These Japanese Engineers Invented $7,900 Bike Wheels (BusinessWeek)

Brothers Nobuo and Yutaka Kondo run Kondo Machine, a 30-employee shop that engineers specialized parts for Rolls-Royce jet engines and machines that make parts for Toyota cars. They also love to bike. You can see where this is going: The Gokiso wheels the Kondos have made out of titanium and carbon fiber provide what they say is an incomparably smooth ride. Spin ’em on a test rack at 18 mph, and the bike wheels take six minutes to come to rest, compared with about 90 seconds for a high-end, resistance-impaired competitor. But it’s a level of quality few can afford: Each pair costs $7,900. In four years, Kondo has sold 30 and about 1,000 of simpler models that go for less than $3,300 a pair.

In Japan compulsive overengineering is producing beautiful industrial components and few consumer hits. Sharp has made a $1,300 fridge that tries to distinguish itself by making clear ice cubes, as opposed to cloudy ones. Panasonic is selling an $1,800 washing machine that estimates how much detergent you need after you enter the brand into an app and swipe your phone against a sensor on the machine (instead of, you know, reading the bottle). In an era where smartphones come with free step-by-step navigation apps, Pioneer is trying to sell a $2,500 standalone GPS device that projects instructions onto the windshield of your car. “We’re hoping it catches on,” says Pioneer spokeswoman Hitomi Ishizuka.

From left: Nobuo Kondo and Yutaka Kondo

Japan, which invented the Internet-connected mobile phone, last year imported 34 million of them and exported just 240,000. Alberto Moel, an analyst at portfolio manager Sanford C. Bernstein, says a big part of Japan Inc.’s problem is that engineering, not marketing, often drives product development. His take: “You made this stuff on the expectation that your customers would pay more for it, without stepping back and asking whether they really would.”

Over four years, the Kondos have sold only 30 sets of their top-of-the-line wheels.

The Kondos say they weren’t thinking much about sales when they started developing their bike wheels in 2009. Nobuo, the president of the family business, had just trounced younger brother Yutaka in an endurance race. Yutaka blamed the bike and took apart the rear axle. Sure enough, it had been partly crushed during the four-hour ride. Less than a year after the global financial meltdown, the younger Kondo had a lot of free time, so he spent about six months developing an axle that could remain completely straight, suspending it inside a protective sleeve that redistributes weight and absorbs shocks. “We just wanted to know how far our technology would go,” his brother says.

Made with titanium and carbon fiber, the wheels have been tested for a distance of twice the circumference of the earth.

Using a test bike rigged with rollers and sensors, Yutaka ran the wheels at speeds of up to 300 kph (186 mph), close to the top speed of Japan’s bullet train. Then a durability test: 100 kph, 10 hours a day, for 100 days, a distance twice the earth’s circumference. After all that, Nobuo says, the wheels still spun like new. The Gokiso has one-third less mechanical resistance than the next-smoothest wheel on the market, the brothers say, which means speeds 1 mph to 2 mph faster for most riders and crucial seconds shaved off pros’ race times.

Nobuo is contemplating handing the company over to Yutaka and becoming a full-time cyclist.

Marketing the most expensive bicycle wheels in the world is another matter. In 2012, the Kondos hired amateur cycling champion Makoto Morimoto to work a lathe in their factory and use their wheels in races. Morimoto, known for his high-elevation biking, won one of Japan’s steepest hill climbs at a record pace last year, but few credited the wheels, according to Nobuo: “Everyone says, ‘Of course he won, he’s the king of the mountains.’ ” So the older Kondo brother, now 58, is contemplating one more marketing stunt: handing the company over to Yutaka and becoming a full-time cyclist himself. “I don’t even have to win,” he says with a wry smile. “If I just keep up, people will say, ‘How the hell did that old man get so fast?’ ”

The bottom line: Two inventors found it easier to build $7,900 bike wheels than to sell them—a classic case of Japanese overengineering.