Japan-US Business Report Logo

No. 357, June 1999

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American Companies in Japan


COMPUTERS AND PERIPHERALS

On top of all the problems that NEC CORP. has had with PACKARD BELL NEC, INC., its majority- owned Sacramento, California PC manufacturing and marketing company (see Japan-U.S. Business Report No. 354, March 1999, p. 3), the joint venture that the two formed in Tokyo in September 1996 to sell desktop and notebook PCs has not lived up to expectations. The equally owned company had expected to sell 160,000 PCs in FY 1997, mainly to corporate customers, for revenues of $213.1 million and 300,000 machines in FY 1998 for a total of $409.8 million. Instead, it sold only about 10,000 systems in FY 1998, generating sales of just $16.4 million or so. Accordingly, NEC said that it would dissolve the joint venture at the end of June.

Demand for PCs in Japan, particularly for home use, has staged a strong rebound this spring. However, American computer vendors continue to rework their sales strategies, at least at the fringes, to ensure that they are positioned to capitalize on the strengthening market. For instance, DELL COMPUTER CORP., which made its name as the top U.S. direct marketer by catering to corporate customers, will put more emphasis on the consumer market in Japan. Signifying this new focus, its subsidiary will release as soon as this fall PC models priced below $1,000. While the low end of the market in Japan has been moving in this direction, to date, no major PC seller has broken through the $1,000 price barrier. Dell says that technical advances have made it possible for the company to sell machines at low prices and still make money.

For its part, the subsidiary of rival direct marketer GATEWAY 2000, INC., whose customer base consists mainly of individuals and small and midsize businesses, is going after major accounts. Having set up a corporate sales division last year aimed at big buyers, Gateway planned a June launch of an on-line link between that division and the purchasing departments of large companies. By yearend, it hopes to have 30 clients for the service, which will allow them to obtain product information, estimates, and sales and technical support over the Internet as well as to place orders and specify configurations. Gateway is not forgetting its roots in its quest for major accounts, however. Later this year, it will begin an installation service for small and midsize firms. The company will match products to customers' requirements as well as provide upgrade and support services. It also will accept equipment trade-ins. Moreover, Gateway hopes by yearend to extend nationwide a service now available in the Tokyo, Osaka and Nagoya metropolitan areas that helps first-time PC users to get up and running. A 90-minute installation job costs about $125. Training in how to use Windows and other programs also is available, starting at roughly $125 for two hours.

By October 1, NIHON UNISYS, LTD. will complete the transfer of its sizable maintenance operations to its wholly owned UNIADEX LTD. subsidiary. Mainframe service will the last part of this business to be shifted. A big reason for the switch is that most corporate networks now are made up of hardware from a number of vendors, not just Nihon Unisys equipment. Uniadex had revenues of $161.5 million in FY 1998. The addition of mainframe maintenance should boost that figure to around $352.5 million.

Continuing to raise the bar on mainframe performance more quickly than rivals FUJITSU, LTD. and HITACHI, LTD., INTERNATIONAL BUSINESS MACHINES CORP. had a June ship date in both the United States and Japan for its sixth generation of enterprise-class server technology since 1994. The latest S/390 Parallel Enterprise Server performs 1,600 million instructions per second when configured with 12 of IBM's new copper-interconnect processors. That represents roughly a 50 percent performance boost over the S/390 G5 machine (see Japan-U.S. Business Report No. 345, June 1998, p. 10). Capacity is not the only competitive advantage of the S/390 G6, IBM executives note. They also are touting its bandwidth and flexibility, saying that the combination makes the new line ideal not only for such traditional mainframe jobs like running corporate data bases and on-line transaction processing but also for Internet-based businesses. IBM JAPAN LTD.'s mainframe marketing unit is pitching the S/390 G6 for enterprise resource planning, supply chain management and e-commerce in particular.

Designers, engineers and other power users that prefer the stability of the Unix operating system have a new generation of workstations available from HEWLETT-PACKARD CO. powered by the company's 64-bit PA-8500 RISC processor. The new line of HP VISUALIZE workstations starts with the B-Class. Aimed at computer-aided design engineers and three-dimensional solid modelers, these models use a 300-MHz PA-8500. Pricing in Japan goes from $26,100. For mechanical engineers performing simulations, virtual prototyping, complex modeling and other high-end visualization, there is the C-Class with a 400-MHz version of the processor and prices that begin at $35,700. The latest HP VISUALIZE series is topped off by the J-Class. Capable of handling two 440-MHz PA-8500 processors, these workstations are targeted at the most demanding jobs, including advanced 3D design. Pricing starts at $45,700. HEWLETT- PACKARD JAPAN LTD., which will supply the new HP VISUALIZE machines to HITACHI, LTD. and OKI ELECTRIC INDUSTRY CO., LTD. on an OEM basis, is projecting sales of 15,000 units in the next year.

Protecting its turf in the Unix workstation market, SUN MICROSYSTEMS, INC.'s subsidiary unveiled three performance-enhanced versions of previously introduced desktop products. The entry-level Ultra 5 workstation now is powered by a 360-MHz UltraSPARC-IIi processor. Priced from just $3,700, it is aimed at cost-conscious buyers running two-dimensional applications. For 3D graphics tasks, Sun has the Ultra 10, now available with a 440-MHz UltraSPARC-IIi processor and the Elite graphics accelerator for as little as $8,200. Sun's fastest desktop workstation is the Ultra 60, which can be configured with one or two 450-MHz UltraSPARC-II processors. Its pricing starts at $22,400.

The just-introduced AlphaServer DS10 not only is the world's fastest single-processor RISC machine, COMPAQ COMPUTER CORP. boasts, but it also hits a new price point for 64-bit computing, starting at $3,500 in the United States and $8,100 in Japan. Powered by a 466- MHz Alpha 21264 processor and offering a choice of operating system (Tru64 Unix, Linux, OpenVMS or Windows NT), the AlphaServer DS10 is being targeted at fast-growing but budget- minded markets, including ISPs, Web servers and e-commerce. For more demanding business or technical computing applications, Compaq's subsidiary simultaneously released the AlphaServer ES40. It can handle as many as four of the company's new 500-MHz Alpha 21264 processors.

About $2,800 allows corporate software developers to take advantage of the extremely fast processing speed and enhanced graphics capabilities of a 550-MHz Pentium III Xeon processor in a desktop PC. That is the price of the base configuration of GATEWAY 2000, INC.'s GX-550 system. It includes 128 MB of internal memory and a 13-GB hard drive but no monitor.

The same processor also is available in GATEWAY 2000, INC.'s E-5250 PC workstation, which is targeted at such applications as mechanical CAD, software development, digital content creation and geographical information systems. The built-to-order, dual processor-capable machine features the high-end processor with a choice of L2 cache, the 440GX AGP (accelerated graphics port) chipset offering up to 2 GB of synchronous DRAM memory with 100-MHz system bus technology, a variety of graphics accelerator options, a 9-GB SCSI hard drive and several monitor alternatives. A typically configured E-5250 technical workstation costs $6,600.

The release of the multimedia-boosting 550-MHz version of INTEL CORP.'s Pentium III processor has triggered another wave of product introductions. In the PC workstation market, they include COMPAQ COMPUTER CORP.'s refreshed AP200 Professional Workstations. Designed for users seeking a cost-effective, entry-level, single-processor system, the AP200 comes with the 440BX AGP chipset and a choice of graphics accelerators: Compaq PowerStorm 300, Matrox Millennium G200 or ELSA GLoria Synergy+. Pricing begins at $4,000.

DELL COMPUTER CORP.'s entry-level and midrange Precision WorkStations also can be configured with one or two 550-MHz Pentium III processors for as low as $2,700. The world's leading direct computer systems company used the release of these models to offer buyers a choice of graphics adapters from DIAMOND MULTIMEDIA SYSTEMS, INC. The Diamond Viper V770D now is the entry-level graphics option for the Precision WorkStation 210 and 410 as well as for the Pentium III Xeon-equipped Precision WorkStation 610. Alternatively, buyers of the Precision WorkStation 410 and 610 can opt for the Diamond Fire GL1, which is designed specifically for the 3D OpenGL workstation market.

The performance advantages of the 550-MHz Pentium III processor are available as well in DELL COMPUTER CORP.'s departmental and workgroup Pow-erEdge servers and in its OptiPlex GX1 and GX1p desktop PCs for corporate users. The latter machines start at just under $2,000 for the new engine, plus 64 MB of synchronous DRAM memory, 6.4 GB of hard drive storage, 3Com 10/100 Wake-up On LAN (local area network) networking, integrated 2X AGP video with 4 MB of integrated video memory, integrated audio, a 32X CD-ROM drive and Windows 95.

COMPAQ COMPUTER CORP.'s corporate customers also have access to the processing power of the 550-MHz Pentium III chip in selected Deskpro EN and Deskpro EP models. The high end of the Deskpro EP line, the Deskpro 6550/10/CDS/N, lists for $3,100, which includes a 10-GB hard drive, a 32X CD-ROM drive, a 2X AGP graphics card and a 17-inch monitor.

Giving corporate PC users more power is just one thrust in desktop marketing. Another current angle is a space-saving design. IBM JAPAN LTD., for example, announced the four-model PC 300PL Slim line. These products have in common a 400-MHz Celeron processor, 64 MB of SDRAM memory, an 8.4-GB hard drive and a CD-ROM drive. Their monitors differ both in type — TFT LCD or cathode-ray tube — and in size. Prices range from $1,600 to $3,500.

The subsidiary of GATEWAY 2000, INC., one of the first vendors to discover that a stylish, space-saving, all-in-one desktop design would sell, particularly if it was customized for Japanese users, has unveiled new models in its Profile series. It already is selling the Profile LS for the home buyer. Powered by a 400-MHz AMD-K6-2 processor with 3D Now! technology from ADVANCED MICRO DEVICES, INC., this $2,000 machine features 64 MB of internal memory, a 6.4-GB hard drive, a 2X DVD-ROM drive and a 15-inch color XGA TFT LCD display that has all of the system's electronics built into its base. Gateway also had a late June ship date for the Profile SE, a model designed for use as a network computer. It is less expensive than the Profile LS because the storage capacity is smaller and a CD-ROM drive is installed in place of the DVD-ROM drive.

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Slim also sells in notebook PCs. For instance, COMPAQ COMPUTER CORP.'s subsidiary added two models to its Presario 1900 Series of ultrathin, lightweight products for home computing. Both
are optimized for Internet access and feature a removable drive wedge. The higher-end product, the Presario 1925, uses a 400PE MHz mobile Pentium II and provides 64 MB of memory, a 6.4-GB hard drive, a second-generation DVD-ROM drive and a 13.3-inch XGA TFT LCD display.

For corporate customers just as interested in value as performance, COMPAQ COMPUTER CORP.'s marketing unit has the Armada 1500c notebook. Available at a number of price points, including $1,400 for the base model, these machines all use the new 366-MHz mobile Celeron processor.

GATEWAY 2000, INC.'s latest entry in the svelte category is the Solo 3150, which is just 1.2 inches thick and weighs only 5.2 pounds fully loaded, including its DVD-ROM drive. A model with a 333-MHz Celeron processor, 32 MB of internal memory, a 4-GB hard drive, a 24X CD- ROM drive and a 12.1-inch screen goes for $2,200.

For buyers who want all the bells and whistles of a desktop machine in a notebook PC, GATEWAY 2000, INC. introduced several Solo 9150 models. One configuration pairs a 366-MHz mobile Pentium II processor with 128 MB of memory, a 14.1-GB hard drive, a removable combination DVD/SuperDisk diskette drive and a 15.1-inch XGA TFT LCD display for $3,600.

A 14.1-inch TFT LCD screen now is available in the business-focused Latitude line of notebooks from DELL COMPUTER CORP.'s subsidiary. The Latitude CPt C333GT comes standard with a 333-MHz mobile Celeron processor, 32 MB of RAM, a 4.3-GB hard drive, a 24X CD-ROM drive and the large display for $2,200.

IBM JAPAN LTD.'s latest PC innovation is to pack an almost full-size keyboard into a mininotebook, the ThinkPad 240. Weighing only 2.9 pounds, including the battery, and measuring 1.05 x 10.2 x 8 inches, these machines run off a 300-MHz Celeron processor and feature a 10.4-inch SVGA TFT LCD screen. Depending on the model, 32 or 64 MB of SDRAM memory is available, as is a 3.2-GB or a 6.4-GB hard drive. A well-equipped system costs about $2,000.

For people willing to sacrifice functionality to gain portability, IBM JAPAN LTD. introduced the WorkPad c3. Small (4.5 inches in length) and lightweight (4.2 ounces), this PDA or personal organizer has only half the 4 MB of memory of the WorkPad introduced earlier this year (see Japan-U.S. Business Report No. 354, March 1999, p. 16) and no expansion slots. However, it still can be used to store memos, lists of thing to do, addresses, schedules and the like for transfer later to a PC. Moreover, it has handwriting-recognition capability and an easier-to- read screen. At $450, the WorkPad c3 costs about $40 more than the previously released model.

HEWLETT-PACKARD JAPAN LTD. is marketing a second color handheld product running Windows CE Handheld PC Professional Edition (see Japan-U.S. Business Report No. 354, March 1999, p. 16). The Jornada 680, which has an estimated street price of $1,100, measures 7.4 x 3.7 x 1.3 inches and weighs just 1.1 pounds. Yet it sports a 6.5-inch screen displaying 256 colors and a keyboard that is 76 percent the size of a normal PC keyboard. In addition, a faster processor has improved performance.

With the iMac adding luster to the APPLE COMPUTER, INC. name, its subsidiary hopes to broaden the appeal of its whole line. That now includes a pair of Macintosh PowerBook G3 notebooks that are faster than their predecessors as well as lighter and thinner. Moreover, they can operate five hours on their batteries, an hour and a half longer. Through its direct sales channel, Apple is selling a PowerBook with a 400-MHz PowerPC G3 processor for $3,500 and a model with a 333-MHz chip for $2,400.

The subsidiary of automatic teller machine specialist NCR CORP. is marketing to financial institutions what it bills as a next-generation terminal. The 5750II, which starts at $27,900, actually is an OEM version of the Banking Terminal N8333 developed by NEC CORP. with input from SUMITOMO BANK, LTD. .....NCR CORP.'s marketing unit, which has built a name for itself in Japan by supplying integrated systems to the financial sector, also has introduced the NCR Next Banking System Solution. This accounting and information-based package consists of a NCR WorldMark 5200 Unix server, Open ToxIII middleware and the iBIS program, which helps banks comply with the regulatory environment established by the Bank for International Settlements. The base configuration costs $16.4 million. With Japan moving to implement global accounting rules, NCR expects to sell 30 systems over the next five years.

Less than a year after forming a Japanese subsidiary, M-SYSTEMS FLASH DISK PIONEERS LTD. has won a breakthrough order for its FFD (fast flash disk) data storage device from a communications carrier described only as a first-tier company. The order, to be delivered over three years, consists of FFDs ranging in capacity from 320 MB to 1.8 GB. They will be used with the carrier's private branch exchange equipment. Newark, California-based M-Systems attributed the win, which could be worth close to $3 million, in large part to the reliability of its data storage device compared with traditional hard disks and, as a result, the lower costs of ownership.

Demonstrating its newfound commitment to serve the storage requirements of the fast- expanding enterprise market, HEWLETT-PACKARD CO. introduced on both sides of the Pacific the HP SureStore E Disk Array MC256. The first high-end array delivered by HP, this product is designed to address the growing demand for Fibre Channel storage area network-ready disk arrays for open, highly available, centralized storage. The MC256, which scales from 60 GB to 9 terabytes per storage subsystem, supports multivendor Unix system, Windows NT and mainframe environments. According to HP, it also offers the best multiplatform SAN support, with connections to the HP-UX, Solaris, AIX and Windows NT operating systems, and contains the most reliable disk-drive technology in the industry. HEWLETT-PACKARD JAPAN LTD. has priced the MC256 from $516,400. It believes that it can sell 200 systems, plus a variety of software from the 11-product portfolio offered for the MC256.

Marketing peripherals from other companies is one strategy that a newly aggressive SILICON GRAPHICS, INC. is trying to boost sales of its proprietary Unix servers in Japan. Its subsidiary has contracted with SONY MARKETING (JAPAN) INC. to sell SONY CORP.'s digital data tape drives and automated tape libraries to television broadcasters and computer graphics businesses, the company's mainstay customers. Included in the deal are Sony's GY-2120 tape drive, which incorporates that firm's Digital Tape Format technology, the DMS-B9 and DMS-B35 automated tape libraries and the DMS-8400 mass storage library.

NEC CORP. is banking on selling 100,000 units a year of the USB version of IOMEGA CORP.'s Clik! drive for mobile products, including digital cameras and smart cellular phones as well as handheld PCs. In June 1998, the Roy, Utah company gave the diversified electronics maker worldwide, nonexclusive rights to manufacture and market Clik! drives. Previously, Iomega had licensed NEC to build its Zip drives. The USB Clik! drives are priced at $245 in Japan. The low- cost Clik! disk holds 40 MB of information.

In another transpacific release, HEWLETT-PACKARD CO. introduced the replacement for the HP LaserJet 4000, its best-selling network laser printer. The HP LaserJet 4050 printer outputs up to 17 ppm with a resolution of 1200 dots per inch. Networked with the company's 10/100 BaseTX print server, the machine integrates into all Ethernet environments. Despite increased performance and greater versatility, HP kept the price of the HP LaserJet 4050 the same as its predecessor. In Japan, pricing starts at $1,400. HEWLETT-PACKARD JAPAN LTD. is projecting sales of 30,000 units in the first year of marketing.

Come August, EASTMAN KODAK CO. will launch international marketing of an affordable midvolume color scanner for the production scanning market. The Kodak Digital Science Color Scanner 3590C can scan 85 ppm at 100 dpi in color — about the speed of today's bitonal scanners — or 75 ppm for mixed batches. The Color Scanner 3590C costs $36,100 in Japan, where Kodak's subsidiary is forecasting sales of $24.6 million a year for its commercial-use scanners.

HEWLETT-PACKARD JAPAN LTD. figures that 25,000 people a year will want to scan 35-mm photographic images into their PCs using the HP PhotoSmart S20 photo scanner. The system provides a resolution of up to 2400 dpi at a color depth of 36 bits, which is designed to capture the finest details. HP Japan's main selling point, however, is the list price of $570. The company says that the HP PhotoSmart S20 offers features for which other companies charge up to three times as much.

COMPAQ COMPUTER CORP.'s subsidiary selected the Compaq TFT5000S flat panel display to spearhead its push into Japan's monitor market. With a 15-inch viewable image size, this color display has a XGA resolution of 1024 x 768 pixels. Equally important, it weighs only 20 pounds with a 3.1-inch-thick panel. Thus, it can be hung on the wall or mounted on an arm as well as placed on a desk. The TFT5000S lists for $1,500-plus. Compaq also introduced a 17-inch cathode-ray tube display, the V700, for $560.

With the launch by NEC CORP. of two desktop PC families incorporating an all-digital video interface, SILICON IMAGE, INC., the developer of the PanelLink Digital technology, believes that the stage has been set in Japan for the widespread adoption of this digital video interface know- how (see Japan-U.S. Business Report No. 352, January 1999, p. 18). The reason? NEC is Japan's top PC manufacturer, and it used the Cupertino, California company's chips in a pair of mainstream PC products, the VALUESTAR NX series for the consumer market and the Mate NX line for the corporate market.

Seeing the USB port standard as a way to provide network-like file transfer speeds between two PCs running Windows 98 and equipped with software offering the appropriate support, TRAVELING SOFTWARE INC. developed the LapLink USB cable. It transfers files at rates as high as 4 MB to 6 MB per second, far faster than serial cables and even parallel cables, the Bothell, Washington company claims. INTERCOM CO., LTD., which represents Traveling Software, expects to sell 3,000 LapLink USB cables in the first year. It has priced the cable at $65; the LapLink software is separate.

Mechanical computer-aided design and engineering users of various IBM JAPAN LTD. RS/6000 Unix workstations now can obtain the performance and the functionality of 3D visualization through a graphics accelerator that costs half the price of its predecessors. The Power GXT2000P lists for $4,400.

An exchange rate of ¥122=$1.00 was used in this report.aaaaaa

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