There should be companion pieces: "Why China didn't create the iPod" and "Why Europe (Germany, Finland, Sweden, etc.) didn't create the iPod". Japan and these places are all very tech-savy but their cultures are very different than that in the US, you can almost think of it as different solutions to the same equation.

Simplifying and summing up, I think the arguments go like this: * In Japan, the conformity culture, bureaucracy in big companies, and lack of foreign brain power and venture capital is the problem (The Economist was saying that Japan has the lowest foreign technical investment in developed countries). * In China, the lack of entrenched copyright culture is the problem, in fact, taking a product and hacking to add new features is prized. Also, good product design design and customer feedback is unknown. * Europe does have excellent designers; however, it lacks a start-up worshiping culture, in fact they're given the cold shoulder in government-heavy countries like France. Their modus operandi is to proceed by government-funded huge projects, e.g. Galileo, Airbus. And the foreign brain power is there, too.

So, you see, it's not Japan's fault: US has a unique combination of cultural and other factors that produces things like the iPod. I don't think this is unrepeatable, though.