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(Nikkei BP Group)

(No.1 High-Tech News Site in Japanese)

  • [Industry Forecast ’99] HP Japan Stresses Customer-First Policy, Pres. Says
  • January 6, 1999 (TOKYO) — Masao Terazawa, president of Hewlett-Packard Japan Ltd., said a key point for the company’s future growth is to strengthen ties with customers by providing services that precisely match their needs.
    Hewlett-Packard Japan will aim to achieve an annualized growth rate of around 10 percent for its 1999 business year (November 1998 through October 1999), despite the harsh business environment. If the company does post a growth rate of around 10 percent for the 1999 business year, it would be roughly equal to the growth rate in fiscal 1998.

    Terazawa, who was appointed president on Nov. 1, 1998, is the company’s first president who worked his way up through the ranks. BizTech interviewed Terazawa after he had been in the job for about two months.

    According to Terazawa, Hewlett-Packard Japan’s results for the 1998 business year were good, considering the fact that the domestic economy was in the doldrums. Sales rose 9 percent over the previous year, to around 300 billion yen (US$2.6 billion). In addition to UNIX servers, the company’s main product, sales of Windows NT machines also were strong.

    Its market share for color ink-jet printers climbed to around 15 percent, so there are signs that printers are becoming a major part of the company’s computer-related product range.

    BizTech: In 1998, Hewlett-Packard Japan’s sales grew by 9 percent, although most companies were slashing their investments in information technology systems. As the company’s president, how do you rate that achievement?

    Terazawa: It’s a good result. Looking at the structure of the company, in the years leading up to 1998 computer and IT-related equipment accounted for around 62 percent of total sales, with measuring equipment accounting for the remaining 38 percent.

    However, in 1998 the ratio of computer and IT equipment sales rose by two or three percentage points. Sales of computer and IT-related equipment accounted for the improved business performance.

    We haven’t yet held our general stockholders’ meeting, so I’m not able to reveal the exact figures, but I can say that our profit structure is extremely healthy.

    Sales of our UNIX servers continued to expand, but those of UNIX workstations actually fell by 8 percent from the previous year. Other products, such as our Windows NT servers and workstations, and color ink-jet printers have now become mainstay products.

    Regarding ink-jet printers, we have done quite well. All the surveys by market research companies show that HP Japan has close to 15 percent of the market, putting us third in the market share rankings. And it won’t be long before we will seek to gain a 20 percent market share. Importantly, there is a clear ‘Top 3’ class of market players, which is increasingly pulling away from the remainder of the competition.

    To sum up 1998, I’d say that although business went well for us, it certainly wasn’t an easy year.

    BizTech: What kind of year will 1999 turn out to be?

    Terazawa: First, looking at the domestic industry as a whole, I think 1999 is likely to be equally as challenging as 1998.

    Businesses are undergoing thorough restructuring processes and budgets for IT systems are not exempt from their efforts to cut costs. Regardless of the industrial sector in which they operate, companies will continue to hold down investments in computers and IT. Therefore, I think the probable business environment for 1999 doesn’t allow IT businesses such as ours to look ahead with much optimism.

    A bright spot on the horizon is the possibility that demand for semiconductors will pick up momentum in the middle of the year. The key to that is the growing popularity of mobile information devices, such as PDAs, equipped with email capabilities. An example of that kind of device is the Pocket Board from NTT Mobile Communications Network Inc. (NTT DoCoMo).

    The use of mobile equipment is starting to spread to the private consumer market, rather than just being limited to business customers. If things really start to take off, demand for semiconductors will recover and that in turn will give impetus to the manufacturing sector as a whole. For the semiconductor industry, the April-June period is likely to be a time of bottoming out. Later, it will probably start picking up steam.

    BizTech: That view of the outlook for the semiconductor industry is an optimistic scenario. But what happens in a worst-case scenario? It is also possible that the current tough market conditions will simply drag on. What then?

    Terazawa: Then we will just have to ride out the recession by continuing to implement measures to strengthen the company structure, as we did in 1998.

    HP Japan will continue to promote its ‘customer first’ policies. The aim of these policies is for HP Japan to develop close relationships with its customers, to provide high-quality service encompassing everything from initial system design to servicing and system maintenance.

    As a computer manufacturing company we must hold on tightly to our customers so as to steadily increase profits, and that’s an area that we need to continue to focus on. From 1998, HP Japan has been instituting a system whereby we try to offer the highest possible levels of service to our clients.

    HP Japan also introduced a financing service. It is a service that includes a variety of different plans for businesses such as equipment rentals, leasing and outsourcing. By offering investment plans, it enables our customers to obtain the most suitable IT system for their business needs. The service aims to make it easier for customers to invest more freely. HP Japan uses the service to provide our customers with the necessary upgrades for their client machines (PCs).

    BizTech: As a company in the Hewlett-Packard group, what is an area in which you must focus in the Japanese market?

    Terazawa: We must deal with companies that operate on a global scale. For example, if a customer of our U.S.-based parent decides to start operating in Japan, then we provide them with computer and IT system support.

    And now, with the ‘Big Bang’ liberalization of Japan’s financial markets, various U.S. and European financial institutions are moving into Japan, and many of them are customers of Hewlett-Packard in their home markets. HP Japan’s relations with these clients are growing, and this helps boost our sales.

    We seek to provide even better service to these overseas companies that are coming to Japan, to increase our sales and because it is a part of our responsibility to the Hewlett-Packard group.

    Related story: HP Japan Sells More Than 100 Large Servers in FY98

    Click here for more New Year features.

    (BizTech News Dept.)

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