using phones for gaming is in the billions. In contrast, the number of people using consoles saturated at most at 30 percent of households in the United States. I don’t know what it is in every country and there are many still. That’s an okay business but it’s not measured in the billions of users and arguably those users are not the ones you want to listen to.

The only exception was Nintendo with the Wii, which actually tried to expand to non-consumers, tried to expand to elderly people (so that they can do some movement) with the product or to young children. And that was a brief moment of success in the incumbents. But I think fundamentally, even that too gets passed to the phone.

So this is a classic example. How Apple plays in this game is a very tricky one because…

The rest of this post is for Asymco members. Continue reading on asymco.com.