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New Japanese-Language Operating System Raises Heat On Japanese Computer Giant

NEC proprietary software loses ground to outside competition

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AFTER years of stability and limited competition, the Japanese computer market is facing upheaval. Last year Japan saw a fierce personal computer price war sparked by software innovations.

The price war was started by the introduction of DOS/V, an IBM-compatible, Japanese-language operating system in 1992. Now Windows NT, another software breakthrough, threatens to intensify the competition.

Until 1992, most Japanese computers operated only with proprietary software. One company's programs could not work on a competitor's machines. NEC, which according to market analyst Dataquest held 52 percent market share last year, owed much of its success to having the largest library of Japanese-language software.

Internationally, however, MS-DOS run on IBM-compatible machines is the software standard. Despite their price advantage over Japanese PCs, IBM-compatibles had not been popular because DOS could not work with the complex, three-tiered Japanese alphabet. Half-price imports

The arrival of DOS/V brought a flood of foreign companies into the market with prices around 50 percent of comparable NEC units.

For most of 1992, NEC downplayed the threat from low-price ``invaders.'' Although the firm made one substantial price reduction, Akira Kobayashi, senior managing director at NEC, said the company's superior distribution and range of Japanese-language software would keep it ahead.

So far, NEC has kept most of its market share. Compaq, for example, has reportedly shipped 10,000 machines a month this year. This represents only about 5 percent of the more than 2 million PCs expected to be sold this year.

But at the end of this year, Microsoft's Japanese-language version of Windows NT will be released. Windows NT includes its own operating system and has advanced capabilities for working in a network of computers. Once it is installed, the user can run any software with Windows NT without worrying about compatibility.

Windows NT spells an end to NEC's greatest competitive advantage - proprietary software. Despite initial resistance, even NEC now recognizes that Windows NT should become the new operating standard both internationally and in Japan. In a major about-face, the company has begun working closely with Microsoft on the Windows NT project. Shinichi Manaka of Microsoft Japan expresses enthusiasm about future projects with NEC. ``Microsoft is more than happy that a greater range of professional applications and hardware parts are coming out in Japan.'' NEC competitors

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