Open ＆ Close Strategy～ To develop and implement your company's own
strategy based on advanced case studies ～１. What is an open & close strategy
A n open and close strategy is a strategy to create a favorable businessenvironment for the company by intensively developing technologies in thecompany's core innovation area while thoroughly excluding third parties, andmeanwhile expanding the market for technologies in the company's non-core
innovation area by standardizing them or releasing them free of charge.

２. Introduction of foreign cases
Let's look at some of the open and close strategies that have been very
successful.
1) Intel MPU
The company secured technical information on MPUs, which are key
components of PCs, by means of patents and confidentiality and made them intoa black box and closed system.
They granted the PCI bus, which connects the MPU to external devices, to PC
and motherboard manufacturers, emerging companies that received policy
support for flexible taxation. However, by contractually restricting revisions, they
will take the lead in the technological evolution of PCs. They also provided PCI aibus and motherboard technology to these manufacturers, who did not have thetechnical capabilities at the time. This has enabled them to take advantage ofnetwork externalities to massively promote its own MPUs, which are optimized for
the PCI bus and motherboard, and to achieve high profitability.
2) GSM system for digital cell phone networks in Europe
By standardizing and opening up the internal and external specifications of cell
phone handsets, the company has achieved mass adoption at low cost.
They black-boxed and closed the radio base station and control equipment in
the cell phone backbone network system and led its evolution and revision while
securing intellectual property rights to the communication protocols.
This enabled them to achieve total market dominance.
(In contrast, the U.S.-led standardization and opening of Wi-Fi access points
that allow direct Internet access without wireless base stations, as well as Apple'sand Google's smartphones with full Internet browser functionality [and openoperating systems], have deteriorated this market dominance.)3) Adobe Systems
The company sold PDF (Portable Document Format) creation and editing
software (Adobe Acrobat) for a fee, while releasing and providing PDF reading
software (Adobe Reader) for free. By opening PDF reading-related patents andcopyrights to other companies free of charge on the condition that they conformto the PDF specification, they restricted independent extensions of thespecification and took the lead in the direction of technology and productdevelopment. This has enabled them to achieve high profit margins while
expanding the PDF-related market.

3. Introduction of domestic cases
Open and close strategies are not the exclusive domain of IT companies
in the U.S. and Europe. There are several successful examples in Japanesecompanies.
1) Mitsubishi Chemical Corporation
The company established, standardized, and opened up a DVD
manufacturing platform and provided it to companies in emerging countries
that received policy support from special economic zones and flexible taxation
systems, and supplied the optimal recording materials and stampers for the
manufacturing platform to those companies in a black box and closed system
under its own patented inventions and other technical information to achieve
high profitability.

2) Denso Corporation
The company concerned made the basic specifications of QR Code,which was an in-house standard for goods distribution management, into ISO
for dissemination, licensed the essential patents free of charge, and expanded
the market. At the same time, the company made QR Code recognition anddecoding technology a differentiated area and sold readers and software for a
fee to gain the top domestic share in readers and secure profits.

４. Conclusion.
Implementing an open and close strategy requires careful research,planning, and preparation. It is essential to identify and distinguish between
core innovation areas and non-core innovation areas, and to formulate andexecute detailed strategies for both areas and the boundary areas thatconnect them. During execution, flexible modifications are required in
response to changes in the market.
We are here to help you develop and execute your strategy. Please do
not hesitate to contact us.
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WriterKei IIDA
Attorney at Law[k_iida☆nakapat.gr.jp]

Akira WATANABE
Attorney at Law[a_watanabe☆nakapat.gr.jp]

Nobuyuki TANIGUCHI
Patent Attorney[Pat☆nakapat.gr.jp]

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