Japanese Manufacturers (nearly), bankrupt. Why?

I've been emailing with a close friend about the sorry state of Japanese electronics companies. Panasonic, Sony, Sharp, and even smaller companies like Olympus have all announced heavy re-structuring and huge losses. Based on several conversations I've had in the recent past with employees at these companies, I told my friend I wouldn't be surprised if a major Japanese electronics company ceased to exist by the end of 2013. 

How could these companies, some of the largest companies in the world, be crashing so hard? My hypothesis is that they've stuck to HW manufacturing with near complete ignorance on the services side of the equation. Electronics HW is just becoming a means to internet services. Japanese do internet services horribly, & Chinese manufacturing is approaching Japanese quality at a fraction of the cost. Voila. 

Don't claim to be expert in this field, but seems to me that HW manufacturing (and firmware) skills are the near opposite of services skills. One reason why UI and menus are so horrible in Japanese electronics. And why Apple stands out as an exception for its abilities to put UI/ease of use *and* HW into a complete user experience. 

This also holds true in the US. Remember those really amazingly well put together Startac(TM) phones from Motorola? Horrible menus, but the HW was awesome. Or even take Microsoft as an example with Windows. Engineering (backwards compatibility, unwillingness to change things so as not to upset manufacturing partners/parts suppliers, etc) takes over vs strong user experience. In Manufacturing, Engineers have the upper hand. And these aren't your SW engineers, these are the firmware/HW kind. This is the land of "cost, stability, and robustness", not ease of use. If it costs $0.20 more per TV, then forget it. It's all volume, cheapest possible. So the services guys get no say, and each division in the manufacturer (esp Sony!) builds their own, incompatible, on the cheap, UI. There is a strong belief that a slightly better screen is more important than a better UI. 

Finally, they seem to share a strong sense for not needing to play with others, which is anathema to building good services. Sony only built for Sony services, for example. Note how their Playstation is still essentially a closed ecosystem. Microsoft only recently opened up its Xbox platform to other video services, and its popularity is exploding internationally. This is indeed a cultural thing where Japanese manufacturers built integrated supply chains (as did the Koreans like LG & Samsung). They then applied this culture to UI/services. So Samsung TVs work with Samsung apps, Sony TV with Sony apps, etc all in virtual silos - no good. 

They have recognized this, and seen success with Android on mobile devices, of course. They make the phones, and Google develops the OS/UI. But then old habits die hard. They of course can't help themselves and create their own versions of Android, mostly just screwing up the UI and frustrating users. All the while, they fret that they are ceding power to Google/Android, which is partially true. Then Google goes and buys a competing manufacturer (Motorola) and these manufacturers worst (imagined) nightmares are realized. Now manufacturers are scrambling for new OS platforms, all the while their HW margins are grinding down to $0, or much much worse (try $billions of losses). 

If these manufacturers spent even a fraction as much on UI as they do on HW R&D, they'd quickly see the return. That is, assuming they even exist.