The Active Matrix
The liquid crystal display digital watch and pocket calculator were tremendous commercial successes, perhaps too much so, for they attracted so many producers that competition to gain market share required rampant price cutting. The lower prices of course meant lowering manufacturer costs, and just as in many other electronics industries at the time, this engendered an inexorable shift to Asia, where the unskilled and skilled labor costs could be cut to one-fourth or less. In Japan, manufacturing quality and efficiency ruled at first, but when prices began rapidly falling and the market expanded to lower-priced products, the electronics manufacturers in Hong Kong and Taiwan sniffed out the new opportunities, and digital watch and calculator plants soon began sprouting like bamboo shoots after a spring rain. This proliferation of new, lower-cost manufacturers, using the ever more standardized manufacturing processes, while succeeding in cutting costs, exacerbated the price wars, and the prices fell even more precipitously. Once pricey digital watches and calculators quickly were available at discount retailers in the suburbs and on the streets and in the alleys of big cities at one-tenth the former prices. The losses for the American and Japanese manufacturers soon became debilitating.
The older electronic companies knew that competing with the Hong Kong and Taiwan manufacturers was futile, and so realized that the only way to gain profitability was to add value ...