All, Article...Japanese PC market prospects going forward...
Six PC Cos. Talk of Japan PC Market Prospects
December 15, 1997 (TOKYO) -- Six top personal computer makers in Japan, talking to Nikkei Electronics about prospects in the local market from 1997 to 1998, said business was bleak in 1997 for household PCs in Japan.
Talking about the whole PC market, however, the leading manufacturers agreed that the annual market growth of 20 percent in the past was extraordinary, and that the market now had entered a stage of steady growth with an annual growth rate of 10 percent (See chart.).
Nikkei Electronics' interviews were held with top management or managers responsible for the PC business at NEC Corp., Fujitsu Ltd., IBM Japan Ltd., Apple Japan Inc., Microsoft Co., Ltd. of Japan and Intel KK of Japan.
Major questions included prospects and estimates of domestic shipments, strategies for a steady business market and stagnant household market and development of notebook PCs.
Each of the six companies were basically maintaining offensive attitudes, saying that the market size would not decline because it will be sustained by a steady business market in the future.
In particular, they predicted the market would rebound after 1998 because attractive PCs, such as those with an LCD as standard and those with more user friendly features, would be introduced.
The majority of the respondents said notebook PCs would grow to account for more than 50 percent of the domestic market. These products can meet the requirements of Japanese consumers for space and energy-saving products.
They had, however, negative opinions on low-priced products with a lower degree of expandability and fewer functions such as those priced at about US$1,000.
Microsoft and Intel, which dominate the market for the two key components of PCs, that is, operating systems and microprocessors, are actively developing sales for business use as a short-term strategy. But they also are developing the market for the Internet and home use longer term. They also are promoting higher functionality and performance for their products.
Following are summaries of the interviews with the six companies.
Maintaining the Largest Market Share by Introducing New Series
-- Yoshi Takayama, senior vice president, NEC Corp.
NEC's domestic shipments for fiscal 1997 (April 1997 - March 1998) are estimated at 3,700,000 units, a 6 percent increase over the last fiscal year. Sales are estimated at 720 billion yen (US$5.53 billion), down by 4 percent from the last fiscal year.
Shipments for the first half of fiscal 1997 were 1,550,000 units, which is somewhat lower than expected. This is because his company held down the shipments of old models just before the introduction of the PC98-NX series in October 1997.
The PC98-NX complies with the architecture worked out by Microsoft Corp. and Intel Corp. of the United States, and NEC is entertaining strong expectations for its success. NEC expects that shipments in the second half of 1997 will increase 10-15 percent, and in fiscal 1998 they will be up by 10-20 percent.
NEC predicted that notebook PCs will increase their share to more than 50 percent of the business market. It plans to introduce notebook PCs both for business use and home use and intensify marketing.
Notebook PCs are currently higher in price than desktop PCs by 20-30 percent. NEC wants to decrease the price difference to 10 percent. It also indicates that sales of desktop PCs with LCDs will expand rapidly.
Offering Attractive Products Rather Than Reducing Prices
-- Tadayasu Sugita, personal systems business group president, Fujitsu Ltd.
Fujitsu set its target for domestic shipments for fiscal 1997 (April 1997 - March 1998) at 2,250,000 units, a 12.5 percent increase over last fiscal year. Shipments for the first half of fiscal 1997 were 950,000 units, scoring only a six percent increase over the same period last fiscal year. This is because PCs have permeated the active users market, according to Fujitsu.
Its PC business, however, showed steady growth in the business market, which accounts for more than 60 percent of its total shipments. It will push the shipments for the second half of fiscal 1997 to 1,300,000 units, which is 17-18 percent more than the same period last fiscal year. It introduced desktop PCs with LCDs as standard for about 200,000 yen (US$1,540) in November 1997. It wants to stimulate the market with models with new concepts.
It is important to hold down prices because the market is sluggish, but Sugita predicted that low-priced PCs like the US$1,000 PC would not find an easy market in Japan. It should be more important to introduce products attractive to users instead of reducing prices, he said.
Developing Usability, Entertainment Features for Notebook PCs
-- Koichi Higuchi, director, IBM Japan Ltd.
IBM Japan does not disclose shipment figures, but the home market was bleak until the third quarter of 1997.
It attributed the stagnant business to the increase in the consumption tax and the spread of PCs into households nationwide. It plans to introduce easy-to-use products backed up by its technology to overcome the difficult market. Pursuing a better user interface is one of the strategies. IBM Japan is offering, for example, voice input software and it is making application software that runs with a special key.
The Japanese notebook PC market is the second largest in the world. The IBM ThinkPad series has total shipments of 4,700,000 units worldwide, of which 1,000,000 units were sold in Japan. Users who own two or three portable PCs are increasing in number, and the market is supposed to grow further. It is vital to develop thinner and lighter products, and technological development of batteries is indispensable to expanding market share, IBM said.
Maintaining a Leadership Position by Adding Resources
-- Naohisa Fukuda, business operations director, Apple Japan Inc.
Apple Japan's total domestic shipments for fiscal 1997 (October 1996 - September 1997) were about 800,000 units, decreasing by about 10 percent from last fiscal year. Shipments for business use accounted for 65 percent, and the remainder were for home use.
The PC market will expand steadily at 10-15 percent annually for the next two or three years. Demands for first purchases are decreasing, whereas demands for replacements are increasing. The Power Macintosh is strong in niche markets, such as desktop publishing, medical and architecture, and Apple will concentrate in these fields. Instead of pursuing market share, it is attaching more importance to share by field.
Apple will put more resources into the home market. Since current product lines are not attractive enough, Apple is considering introducing products with reduced costs for specialized use. Products that enable users to run Internet, word processing and spreadsheet functions will spread into the home market if they are introduced at less than 100,000 yen (US$770).
Notebook PCs accounted for a little more than 20 percent of sales. Apple is scheduled to introduce products with performance exceeding that of desktop machines.
Recreating the Internet Boom
-- Hirohisa Ohura, managing director, Microsoft Co., Ltd.
Microsoft of Japan achieved sales of 146 billion yen (US$1.12 billion) in fiscal 1997 (July 1996 - June 1997), a nearly 50 percent increase over last fiscal year. As for the OS share of shipments, Windows95 accounted for 88 percent, Windows 3.1 less than 5 percent and Windows NT had the remaining share. Windows CE has only a very small share currently.
Windows95 will decrease its share to 80 percent and Windows NT will increase its share of the shipments for 1998, the company said. However, the domestic PC market has entered into the stable growth stage. Windows98 and Windows NT 5.0, both scheduled for introduction in 1998, will not be as sensational as Windows95.
The United States has a growth rate of 40 percent in the home market, whereas Japan has only 14 percent, with a lot of room for further growth. Software makers are expected to create a second Internet boom and develop a killer application, such as Internet shopping.
Microsoft will offer powerful operating systems and microprocessors in collaboration with Intel.
Pentium II Seen in Every PC in the 2nd Half of 1998
-- Nobuyuki Denda, president, Intel KK
Domestic shipments of PCs in 1997 will increase by about 10 percent. Intel wishes to concentrate on Pentium II processors in the steadily growing market.
Although PCs with MMX Pentium processors currently account for more than 70 percent at sales outlets, products with Pentium II processors will be introduced in rapid succession during the Christmas business season. Pentium II processors are expected to be employed by every model of PC, ranging from desktop models and portable models by the second half of 1998.
Sales of desktop PCs with LCDs will increase in the business market from 1998 to 1999. PC servers will see greater demand, increasing by 200 percent annually. Notebook PCs also will be in greater demand and account for more than 40 percent of total domestic shipments in 1998.
But Intel said it does not expect the market for personal digital assistants (PDAs) to show remarkable growth. PDAs will not take the initiative in expanding the market, and it is not clearly positioned in the market, Intel said.
It is PCs for home use that will expand the demand for PCs after 2000. The market will grow further should home electric appliances manufacturers put their resources fully in the market for PCs for personal use.
Chart: Japan's PC shipments of units and growth rate from previous year (Source: JEIDA)
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Looks like a very positive report to me.
Michael |
