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No. 354, March 1999

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American Companies in Japan


COMPUTERS AND PERIPHERALS

The world's largest electric utility is ready for any emergency that knocks out its main computer system. COMPAQ COMPUTER CORP. has installed a backup server in Saitama prefecture that is linked via a very high-speed network with TOKYO ELECTRIC POWER CO., INC.'s computer facility in central Tokyo 30 miles away. If a disaster damages that operation, TEPCO will be able to get its computer system back up and running in about two to three minutes. At the heart of the Compaq backup/recovery system is one of its high-powered, 64-bit RISC AlphaServers running the OpenVMS operating system.

The recession is forcing the subsidiaries of American companies as well as Japan's electronics manufacturers to find ways to cut costs and improve efficiency. One step by IBM JAPAN LTD. in that direction was to spin off its accounting and general affairs departments into subsidiaries. This move is expected to trim IBM Japan's administrative staff to 500 from 800. The 64 companies affiliated with the computer maker will shift their accounting and administrative operations to the new units in stages. In 1993, IBM Japan converted its personnel department into a subsidiary.

Market trackers report that computer sales, particularly PC sales, are on the rebound, but the turnaround did not occur soon enough for MICRON ELECTRONICS, INC. The direct marketer has pulled out of Japan, where it never managed to sell more than about 15,000 machines a year since launching operations in 1996. Late last year, the Nampa, Idaho company signaled that it was having second thoughts about trying to slug it out with its many American and Japanese competitors (see Japan-U.S. Business Report No. 352, January 1999, p. 11). Micron Electronics reportedly is looking for a distributor to handle its PCs. In the meantime, it contracted with PFU LTD. for service.

Increasingly frustrated that its market share in Japan lags so far behind what it has gained in the United States and internationally, COMPAQ COMPUTER CORP. is trying to boost sales by lowering prices. The cuts extend over a cross section of its broad product line. At the top, they include reductions of 10 percent to 24 percent on all models in the Windows NT-based Digital Server 3300, 5300 and 7300 series; these enterprise servers are powered by the 64-bit RISC Alpha 21164A processor. Compaq's subsidiary also slashed prices by as much as 22 percent on its Professional Workstation AP400 and AP500 models, which run off fast versions of the Pentium II. In addition, it trimmed prices on the corporate desktop Deskpro line by up to 25 percent and decreased those for the Armada 3500 Slim series and the Armada 1700 Value series of notebook PCs by up to 21 percent. So far, there are no signs that these moves are leading to the price-cutting one-upmanship that roiled Japan's PC market earlier in the 1990s. One reason is that the reductions on the Compaq desktop and notebook machines were linked to the introduction of lower-priced replacements. However, DELL COMPUTER CORP.'s subsidiary did mark down prices by as much as 19 percent on all its Precision PC workstations and on certain models in its PowerEdge PC server family. Moreover, HEWLETT-PACKARD JAPAN LTD. discounted prices by as much as 23 percent on all Vectra desktop PC models targeted at corporate customers.

COMPAQ COMPUTER CORP.'s unit also is refining part of its marketing strategy for PCs in an attempt to give a lift to sales. It has enlisted CANON SALES CO., INC. to handle Presario desktop and notebook models targeted at the corporate market. Canon Sales will stock these products at its Zero-One stores, which are located mainly in the Tokyo area, and market them through its network of distributors. This is the second time that Compaq has turned to Canon Sales for marketing help. In January 1998, the world's top PC vendor gave the company exclusive rights to sell a new line of Presario PCs for the home. That arrangement contributed to the roughly tripled sales of home-use Presarios in 1998. Compaq is gunning to double overall Presario sales in 1999.

For its part, GATEWAY 2000, INC.'s subsidiary sees directly managed stores as a market-boosting complement to direct sales by phone and over the Internet. The company has opened its fourth Gateway Country Store, located in Sendai in northern Honshu. Like the ones in Tokyo, Osaka and Nagoya, the store sells Gateway PCs and peripherals as well as movies on DVDs.

Of course, new products remain central to the marketing strategies of all American computer manufacturers. Going after the scientific and technical computing markets, IBM JAPAN LTD. introduced a new generation of RS/6000 SP supercomputers. The 64-bit RISC POWER3 processor that is at the heart of the POWER3 SMP (symmetric multiprocessing) Node system can perform up to 2 billion operations per second, or roughly double the capabilities of the POWER2 chip previously found in the SP line. However, pricing basically has been left unchanged. For example, the low-end POWER3 SMP Node starts at $82,000. The new SP family, which, like its predecessors, runs AIX, IBM Japan's version of Unix, can scale from one or two nodes up to 512 nodes, with performance expanding almost linearly with size.

IBM JAPAN LTD. also released additions to the AS/400e enterprise server line that deliver a 30 percent average price/performance improvement, thanks to a fourth-generation 64-bit RISC PowerPC processor. The AS/400e 720, 730 and 740 systems simultaneously can host Internet sites, conduct electronic business, mine data bases, run enterprise Java and native Lotus/Domino and handle traditional business applications. One innovation incorporated in the new models, which run OS/400 Version 4 Release 3 but are ready to use the next release, is logical partitioning. LPAR enables a single server to operate like multiple servers. The AS/400e Model 720, which can be configured with one to four processors, starts at $102,600. The Model 730 supports one to eight PowerPCs and goes for $282,900 and up. The top-of-the-line Model 740 can handle eight to 12 processors. Its pricing begins at $2.1 million.

When it bought DIGITAL EQUIPMENT CORP. in June 1998, COMPAQ COMPUTER CORP. said that it would continue to implement DEC's powerful 64-bit RISC Alpha processor architecture. For a time, this promise appeared to be jeopardy. Finally, however, Compaq released worldwide the first two products incorporating what industry analysts consider to be the fastest processor available, the Alpha 21264 running at 500 MHz. The Professional Workstation XP-1000, which starts at $13,800, supports the just unveiled Tru64 Unix, Compaq's successor to the 64-bit Digital Unix operating system, OpenVMS and 64-bit Windows NT. Compaq also put the Alpha 21264 chip into a new line of servers called the AlphaServer DS20. The entry-level price for this dual processor-capable system with 128 MB of memory and 4 GB of disk storage is $30,600 for either Tru64 Unix or OpenVMS with their Windows NT interoperability.

In the latest attempt to protect its position in the Unix systems market, SUN MICROSYSTEMS, INC. started international shipments of high-end and mid-range enterprise servers sporting the new 400-MHz UltraSPARC II processor and the company's exclusive 100-MHz Gigaplane XB crossbar or standard Gigaplane interconnect technology. According to Sun, the 34 percent performance enhancement to the Sun Enterprise 10000 server, more familiarly known as Starfire, and to the Sun Enterprise 3500, 4500, 5500 and 6500 server lines should bring immediate benefits to traditional data center applications, including on-line transaction processing, enterprise resource planning, data warehousing and high-performance computing, as well as to Internet service providers. .....SUN MICROSYSTEMS, INC. also brought the performance enhancements of the 400-MHz UltraSPARC II processor to the lower range of its Unix server lineup by installing it in the compact Sun Enterprise 250 server. Moreover, with a starting price of $13,200, Sun's subsidiary priced the new product to go head-to-head with PC servers.

Windows NT users requiring a high-availability solution are the target customers for COMPAQ COMPUTER CORP.'s Parallel Database Cluster system, which can link together as many as six ProLiant 1850R servers. When used with Oracle8 Enterprise Edition and Parallel Server software, the system also provides the data processing speed sought by enterprise customers. A configuration with four ProLiant 1850R servers, a Fibre Channel storage interconnect kit and 9.1 GB of hard drive storage costs $182,000.

COMPAQ COMPUTER CORP.'s higher-end PC servers now can deliver the power of the 450-MHz Pentium II Xeon processor with its choice of 512 KB, 1 MB or 2 MB of L2 cache. The ProLiant 5500, which is available as a minitower model or a rack-mounted system, starts at $13,200. The four- way-capable ProLiant 6000 costs $13,700 for the base single-processor model. The ProLiant 6500, which is designed for high availability, goes from $29,100. That also is the starting price for the ProLiant 7000. It, too, can be equipped with up to four 450-MHz Pentium II Xeon processors and offers the latest in high-availability features.

In a Japan-only initiative designed to make its PC servers stand out in the crowd, HEWLETT-PACKARD CO. is bundling Microsoft Exchange Server 5.5 with selected NetServer products: the LXr 8000, the LH 4/4r and the LH3/3r. This strategy does double duty since it could help MICROSOFT CORP. win market share from LOTUS DEVELOPMENT CORP.'s Notes.

With corporate IT budgets pinched, the products offered by American PC manufacturers increasingly are value-priced. Sometimes, though, this strategy buys innovative packaging as well as performance. For example, the first product to emerge from GATEWAY 2000, INC.'s summer 1998 initiative to develop products specifically for the Japanese market is the Gateway Profile, a space-saving desktop machine that integrates a 15-inch LCD display with the PC's electronics. This $2,100 system, which offers 64 MB of main memory and a 4.3-GB hard drive, also is the second Japan-only Gateway PC to use the 400-MHz AMD-K6-2 processor from ADVANCED MICRO DEVICES, INC. (see Japan-U.S. Business Report No. 353, February 1999, p. 14).

IBM JAPAN LTD. also hopes that a space-saving design can sell desktop PCs. It has put on the market two versions of the IBM PC710 Slim Tower with a skinny LCD display and a thin hardware box. The 6870-JH3 model runs off a 333-MHz Celeron processor. It lists for $2,300. The 6870-JH6 system, which goes for $3,200, uses a 400-MHz Pentium II chip.

The same two companies are using the Celeron processor running at 366 MHz to give customers that are budget-minded but performance-conscious new desktop options. This chip shows up in a $2,000 addition to IBM JAPAN LTD.'s PC 300GL line and in the new, three-model PC 300PL family, which starts at $2,800. The 366-MHz Celeron processor also is the latest engine in the E-1200 series of systems for corporate networks from GATEWAY 2000, INC.'s subsidiary. The new model features 32 MB of system memory, a 3.2-GB hard drive, a 32X CD-ROM drive and a 15-inch monitor for less than $1,200.

For GATEWAY 2000, INC. corporate customers that want more in terms of performance and bells and whistles while staying within budget, the direct marketer is offering the GP6-400. Powered by a 400-MHz Pentium II with 512 KB of cache, this machine comes standard with 96 MB of SDRAM, a 13-GB Ultra ATA hard drive, an IOMEGA CORP. internal Zip drive, a 17-inch color monitor and other features for just $1,600-plus.

Given the limited budgets of most IT managers, generic PCs would seem to be ready-made for today's market environment since they cost far less than name machines. For whatever reason, they have been slow to catch on, perhaps because Japan is an extremely brand-conscious country. Now, however, SOFTBANK CORP. has thrown its weight behind this sales strategy. It has arranged for big electronics distributor INGRAM MICRO INC. of Santa Ana, California to supply it with no-name PCs on an order- only basis. Softbank thinks that it can sell 200,000 PCs in the first year by charging 20 percent to 30 percent less than brand-name systems cost. It also has lined up a RICOH CO., LTD. subsidiary to provide nationwide service for the PCs.

Not surprisingly, the value-pricing strategy extends to notebook computers. COMPAQ COMPUTER CORP.'s subsidiary, for instance, introduced four models in the Armada 1500c Basic Advantage series with an eye toward winning bulk orders for them from companies. These machines use mobile Celeron processors running at up to 300 MHz with 128 KB of integrated L2 cache, 32 MB of system memory, a 4-GB hard drive, a 24X CD-ROM drive and a diskette drive. To hold prices down, though, the Armada 1500c models have a 12.1-inch supertwisted nematic display rather than the usual TFT display. Pricing starts at $1,500.

Adding about $600 to the price allows COMPAQ COMPUTER CORP.'s unit to respond to one of the few drivers of the notebook market: the demand for thin, lightweight machines. Its Japan-tailored Presario 1905 and 1906 models measure just 1.2 inches thick and weigh only about 4.6 pounds, yet they feature a 13.3-inch XGA TFT display and integrated hard drive, DVD- ROM drive and diskette drive. A 266-MHz mobile Celeron processor provides the power.

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American vendors are not ignoring notebook models that cost more. DELL COMPUTER CORP.'s subsidiary, for one, introduced two new products in its Latitude CPi line. The A366XT runs off a powerful 366-MHz mobile Pentium II processor and comes with AGP technology for improved three- dimensional graphics and a 13.3-inch XGA TFT display. It lists for $2,900. The A300ST, which goes for $2,600, has a 300PE MHz mobile Pentium II chip, AGP and a 12.1-inch SVGA TFT display. Both have 64 MB of RAM standard and disk storage capacity of 6.4 GB.

IBM JAPAN LTD. has put on the market for the mobile professional five localized models in its cutting-edge ThinkPad 600E notebook line. Priced between $4,000 and $5,100, these products offer a choice of the 366-MHz mobile Pentium II or the 300PE MHz mobile Pentium II with at least 256 KB of L2 cache, plus AGP. All have a 13.3-inch SVGA TFT screen, a minimum of 64 MB of internal memory and either a 4-GB or a 6.4-GB hard drive. An UltraSlim bay that accommodates a variety of options, including a DVD drive, a CD-ROM drive, a SuperDisk drive and a diskette drive, is standard. Moreover, regardless of model, the package has a 1.4-inch profile and a travel weight of about 5 pounds. Buyers can choose among the Windows 95, Windows 98 and Windows NT operating systems.

In an attempt to more effectively match the varying requirements of the home market, IBM JAPAN LTD. has revamped parts of its Aptiva line of desktop PCs. For people looking for a basic, low-cost machine, the company has the Aptiva 133. It uses the less expensive 233-MHz AMD-K6- 2 chip from ADVANCED MICRO DEVICES, INC. and eliminates such otherwise standard software programs as Word, Excel and Outlook, thereby allowing IBM Japan to keep the mail-order price at only $1,100 without a monitor. Adding the software raises the price to $1,300, while buying a TFT display ups the cost for the Aptiva 133 to $3,000. For the home buyer who wants tons of software as well as all the multimedia bells and whistles and other high-end features, IBM Japan put on the market the three-model Aptiva 443 series. Costing between $1,700 and $2,700, these products offer among other things voice-activated operation with ViaVoice.

With the release of a localized version of Windows CE Handheld PC Professional Edition Version 3.0 by MICROSOFT CORP.'s subsidiary, a number of competitors, both Japanese and American, announced forthcoming personal digital assistants (as they are known in Japan) utilizing the new operating system. Whatever they are called, these products are starting to fudge the line between mininotebooks and handheld devices. For instance, HEWLETT-PACKARD JAPAN LTD.'s Jornada 820, which will go on sale in late March, has a fairly large LCD display with a VGA resolution of 640 x 480 and a substantial amount of internal memory. An obvious difference between the two types of products is the limited amount of storage in the PDAs because they have no hard drives. The prices of these devices also are starting to approach those of mininotebooks. The Jornada 820 costs about $1,300, although that does buy 21 hours of continuous operation.

American vendors should find a more receptive market in Japan for true PDAs, also called personal organizers or personal companions, now that Japanese-language support is available for all handheld products based on 3COM CORP.'s popular Palm Computing platform, which include the PalmPilot Professional and the Palm III. The localization effort extended to the HotSync synchronization technology as well as to the open- architecture Palm OS software. 3Com's subsidiary will put on the market Japanese-enabled Palm Computing organizers. So will IBM JAPAN LTD., which is reselling the PalmPilot as the WorkPad 8602-30J. Its 6-ounce product, which has 4 MB of DRAM and 2 MB of flash memory, is priced at $425. Both companies' organizers will be going up against SHARP CORP.'s entrenched Zaurus PDA.

Market newcomer NETSCREEN TECHNOLOGIES INC. tapped SUMISHO ELECTRONICS CO., LTD. to distribute its products for the network security market. The Santa Clara, California firm says that its NetScreen-100 and NetScreen-10 are the first solutions that combine firewall, virtual private network and traffic management functionality on a single, dedicated hardware platform. The compact, rack-mountable NetScreen acts as a bridge between networked client servers, PCs and industry- standard routers in corporate LAN (local area network) environments.

The subsidiary of network file server heavyweight AUSPEX SYSTEMS, INC. has rolled out a new line of network-attached storage products. The flagship of the Auspex 4Front family is the NS2000, which can scale to accommodate more than 5,000 users working in Unix or Windows environments. The DataXpress architecture incorporated in the NS2000 distributes the network file access and data delivery workloads to multiple, dedicated processors that are individually optimized for network, file, storage and system administration functions. That technology, claims the Santa Clara, California manufacturer, delivers higher data availability and faster access to shared data than traditional servers while also reducing administrative costs through network data consolidation. The Auspex 4Front family includes the AS200, which supports as many as 200 users in technical workgroup settings, and the AS100 for support of 10 to 50 users in remote locations.

To speed access to data, HEWLETT-PACKARD JAPAN LTD. introduced the HP NetServer Rack Storage/12FC, a mass storage enclosure that supports Fibre Channel host connection and Ultra2 SCSI disk drives in a rack- mounted configuration. This product is priced at $11,100. A FCArray disk array controller card goes for $7,900, while the FC Hub, which provides centralized Fibre Channel-arbitrated loop interconnection, lists at $5,300. A Fibre Channel host bus adapter card costs $2,500.

Backup and restore products designed specifically for PC workstations are now available from HEWLETT-PACKARD JAPAN LTD. in addition to its solutions for PC servers. The four models making up the HP Colorado Backup II family range in price from $1,200 to $2,200. All use DAT (digital audio tape) drives. .....Meanwhile, NISSHO ELECTRONICS CORP. is marketing two backup systems that can store 20 GB of compressed data per tape using IMATION CORP.'s Travan NS20 technology. The N2000TRV for internal or external installation starts at $1,200, with the tape itself costing $65, while the N2600TRV, an autoloader that can handle up to six tapes, goes for $3,400.

Audio and video editing professionals have a more affordable but higher performance storage solution from AVID TECHNOLOGY, INC.'s subsidiary. The Avid MediaDrive rS Plus is available with 9 GB of capacity for $5,600 or double that for $9,400. These products use the fastest drive technology on the market — 10,000 rotations per second — rather than more common 7,200-rpm drives. The higher data transfer rate that results means that fewer drives are necessary to achieve higher resolutions. An 18-inch (viewable image size) TFT flat-panel display is on the market from COMPAQ COMPUTER CORP.'s subsidiary. The Compaq TFT8000 supports wide-angle viewing both horizontally and vertically at 160 degrees as well as 16.7 million colors in SXGA (1280 x 1024) resolution. Moreover, the thin unit takes up less than half the space of a 21-inch CRT monitor and weighs 70 percent less. People who find the $4,000 price tag for this cutting-edge technology too steep can wait for Compaq's 15-inch model. While incorporating the advanced features of the TFT8000, it will cost just $1,600.

In a development tie-up that could create a new generation of flat-panel displays for a range of products, EASTMAN KODAK CO. has agreed to license its cutting-edge organic electroluminescence technology to SANYO ELECTRIC CO., LTD. Displays incorporating this technology promise to be brighter, thinner and more energy-stingy than today's LCD displays. The partners expect to have monochrome passive organic EL displays on the market by the second half of 2000; they will be designed for car navigation systems, PDAs and cellular phones. Full-color active-matrix displays for digital still cameras and digital videocassette recorders could follow in 2001. Kodak will provide organic EL materials to Sanyo Electric, which will use its expertise in making flat-panel displays to come up with driver ICs for the new displays. The Japanese electronics company will manufacture the displays and market them under its brand name. However, Kodak and Sanyo Electric say that they plan to aggressively license their codeveloped organic EL display technology to other firms.

At the same time, PIXTECH, INC., the main promoter of field-emission technology for flat-panel displays, has launched a joint development project with a Japanese company described only as one of the world's largest makers of CRTs. The goal of the program is to develop a 15-inch "flat CRT" prototype for multimedia desktop computer applications using the Santa Clara, California firm's field-emission technology and its partner's CRT expertise. PixTech already has demonstrated several prototypes of the first 15-inch FED color display. Under a late 1997 arrangement, its exclusive Japanese representative is SUMITOMO CORP.

At the end of April, IBM JAPAN LTD. will start shipping a 40-page-per- minute network laser printer. The IBM InfoPrint 40, the new high end of that line, is PostScript 3-compatible and can make clear copies of photographs and other graphic material. It will list at $4,300.

The HP DesignJet line of large-format printers from HEWLETT-PACKARD JAPAN LTD. has two new, fast members. The HP DesignJet 1050C and the HP DesignJet 1050CM can print an A1/D-size color line drawing in 45 seconds with a resolution of 600 dots per inch. The black-and-white print resolution is 1,200 dpi for near photo-quality graphics. The HP DesignJet 1050C costs $11,000, while the HP DesignJet 1055CM, which is PostScript 3-compatible, is priced at $16,200. HP Japan is projecting combined sales of 3,600 units a year.

A rear-projection product line developed by VICTOR CO. OF JAPAN, LTD. is using the SoftBoard Model 301 from MICROFIELD GRAPHICS, INC. as the interactive user interface. The Portland, Oregon manufacturer's system has a 67-inch interactive high-gain screen that allows computer and video images to be projected from the rear. Its laser scanning technology and electronic pen design also enable the user to interact directly with the projected software. Microfield is represented by SORD COMPUTER CORP.

Buyers of APPLE COMPUTER, INC.'s iMac and Power Macintosh G3 machines have a two-year head start on PC users in terms of speedier connections with peripherals. That claim is based on the fact that the company is building USB (universal serial bus) medium-speed interconnection technology into every iMac and both USB and the high-speed FireWire (the IEEE 1394 standard) technology into its Power Macs. In response, 130 USB and 22 FireWire products have been released in Japan for the Mac. The FireWire devices include digital still cameras, digital camcorders and digital VCRs as well as high-performance scanners, disk drives and printers.

An exchange rate of ¥117=$1.00 was used in this report.aaaaaa

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