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IBMers claim to be unruffled by Japanese competition. "I think I'll be physically ill if I hear one more time that the Japanese are coming," says Paul Low, manager of the East Fishkill plant. "That's not to say that they're not formidable rivals, because they are, but we're ahead." All six of the major Japanese makers of large computers together have less than 2% of the U.S. market for business computers.
Many outsiders believe that IBM is more concerned about the Japanese than it professes. Says Magnuson Computer's Strauch: "I'm sure IBM's basic concern is the Japanese. It is almost certain that what happened to us was a message to the Japanese that if they have any thought of entering the market with a low-to-medium-range mainframe, they had better be prepared to compete at an extremely low cost." Apple's Jobs believes that IBM's investments in Intel and Rolm are at least partially intended to strengthen IBM's ability to compete with Japan.
The struggle between IBM and its Japanese competitors is most intense in Japan, where IBM lost its No. 1 position to Fujitsu in 1979. IBM Japan, the company's wholly owned subsidiary, is fighting back. "They are becoming surprisingly aggressive," says Yuji Ogino, managing director of IDC Japan, a unit of International Data. IBM Japan, which employs 13,000 Japanese workers, has been slashing prices and launching new marketing drives in a bid to win back its overall lead. Admits a spokesman for a rival Japanese firm: "IBM is an enormous competitor."
At the same time that it has been fighting vigorously for market share, IBM has been forming cooperative agreements with the Japanese. In one, IBM and Matsushita Electric Industrial teamed up to produce a personal computer that converts Japanese phonetic symbols into Chinese characters or Kanji. Typewriters have not been widely used in Japan, partly because, with so many different characters, a typical machine must be packed with about 3,000 Kanji. The new machine, which ranges in price from $4,100 to $12,700, has a keyboard of only 45 phonetic symbols plus the Latin alphabet. More than 15,000 of the machines have been ordered, and there is at least a two-month wait for delivery.
If striking similarities exist between IBM and Japanese companies, the reason is that Big Blue was the model for some Japanese business techniques. For example, IBM developed "quality circles" some 20 years ago. The circles, small teams of workers that get together to discuss ways to improve output and solve production problems, have been widely adopted in Japan and are often cited as a reason for productivity gains there. Both IBM and Japanese executives stress harmonious employee relations, and both place a high priority on becoming the most modern, cost-efficient manufacturer of the products they turn out.
Foreign operations are vital to IBM. Overseas business accounted for 45% of