Micron Set to Chip Away at Japan's PC Market

John BOYD

First Compaq, then Dell, then Gateway 2000 have stormed into Japan's PC market during the past few years. Before they hit the beaches, Digital Equipment Corp., Hewlett Packard, and Apple had already firmly entrenched themselves, while IBM has been here forever.

So, after we eliminate Packard Bell and AST Research -- both of which recently went over to the other side when NEC and Samsung flashed their yen and won, respectively -- we've accounted for all the US PC heavyweights, right? Not quite. Now the boys from Boise, Idaho, are itching to dig in here too.

That's Micron Technologies -- or, more precisely, Micron Electronics, the company's new PC arm. Micron Technologies, for those who don't recall, happens to be one of the few US DRAM memory chip makers still able to duke it out with the best silicon fabricators from Japan, Korea, and Taiwan. That fact, and having $3 billion in revenues to bolster its efforts, is helping make folks think silicon chips rather than potato chips when the name Idaho crops up in earthy conversation these days.

Micron gets serious

While Micron has been dabbling in PCs for some time, until recently its sales could probably be measured in microns. Some 18 months ago, however, the company reorganized its efforts to establish a new subsidiary, Micron Electronics, and finally got serious about computers. So serious, in fact, that it's climbed to No. 8 in the US rankings through a combination of low-cost, custom-built PCs sold direct to customers, much in the fashion of Dell and Gateway.

According to company chairman and president Joseph Daltoso, Micron's sales of PCs edged towards $1 billion in 1995 -- quite an achievement for what is essentially a new face to the big time. Now, seeking to expand further, Micron is turning its face to Japan and other foreign markets.

But industry watchers here can only wonder at Micron's timing. The most recent American PC invasion of Japan has succeeded splendidly in creating a sense of urgency among Japanese manufactures. Renewed competition from domestic companies like NEC, Fujitsu, Toshiba, and Hitachi has already blunted Compaq's march up the rankings, knocked both Apple and IBM down a rung (from the No. 2 and No. 3 spots, respectively), and kept Dell, Gateway, Digital, and HP bottled up in the crowded wilderness of second-tier players.

Greener markets

Micron realizes it faces an uphill task. "Frankly, it might be easier not to globalize at all, if we didn't have to. We have enough problems managing our own businesses established in the United States," admitted Daltoso, speaking at Nikkei BP's World PC Expo in Makuhari Messe (near Tokyo) in September. Which begs the question: Why bother?

Well, for one thing, growth of PC sales in the US is slowing as the market matures. Admittedly, the US market is much larger than any other; nevertheless, expectations are that it will grow "only" 15% in 1996. Contrast that with the Japanese market, which enjoyed a 70% growth rate last year, expects about a 45% boost this year, and can look forward to a 30% bump in 1997, according to IDC Japan.

Elsewhere, many of the Pacific Rim economies are experiencing an economic boom, and consequently a PC boom. And the potentially limitless markets of India and China are blossoming, beckoning Micron to think global.

Think globally, sell locally

Besides, "Not competing in a particular region makes it easier for the competition to succeed in that market," notes Daltoso. "And success in that market can be used eventually to subsidize competition [against Micron] in the United States."

Actually, this is already happening. Taiwan's Acer, long known as an OEM supplier, has chalked up considerable success of late with its own goodies-laden Aspire brand in the US, and is attracting further attention with a new range of notebook PCs boasting a battery life of 10 hours.

Meanwhile Toshiba, which has grabbed one-quarter of the US notebook market, is looking to use that success as a springboard to the desktop, as it pushes out a new line of full-sized PCs. And while NEC and Samsung go the fast-track acquisition route, Fujitsu and Hitachi have established their own PC organizations in the US and are already shipping notebook computers.

The result is that the US market, which has always been the most competitive in the world, is growing ever more fierce, leaving no room for the parochial minded. In other words, Micron Electronics -- like its Japanese counterparts Fujitsu and Hitachi -- has no choice but to go global.

Micron proclaims that if it can succeed in the US, it can succeed in Japan. While that ain't necessarily so, not to try is to invite a certain demise.

John Boyd is the Tokyo correspondent for InformationWeek and writes the weekly "Computer Corner" column in the Japan Times. His e-mail address is 6840615@mcimail.com.