PLAYING CATCH UP IN THE CYBER RACE

For the past four decades, Japan has been showing the world how to take technological innovation and turn it into gold. Examples abound: the transistor radio, the color television, the portable cassette player, the videocassette recorder. The basic technology in these products was invented elsewhere--the transistor and the vcr were born in the U.S.--but superior engineering expertise and marketing flair gave Japan clear dominance of the world of high tech.

But suddenly, puzzlingly, Japan finds itself well behind in the race to catch the next big technological wave: the intersection of computers, telephones and cable television as well as the...