Next Japan target: personal computers
"Made in Japan." It's written between the lines of the American economy, as increasingly keen competition for US industries comes from the Far East.
The next challenge from Japan plays to America's most dynamic economic hand: the computer industry.
A newcomer to the "high-tech belt" of the Boston suburbs, expected early this year, will be Nippon Electric Company, Japan's largest maker of microcomputers -- small, personal computers for home and office use.
Other Japanese companies such as Canon, Cassio, and Sharp also are expected to enter the US microcomputer market in 1981.
"There will certainly be a major wave of Japanese products" in the next few years, says Sandy Garrett, an analyst of the electronics industry with the investment firm of Paine, Webber, Jackson & Curtis in New York.
But he echoes other experts when he says the Japanese are not likely to take over the US microcomputer market -- at least as it exist now.
"I think we'll see a strong Japanese impact on a home computer market that hasn't yet developed," says Michael McConnell, vice-president of the Computerland Corporation retail chain. This market would be for a home computer that could be bought like a stereo from a department or specialty store. It would be easy to use, well under $1,000 in price, and easy to repair, upgrade, or exchange.
If there is a computer in every home by the year 2000, or even 1990, as some in the computer business envision, that computer is likely to be Japanese. It is in mass production on this scale that the efficient Japanese manufacturers excel, giving them a pricing edge, US analysts say.
As yet, large-scale demand for home microcomputers is still hypothetical. Programs have not been developed to make them simple and useful enough to win a place in American budgets or family rooms on a massive scale.
Although some limited-capacity models sell for less, the "action" in the personal computer market now is in selling $1,000-$5,000 models to small businesses and professional people.
At this level of the microcomputer business, American firms like Tandy (Radio Shack), Commodore International, and Apple Computer still hold an advantage: an edge in technology.
"The state-of-the-art equipment is usually American," Mr. McConnell notes. Future innovation is expected to keep the Americans at the forefront of the industry, at least through the decade of the 1980s.
But McConnell, whose own stores are "very interested in Japanese products," predicts the Japanese will take around 30 percent of the personal computer market in a few years, but not the 70 percent that some analysts envision.
Eventually, computers that sell for less than $1,000 generally may be made in Asia and while the more expensive computers continue to be made in the United States, according to Robert F. Wickham, president of Vantage Research, a firm specializing in market research for the microcomputer industry.
Already American firms are manufacturing their own least-expensive models in the Far East. Commodore introduced its first model built in Japan, the VIC-20, last week in Las Vegas. Radio Shack's TRS-80 Color also is made in Japan.
Japanese companies have some obstacles to overcome in selling computers to Americans. They must adapt their hardware to American applications. Japanese program- ming needs are different, so the machines themselves tend to differ slightly. The Japanese may sidestep this by making American- style computers to suit the American market.
Another obstacle is finding US retailers to sell and service their computers. Japanese manufacturers are likely to try to tie into existing retail networks. For example, office supply stores are expected to start selling personal computers this year. Many buy supplies from Japanese distributors, who may begin to add Japanese computers to their offerings.
An image of quality workmanship may play a role in selling US consumers on Japanese computers. To the general buying public, choosing between otherwise similar computers, the Japanese reputation for quality work may win them sales. According to Mr. Wickham, "They'll trade on their quality image."
But some US analysts say this factor is being overplayed. Adam Osborne, an author, industry critic, and entrepreneur, says, "In the computer business, what everybody has long forgotten is that adequacy is all that counts."
Aesthetics, Wickham says, also could help the Japanese. Wickham expects that , under European influence, the Japanese may produce a better-looking "whole, human-engineering package" than US companies. This, he says, could be what sells one computer over another.
America's big computer companies are readying for the challenge from the East. This year US manufacturers plan to make strong moves into the personal computer field. IBM, Hewlett-Packard, Xerox, and other powerhouses of the US computer industry have reputations for quality themselves and have formidable networks already established for marketing, distribution, and service.
US personal computer market 1979 1980 Company Sales Market share Sales Market share Apple $110,000,000 25% $170,000,000 19% Commodore $80,000,000 18% $140,000,000 16% Tandy (Radio Shack) $150,000,000 34% $210,000,000 23% Others $100,000,000 23% $380,000,000 42% Total $440,000,000 $900,000,000
Source: Gartner Group, Greenwich, Conn.