So Who Said Japan Would Rule World Computer Industry?

Predictions of 'Gang of 33' US trade hawks running awry

ARGUMENT about the relative strengths of the Japanese and American economies is nothing new. In 1992 and 1993, an extended debate over the Japanese economy raged in the pages of publications like Policy Review, The Wall Street Journal, The Atlantic Monthly, and The American Prospect. It all began when 33 industrial policy proponents - including eminences like James Fallows, Clyde Prestowitz, Chalmers Johnson, Ezra Vogel, John Zysman, John Judis, Pat Choate, and Robert Kuttner - attacked an article arguing that the Japanese economy was vulnerable in many critical areas, and that industrial planning by the Ministry of Trade and Industry (MITI) and other government agencies was largely to blame.

Among a raft of earnest claims made by the Gang of 33 concerning the alleged power and success of Japanese government planners was their interesting suggestion that ''Japan's output of computers and computer-related products will pass that of the United States later this decade.''

Well, we're now more than halfway through the 1990s, and the trends in global computer manufacturing are quite clear: The Japanese (and nearly all other non-US competitors) have been wiped off the desktop in the United States and other markets. It's not a Fujitsu or an NEC or a Hitachi that you stare at every day at the office, but a Compaq or IBM or Apple - all American designed and manufactured. Japanese companies have also been crushed in software.

They have even taken a beating in peripherals like cheap printers and disk drives, where many once assumed they would dominate as they do with cheap VCRs. Globally, the standard-setting and market-leading companies in nearly all computer-related markets are now overwhelmingly American.

Ah, but the closed Japanese home market. In a critical industry, US manufacturers will always be shut out there, right? Wrong.

Japan has long relied on Japanese-built computers that use special proprietary standards not recognized outside of Japan. But last year US companies like IBM, Compaq, and Apple invaded Japan aggressively in a price and marketing war. Recently, 1994 sales figures for Japan's computer market were released to the public. And they show that in the single year 1994, US-standard personal computers nearly doubled their market share in Japan, to more than 30 percent. Apple and IBM are now Japan's No. 2 and No. 3 PC sellers.

AGAINST the Gang of 33's silly contention that computer manufacturing may be slated for Japanese dominance by the turn of the century, here's my own counter-prediction: Japanese-standard computers will constitute a minority of sales even in Japan by the end of 1996 - and US firms will be the unquestioned technological pioneers and commercial leaders in this industry for the foreseeable future.

Neither MITI nor any other Japanese agency or planner can change this trend. Indeed, I can conceive of only one longshot possibility that could derail American global ascendancy in the critical computer industry over the next decade: establishment of a government industrial policy directorate in the United States. Now that would be helpful to Japanese companies.

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