Aiming at Number 1
in Computer Systems

interviewed by John Boyd

Yokogawa Hewlett Packard (YHP),
a joint venture between Tokyo-based Yokogawa Electric and Hewlett Packard (HP) of Cupertino, California, became Hewlett Packard Japan (HPJ) earlier this year. The new name and logo better reflects the current 75% ownership by HP (up from the original 51% when the joint venture was
established in 1963). The change also helps underline HP's increasing
emphasis on its computer-related businesses, over YHP's traditional
operations in the testing
and measuring equipment area.

As a bellwether of changes to come, last year HPJ took the unusual step of going outside to hire Shigechika Takeuchi, who had quit his advisory position with Apple Japan, a role he maintained for six months following his shock resignation as president of Apple Japan in November 1993. Before joining Apple, Takeuchi had spent 21 years at Toshiba, including serving as senior vice president and general manager of strategic planning in Toshiba Europe GmBH.

Now 50, Takeuchi heads HPJ's Computer Systems Organization, one of three computer-related units at HPJ. He has also been appointed a member of the board, and is the only director who has not come up through the company ranks.

Before we talk about Hewlett-Packard Japan, I'd like to clear up something. Your resignation from Apple Japan in late 1993 came just as the company was hitting the big time in sales and market share. It seemed to many a strange time to leave, and there were differing rumors about why you chose to quit. Can you settle the question once and for all?

Shigechika Takeuchi: It was more a coincidence that I resigned when Apple's business was doing so well. And I didn't really leave then. I resigned from the position of president of Apple Japan in November 1993, but I kept on with Apple in the position of advisor for the next six months or so. So I didn't quit the company until April 1994.

Okay, but why did you quit?

Takeuchi: In June 1993, (John) Sculley resigned his position (as Apple Computer Inc.'s CEO). Basically, I had agreed to take over Apple Japan's business at Sculley's request in 1989. Of course, many other people besides Sculley were involved in helping me establish Apple Japan's ($1 billion) business growth plan, but Sculley's focus was very much on the Japan market; he visited Japan every other month or so from 1989 and on. That was very good for Apple Japan, and it was helpful for me in developing Apple's business. And so we had very good success.

But then Sculley resigned...

Takeuchi: And the change (with Mike Spindler appointed new CEO of Apple Computer Inc.) was something like the presidential party change from Bush to Clinton in US politics. Many of the people in top management also changed. It (my resignation) was a matter of... the changes they brought in.

My way of running Apple Japan was based on Sculley's vision. When Sculley left, and Apple started to change its way of doing business, those changes made it difficult for me. The culture in Apple is strongly individualistic: everybody stresses their own views, thoughts, and creativity very strongly.

The (new) plan and reality were not synchronizing. It was more (like first) the plan, then reality would follow. So it wasn't just a problem of personal conflicts, but also the changes going on in the business. This wasn't good for either side, so I felt I should resign from my position as president.

All this was not related to whether Apple Japan's business was growing or not.

Had you accomplished your personal objectives?

Takeuchi: My commitment to Apple was to raise sales to over $1 billion in five years, and reach a 10% market share. Apple Japan achieved all this before I started to think I should leave Apple.

I remember reading a quote in the Asian Wall Street Journal at the time. You said something like, "Working for Apple was three times harder than working for any other company."

Takeuchi: That's right! That was another reason. I said 5 years at Apple is like 15 years (elsewhere). Yes, I really felt this. Many people at Apple feel the same way, and told me so when I joined the company.

Why is Apple like that? Because of the emphasis on the individual, compared to the group support you get in Japanese companies?

Takeuchi: Yes. And also because many of the business decisions and product-oriented decisions change so quickly. The speed of doing things is also different in Apple.

But I was very surprised when I heard Sanda-san (Seiji "Frank" Sanda, who took over as president of Apple Japan in 1994) suddenly resigned earlier this year. I don't know what happened.

Anyway, now you've come to HP Japan. How did that happen? What's the story there?

Takeuchi: Well, I had relationships with some of the people in HP even when I was in Toshiba. And I had more contact when I was with Apple. After my quitting as advisor to Apple was reported in the press, some of those HP people started asking me what I was going to do.

At first, it was more in the way of conversation. But as I began to consider what I should do next, I held discussions with several companies. During these discussions, I came to a mutual agreement with HP Japan -- that I could do something for them, and they could do something for me.

So it wasn't one sided?

Takeuchi: No, I don't think so. And my case is unique. We have about a dozen board members in HP Japan, but I'm the only one to come from outside of HP.

Why this change on their part?

Takeuchi: HP Japan's top management, and also Hewlett Packard in Cupertino -- both thought that if HP Japan could add something, some part of external culture, then it could create something more than a pure HP Japan culture.

Add something?

Takeuchi: Take something from outside.

Oh, I see. Like you.

Takeuchi: Like me. Yes!

And what is the expected result?

Takeuchi: I don't know exactly what they expect, but some kind of change -- presumably a good change.

Tell us about your position in HP Japan. What do you actually do?

Takeuchi: In HP's computer area, we have three business units. One is the Computer Systems Organization (CSO), which is doing the UNIX and PA RISC-based workstations and server business. The second unit is called the Computer Products Organization (CPO), which is responsible for Intel-based PCs -- which includes palmtops, desktop PCs, and Windows NT network servers -- and also has two other areas: the printer business, including ink-jet and laser printers, and network-oriented products.

We have another business unit in computers: the Customer Service Organization. Of these three business units, I'm responsible for the Computer Systems Organization -- the UNIX and PA RISC workstations for the Japanese marketplace.

Now, although I mentioned UNIX, today, HP's strength is not just UNIX, but open client/server systems.

And just what does that mean?

Takeuchi: The market is changing daily. Open client/server systems can, of course, be created with UNIX. But recently, we are starting to see more activity from the (Microsoft) Windows NT system. So we are gradually changing from just providing UNIX servers to UNIX, NT, and (Novell) NetWare-based servers.

In the workstation market, YHP, and now HP Japan, has long been second to Nihon Sun Microsystems in terms of market share. Will this continue, or do you have a strategy to get the number one position?

Takeuchi: Sun Micro has done a very, very good job in the Japanese marketplace. We came in slightly later, but I feel we can now do something different than Sun Microsystems.

Like what?

Takeuchi: Not only in Japan, but in the world, we want to become the number one supplier of workstations and servers. In fact, in the server area, I believe we are now number one worldwide. Within several years or so, we want to become the number one supplier in Japan.

And how do you propose to accomplish that?

Takeuchi: (laughs) Our target is not just the UNIX area. We want to be number one in the computer market. That means we also should be the number one in UNIX, but to be number one in UNIX is not our target. When I say the computer market, it is not limited to the Computer Systems Organization. It includes the CPO and Customer Support areas.

So you are including PCs?

Takeuchi: Yes. And how to do it? We are working to become our customers' trusted advisor -- not just a seller of products. As a trusted advisor, we will recommend the most suitable products.

But IBM will say the same thing, and Sun, NEC, Fujitsu. That doesn't make you different.

Takeuchi: (laughs) They say something similar? But our product lines are different, and our systems approach is different.

In what way?

Takeuchi: Our approach is the open environment; we are not trying to keep our customers in the present world. Our way of systems integration and consultation is very open.

That's why we are not limiting ourselves to UNIX. And as the market changes to NT, we include NT. So, because we can supply a more open environment, we can be (seen as) the more trustworthy advisor.

But Digital Equipment Corporation is using a similar strategy: it's pushing UNIX and Windows NT. So they would say...

Takeuchi: ...the same thing? (laughs) Probably so. And I think we'll see more and more companies doing the same. It's a transition time.

There are so many workstation vendors in the Japanese market: all the domestic players, plus HP Japan, IBM Japan, Sun, Digital, Silicon Graphics.... Yet the market is quite small. It would seem a shakeout is inevitable.

Takeuchi: Do you mean in Japan, or worldwide?

Well, also worldwide, but especially in Japan, because you have the domestic vendors and companies like HP Japan. There are double the number here, all competing for what is a relatively small market.

Takeuchi: I tend to agree. But there are different kinds of shakeouts possible. One view says we will see a limited number of players: five or so, with no others surviving. On the other hand, we could see the survival of just two or three architectures -- chips and operating systems -- with these supported by a number of manufacturers as well as major systems integrators. I don't know which direction it will go.

In the PC market, we are seeing extreme competition in price. So, in this area, I think we will see a significant shakeout. But in the enterprise area, we may see something different.

That raises another question. We already have 133-MHz Pentium systems available in Akihabara, and Intel is going to announce its next-generation P6 chip before year-end. So there is going to be more competition in the workstation market from the high-end of the PC market. Aren't you going to face a threat from your own PC unit?

Takeuchi: Yes; we are already experiencing such competition. Especially, entry-level workstations are going to be replaced by PC-based technology. But in three or four years, when we can see the result of the joint microprocessor effort between Intel and HP -- the two companies are combing their technologies to build a RISC-CISC chip or CRISP (a complex reduced instruction-set processor) -- there will be one connected line of products. You won't find one group invading the market area of the other. We will be able to supply a seamless solution to our customers.

So, say in five years or so, is it likely you will no longer have a separate Computer Products Organization and Computer Systems Organization? You might end up having just one organization?

Takeuchi: I don't know what will happen. Of course, organization should be based on market requirements, so we must be flexible. It's very natural to expect our organization to be different in five years -- even in two years or so.What I can see happening is that one (market) -- the enterprise systems market and information service provider business -- will require high-level support; for this we intend to use our direct sales and direct support.

Then, today, you have the high volume (PC) market, which doesn't require the same high level of support, especially for individual users. And there's a mid-range area of workstations and small departmental servers, etc. In this area we can utilize the VAR (value-added resellers) channels.

So we may see three different types of channels. And, fortunately, we have all three: the volume area, direct sales, and value-added resellers.

One final question: Do you still use a Mac?

Takeuchi: Yes, at home. At work I use an HP Japan PC.ç