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Japanese firms, with their knack for producing well-made electronics products at a low price, are already overtaking U.S. manufacturers in some segments of the computer market. Japanese-made semiconductors are installed at the heart of many U.S. machines. IBM, Xerox and Hewlett-Packard all distribute Japanese-made Epson printers under their own labels to go with their personal computers. Experts estimate that up to 90% of American-built computers are now sold with either Japanese printers or monitors.
Japan is also quickly moving to pioneer its own technological advances. Sharp has developed a flat computer display screen that takes much less space than conventional ones. It is being used by Grid Systems of Mountain View, Calif., in its new Compass computer, which sells for $8,150. Sony has introduced a device that can store nearly twice as much computer information in about half the space that is now required. Japan is also reputed to have a lead in the development of more futuristic improvements like videodisc storage, which will vastly enlarge the capacity of personal computers.
Despite Japan's formidable track record in marketing to the U.S. consumer, American computer executives are downplaying the Japanese challenge. Says Radio Shack Vice President Jon Shirley: "They don't understand office automation, small business computing or have a clear grasp of the applications these machines are used for." Adds another top industry official: "I don't think the Japanese have ever faced this kind of competition in a particular market. We've got a very, very strong industry with extensive distribution, software support and computer experience."
U.S. computer firms, though, should not forget how they lost their dominant position in the Japanese market. As recently as 1979, U.S. companies controlled some 90% of personal computer sales in Japan. Their market share is now about 20%. Says David Crockett of Dataquest, a California-based firm that monitors the industry: "The U.S. companies don't seem to be doing their homework the way the Japanese are. The Americans feel they know the answers. It's an extremely serious situation." A little more than a decade ago, many U.S. executives in the automobile and consumer electronics industries dismissed the Japanese competition—and then saw their markets begin to slip away.
—By Alexander L. Taylor III.
Reported by Michael Moritz/San Francisco and Bruce van Voorst/New York