American PC Makers Shake Japanese Market

UNITED States companies are storming Japan's once unassailable (and growing) computer market. Low prices and long-awaited Japanese-language software are giving US firms an edge over Japanese rivals.

Apple Computer's market share has gone from 8.8 percent in 1992 to 15.7 percent in 1994.

Led by Houston-based Compaq Computer Corporation, manufacturers of computers using the MS-DOS standard operating system, are also charging ahead.

Total US shipments of MS-DOS based computers reached 27.8 percent of the market in 1994, up from 10.4 percent in 1992, according to IDC Japan.

Only a few years ago, foreign-made personal computers were a rarity in Japan. Japanese makers stifled competition -- both foreign and domestic -- by manufacturing incompatible systems (one company's software could not run on another firm's hardware). A single company -- NEC Corporation -- accounted for over 50 percent of sales, primarily because its PC98 architecture operated the largest number of Japanese-language applications.

MS-DOS is the worldwide standard. Until recently, however, it could not handle the Japanese language, making IBM-compatibles unpopular in Japan. Now that IBM-compatibles are cheaper and operate enough Japanese-language applications, MS-DOS appears to be supplanting PC-98 as the dominant software standard in Japan. Sales of NEC and Seiko Epson computers running on the PC-98 standard fell to 46.8 percent of the market last year, down from 57 percent in 1992.

One reason is that Japanese makers (except NEC) are now backing IBM-compatibility. Seiko Epson announced last November that it would focus on IBM-compatibles. ''The PC-98 architecture is having a tough time these days,'' says Toshio Kimura, Seiko Epson's managing director. ''The share of IBM-compatible machines in Japan will be greater than those of the PC-98 within the next two years.''

Two events in the early 1990s opened the Japanese market to imports of IBM-compatible PCs. First, an IBM-led consortium introduced DOS/V - a version of MS-DOS that could operate in either English or Japanese. Then Compaq began to sell IBM-compatible PCs for about half the price of similar NEC machines.

The influx of foreign-made computers became a flood in late 1993 when a bilingual version of Windows nearly eliminated NEC's software advantage. Applications for this operating system can operate on both IBM-compatibles and NEC computers, regardless of differences in the hardware. Says one Tokyo-area retailer, ''Now about 80 percent of software [for NEC or IBM-compatible PCs] on our shelves is for Windows.''

INDUSTRY pundits used to say that foreign makers could not capture a large share of the market, given their relatively limited distribution channels. It now seems that this limitation has slowed, but not stopped, them.

Masaru Murai, president of Compaq's Japanese subsidiary, says his company captured between 4 and 5 percent of the Japanese PC market last year -- more than double the figure for 1993. IBM itself had about a 10 percent market share in 1994.

Many companies are excited about the growth potential of the Japanese market. IDC Japan says the PC market should expand from about 3.2 million units last year to 6.9 million in 1998.

''Incompatibility stopped Japan from becoming a mature market,'' says Murai. ''Compared to Japan, the United States still has more than twice as many PCs per capita. But now Japan is catching up.''

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