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Japanese Ready to Move Into PC Market in U.S.--Again

Asia: Firms, making a push as industry slows, vow not to repeat mistakes of '80s.

June 17, 1996|JULIE PITTA | TIMES STAFF WRITER

The last time the Japanese electronics giants launched a broad assault on the U.S. personal computer market, they got nowhere. But now, as the PC industry gathers in New York this week for the PC Expo convention, the Japanese--led by Sony Corp.--are finally ready to try again.

Sony today will debut a line of personal computers targeted at U.S. consumers. Hitachi and Fujitsu are gearing up massive advertising campaigns for new portable computer products.

Toshiba Corp., which has been successful selling portables, is preparing a move into desktops for later this year. And NEC Corp. earlier this month made a big move when it handed over its non-Asian PC business to partner Packard Bell.

Japanese companies have a variety of reasons for acting on their U.S. PC ambitions at a time when the market is cooling down after several years of torrid growth. Hitachi and Fujitsu, which both make mainframes and minicomputers, are seeing sales of those venerable machines slow. Sony is worried that multimedia PCs threaten its consumer electronics stronghold.

"We cannot afford to bury our heads in the sand," says Tim Errington, senior marketing vice president of Sony's newly formed Information Technology of America company.

The big Japanese companies also manufacture the disk drives, semiconductors, monitors and keyboards that are the components of any PC.

"This is not a strategy for selling components," insists Greg Chambers, marketing vice president for Fujitsu PC Corp., but he also allows that "Fujitsu has some core technologies that are perfect for laptop computers."

Perhaps the most important factor, though, is that it's hard to remain on the cutting edge of technology without a presence in the remarkably dynamic and fast-growing U.S. PC market. Trends almost always originate here, and staying abreast of them is critical.

Last time around, though, in the late 1980s, the Japanese largely failed to gain a foothold. Many in the U.S. at the time were fearful that big Japanese conglomerates--which had suddenly emerged as the dominant players in the computer chip and component businesses--were poised to take over the PC market too. It wasn't for lack of investment: From 1987 through 1990, NEC spent more than $20 million a year on U.S. advertising alone. But today only two Japanese firms have made International Data Corp.'s list of the top 10 PC vendors: Toshiba and NEC, Nos. 8 and 10, respectively.

Part of the problem flowed from the Japanese firms' insistence on keeping so many key functions in Japan rather than close to the ground in the U.S. "We weren't as quick to market as we should have been," says Craig Conrad, a marketing manager at NEC in the late '80s. "The engineering team was in Japan and the manufacturing was in Japan. When things are overseas, you're not going to be quick.

The Japanese companies were also oftentimes committed to using internally made components, which were not always the cheapest available and thus added to the price of their machines.

But they vow not to repeat past errors: "The worst thing you can do is take a product made in Japan and then try to sell it here," says Mark Yahiro, a marketing vice president for Hitachi's PC company. "What Mazda did with the Miata is an example of what we want to do here with PCs.

"This is the first time in Hitachi's 80-year history that they have ever hired a non-Japanese CEO," Yahiro says, noting that PC unit chief David Hancock hails from Apple Computer Inc. "And I haven't had to get Japanese approval for advertising--or any of the other marketing programs, for that matter."

Hitachi says it will spend $30 million in the first year on marketing alone. Fujitsu, which has established a U.S. PC company in Milpitas, Calif., plans to spend $50 million.

They're arriving at a tough time, though. A fierce price war is raging as PC vendors try to cope with slow growth. And that means the Japanese conglomerates' disk drive, monitor and semiconductor sales--especially for memory chips--are suffering too.

"The market's a lot more competitive than it was the last time they tried to come in," says Michael Dell, founder and chief executive of Dell Computer Corp. "There's a lot less space on dealers' shelves.

"And the business they expected to fund it all was semiconductors," Dell says. "My guess is they hit the launch button before semiconductor prices dropped."

Sony at least is moving more cautiously then some had expected; its new machines will disappoint those who had expected razzle-dazzle from the consumer electronics powerhouse. Beyond high-quality speakers and some 3-D software, there will be little to distinguish Sony's PCs from the slew of other IBM-compatibles.

But Errington says today's introduction is only the first phase of a program designed to establish the PC as a kind of control unit for a wide array of consumer electronics devices.

"They held back," says IDC analyst Richard Zwetchkenbaum. "I think it's because they didn't want to be perceived as a different animal, so they hit all the buttons they had to hit, and it's respectable. Anyway, it's only Round 1."

Julie Pitta can be reached via e-mail at jpitta@aol.com

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