Sales of the software industry Japan FY 2011-2020

The sales of the software industry in Japan amounted to 16.66 trillion Japanese yen in fiscal year 2020, which constituted an increase of almost six trillion yen since fiscal year 2011.

The Japanese software industry

A breakdown of the sales value generated by the information and communications technology (ICT) industry shows that software is one of the largest segments within Japan’s ICT industry. Despite its size, however, the software industry has been perceived as lacking in competitiveness compared to its counterparts in other countries. Partly due to the high prestige of the domestic hardware and manufacturing industries, Japanese companies were comparatively slow to recognize the potential of software with regard to value-creation. Tasks related to software were often outsourced to other companies or handled by subsidiaries, which encouraged customization and hampered the development of widely applicable software products. At the same time, the Japanese software industry is highly regarded when it comes to embedded software, which is used, for instance, in vehicles or consumer electronics. One additional area of strength is gaming software, which is also related to hardware and manufacturing insofar as Japan is home to Nintendo and Sony, two of the world’s leading gaming console manufacturers. Both console gaming and mobile gaming are very popular pastimes in Japan and Japanese companies have repeatedly acted as innovators in the global video game industry.

IT-related government policies

The software industry is closely connected to the IT industry, which in addition to software also covers hardware and services. Japan’s IT industry has come into increasing focus in recent years, as the government has emphasized the importance of technological innovations for economic growth as well as for coping with various challenges currently faced by Japanese society, such as demographic ageing and rural depopulation. In 2013, the position of Chief Information Officer (CIO) was newly created in order to control and improve the cabinet’s policies with regard to the IT industry. During the same year, the Strategic Headquarters for the Promotion of an Advanced Information and Telecommunications Network Society published the “Declaration to be the World’s Most Advanced IT Nation,” which set an ambitious plan that explicitly acknowledges IT and data as being key factors for global success. In 2016, the Council for Science, Technology and Innovation (CSTI), which consists of the prime minister, cabinet members, and various experts, introduced the concept of “Society 5.0,” which describes the vision of an increasingly interconnected society. All these developments point toward the growing importance of the IT industry, which is also reflected by the private investment volume in the IT market in Japan.