Japanese manufacturers finally take on the iPad

March 13, 2013, 9:00 AM UTC

FORTUNE — Stung badly by soaring sales of foreign-made smartphones and tablets, Japan’s electronics makers are fighting back with a bevy of hi-tech tablets they hope will turn the tables on the dominant Apple iPad.

Sony (SNE) is setting its hopes on the svelte, bantam-weight, waterproof Xperia Tablet Z. It aims to duplicate the success of the popular smartphone of the same name, says the firm.

Panasonic (PC), meanwhile, is hitching its star to a tablet with so-called 4K technology that it claims displays images at four times greater resolution than existing high-definition resolutions. Both are aimed at the premium end of the tablet spectrum, where Japan tablet makers expect to find their niche. At around $500, the Z’s price is steep compared to other tablets on the market but could set new standards for competitors, say analysts. Sony claims its Xperia Tablet Z is the world’s slimmest tablet, and Japan’s lightest.

Some think the Z and its ilk could help pull Sony out of a vast financial hole. Recently the firm reported losses for the last quarter of 2012 of 10.8 billion yen. It has been the demand for tablets, particularly those from Apple (AAPL), that has helped to end Sony’s and Japan’s hardware hegemony over the world’s gadgets and piled up its red ink. Sony is still struggling to catch up, says technology consultant Nobuyuki Hayashi, especially with the iPad. “Japanese manufacturers are making so many tablets … but I haven’t seen anyone using them,” he says.

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It must be particularly galling for Japan’s tech industry to miss out on the tablet bonanza. It is estimated Japan supplies 20% to 30% of the parts for the iPad. (They are mostly assembled in China.) Sony, meanwhile, produced tablet computers long before Apple. Trouble was, nobody wanted them. Domestic demand for such gadgets was always poor until, that is, the iPad debuted here nearly 3 years ago. “Tablet adoption is very late in Japan. Of course, this is expected to change,” says Tokyo-based publisher Xavier Marchand.

According to analysts at IDC Japan, 3.6 million tablets were sold in Japan in 2012, although another estimate from Yano Research suggests figures are closer to 4.2 million — nearly twice the number sold in 2011. Yano expects sales to reach 5.6 million for 2013. Apple still accounts for the majority of sales here it says. “The iPad mini has been doing fairly well I don’t know if the cumulative has exceeded that of iPad,” says Hayashi. (According to IDC it has.) “Then after a big gap come Kindle Fire, Nexus 7, and Kobo. And then, perhaps, on distant sixth place are Sony, followed by Toshiba, NEC, etc.,” he says.

Where Japan’s beleaguered tech firms see their chances is in the development of products for business users, particularly in Japan where the salaryman so far remains generally nonplussed by tablets. Panasonic’s new 4K offering, for example, hopes to edge out Apple in the market for creative professionals like photographers, designers, architects, and engineers. To compete, Japan Inc. is also eyeing more tie-ups with outside companies. Panasonic’s new baby was created by partnering with Microsoft (MSFT) and IBM (IBM).

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Others like Sharp and Toshiba, however, seem to have lost the plot altogether when it comes to tablets says Hayashi. Ideas for kickstarting their tablet sales seem few and far between. “Toshiba had no clue. So they produced as many sized tablets as they could and see which one size would catch fire. But no one wanted to buy a Toshiba tablet, so I think they are still clueless,” he says. “They’ve stop producing random sizes and are following the popular formats in the market. NEC and Fujitsu are just following the market trends without a clue, too.”

Sharp’s failure to ignite even a small spark in the domestic tablet market is probably the most tragic of Japan’s tablet tales. Its range of tablets dubbed Galapagos, expected to sell in the millions, achieved only 30,000 sales in the first 10 months, despite enormous hype. The devices were victims of their high price and a joke name — made in a tongue-in-cheek tribute to Japanese “insular” genius. A few years later and the joke has turned sour. Sharp pulled its Galapagos tablets off shelves amidst huge losses in 2010.

As Japan’s technological powerhouses gear up for round two of the tablet wars, they seem determined not to be outmaneuvered this time.