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(Nikkei BP Group)

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

  • PC, TV to Compete in Future: NEC Exec. VP
  • December 24, 1999 (TOKYO) -- Yoshi Takayama, executive vice president of NEC Corp., said NEC's future rival will not be Fujitsu Ltd., Sony Corp. nor Apple Japan Inc., but television. He recently gave an interview to Nikkei Electronics, a magazine published by Nikkei Business Publications Inc.
    The domestic personal computer market for 1998 was enlivened by brisk sales of the VAIO line of notebook PCs for individual consumers marketed by Sony, and Apple's iMac boom, even though PC sales to corporate customers dropped from a year earlier. The release of the Windows 98 operating system by Microsoft Co., Ltd. of Japan also contributed to boosting sales to individual users.

    Nikkei Electronics interviewed eight major domestic PC vendors about their prospects and product strategies for 1999. Following, Asia BizTech features the interview with NEC's Takayama.

    Nikkei Electronics: Could you tell us about the industry outlook for the PC market in 1999?

    Takayama: I have no idea about it. At the beginning of 1998, I thought the market had hit bottom in 1997. But look at the poor sales last year.

    Nikkei Electronics: What were reasons behind it?

    Takayama: PC sales to corporate customers were particularly disastrous. The figure for the first half of fiscal 1998 through March 1999 dipped below the previous year's level. Even though we are expected to see higher sales for the second half over the previous year, it just means that sales for fiscal 1997 were unbelievably bad. Sales to corporate customers remain sluggish.

    The only good news among other things is the market for individual consumers has been improving since around June 1998. The market was stimulated by the release and shipment of Windows 98 and the iMac. A variety of such enlivening topics has also favorably influenced our sales, making up for the flagging sales to corporate users.

    Nikkei Electronics: Do you expect the market for individual users to remain brisk in the future?

    Takayama: We should still be careful. The market for individual users is ruled by chance. The boom can subside so easily. I don't know how long we can keep sales brisk....

    Nikkei Electronics: Do you think the fads in Apple's iMac and Sony's VAIO, both of which are big hits in the market for individual users, are transient?

    Takayama: You call them a hit, but the market share of the both products does not even surpass 10 percent. It is still premature to conclude that they have won a firm foothold in the market for individual users.

    I hope the iMac boom is a transient one. As to VAIO, initially I thought the boom was transient, but actually it stayed long. We are lucky, because the VAIO line do not have products targeting corporate users yet.

    Nikkei Electronics: Do you think that designs play a large part now in selling PCs?

    Takayama: It is true that PC manufacturers can arouse customer interest by inventing new colors and forms. Shigeaki Saegusa, a composer, told me that he is thinking of buying iMac. "But I will not use it," he said. "I will just place it in my living room because it looks so cool." The point is that iMac serves as an interior decoration.

    I know designs of our products are not hip. You don't have to tell us. But it is not like we will make our PCs blue and purple and the PCs will sell more. It will not work that way. We cannot sell more products by just copying other companies' successes. Customers like those novel designs because they were invented by Apple or Sony. NEC should pursue originality.

    Unfortunately, however, users currently regard NEC products as quiet and nothing but office automation equipment. It is like our originality is no originality.

    I think we should change the way we have been, though. I am telling our designers "It is now your turn, guys, to create something very 'NEC-like.'"

    Nikkei Electronics: So, is it only designs that can make your products sell?

    Takayama: No. It is important to show customers what they should use their PC for. In the case of iMac, for example, the model is different from conventional Macintosh machines. It is a model specifically made for the Internet. Any customers who take a look at iMac can easily understand that the product is to use the Internet.

    Lately, I am repeatedly telling our staff, "Go back to the basics." The PC market has grown this big because PCs have killer applications such as word processing software and spreadsheet software. To go on to the next step, we will need some new killer applications. I think the Internet will be a key.

    We have 3.8 million users registered with our customer list. Only 20 percent of them are Internet users, because the Net is difficult to use.

    The Internet is an ocean of information. The word "net surfing" is popular because only a handful of well-trained people can surf big waves of the information ocean. If there are beaches where even people who don't know how to swim can enjoy themselves, more people will visit such beaches. In other words, we can sell even more PCs by inventing some system which will help non-net surfers obtain information easily.

    Nikkei Electronics: Which companies do you consider a rival for the market for individual users?

    Takayama: Our rival is not Fujitsu nor Sony. It is not Apple, either. We will compete with televisions.

    Unlike TVs, PCs have not established a firm foothold in people's daily lives. Why don't they use a PC on holiday? They watch TV every day. The most important task for now is to propose to users new Internet-based ways to use a PC that are more closely related to their daily lives.

    A TV appeals to one's sensitivity. A PC stimulates one's intellect. I am saying that in putting together a PC and a TV, hardware is not important. We will need to create contents that are associated both with one's sensitivity and intellect.

    Nikkei Electronics: Do you have any news for the market for corporate users?

    Takayama: Of course the news is our new desktop models, which use a liquid-crystal display monitor. Currently, 29 percent of desktop models used at companies are LCD monitor types. These models are selling like hot cakes. I predict that these models will account for more than 50 percent of all desktop sales to corporate customers for 1999.

    I assume sales of the desktop models with an LCD monitor will even eat up the market for notebook PCs. Currently nearly 50 percent of PCs used at companies are a notebook model, but I think the percentage will go down close to 40 percent in the future. Sales of the desktop PC with an LCD monitor are that brisk.

    Anyway, we are seeing an intensifying battle to secure LCD panels among computer makers. Manufacturers of LCD panels are so bullish that they intend to raise their prices....

    Nikkei Electronics: In the United States, an increasing number of PC makers started using x86 Intel-compatible microprocessors for PCs targeting individual users. How does that impact NEC?

    Takayama: I do not think use of an Intel-compatible microprocessor presents any issue now.

    NEC will also use more Intel-compatible chips in the future in the foreign market via Packard Bell NEC Inc. of the United States. We do not mind using products of Advanced Micro Devices Inc. or Cyrix Corp. (currently operating under National Semiconductor Corp.) of the United States.

    For the domestic market, we will continue to use products of Intel Corp. of the United States. We are particularly on friendly terms with Intel.

    Nikkei Electronics: Does that mean customers are not particular about the brand name of the microprocessor anymore?

    Takayama: Customers who plan to purchase a PC priced around 200,000 yen (US$1,740), or even up to 300,000 yen in some cases, are not particular about a brand name any more, even though they used to stick to an Intel product in the past.

    Related stories:
    Japan's PC Sales in 4th Week of Nov. Reach High Level
    Year-End Sales Season to Feature More Space-Saving PCs
    Sony's VAIO Triggers Tiny Notebook PC Boom: Designer
    Apple Japan Converts Windows Users to iMac at Rapid Rate
    NEC to Buy Notebook PCs from Taiwan's FIC

    (Nikkei Electronics)

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    Updated: Wed Dec 23 14:57:42 1998 PDT