The Business of Portable Computing

In Japan, "small" is more than just beautiful - it's a fetish. Haiku poems, netsuke carvings, and sushi are enjoyed, in part, because they are among the tiniest examples of their categories in the world.

This same aesthetic sense is active in industry, which helps explain why Japan is a master of miniaturized electronics, such as complex memory chips, the Sony Walkman... and the latest in diminutive portable computers.

by John Boyd

Japan has the highest ratio of mobile PC use in the world. For the past several years, about 30% of all the PCs sold in Japan have been portables, and that percentage is growing. The most recent quarterly PC shipment figures from the Japan Electronic Industry Development Association show that portable PCs accounted for some 40% of all domestic shipments between April and June - more than double the worldwide average of 17%.

Yet the data is deceiving. It's a common sight in the US to see business users at airports, on trains, and in the backs of limousines and taxis, tapping away on their laptop PCs. But, in spite of the burgeoning portable PC sales, such scenes are relatively rare in Japan. The reality is that a very large majority of portables are being used simply as space-saving replacements for desktop computers in Japan's notoriously crowded offices. This phenomenon also explains why a growing number of corporate notebook PCs are sold with Microsoft's high-end Windows NT 4.0 preinstalled.

"More than two-thirds of our corporate customers use 'mobile' computers to save space on the desktop," says Keichi Adachi, a senior manager of NEC's PC product planning, in Tokyo. "Not so many Japanese drive to work, so portable PCs are [considered] too heavy to carry around."

Isao Kato, a marketing manager in Fujitsu's computing systems promotion division, agrees. "Japanese offices are small, so notebook PCs are needed more for use on desktops than for portable computing."

A mobile workforce?
These are generalizations, of course, or my story of mobile computer use would end here. But investment in turning office staff into "road warriors" is confined largely to the PC industry itself.

All the major portable PC vendors like to talk about how the sales forces of large corporations - particularly in the financial and retail sectors - use mobile PCs to give presentations and to help with sales support and logistics. Yet when pressed for specifics, they are only able to provide concrete examples from their own internal use.

For instance, at a Toshiba branch office in Tokyo's Ebisu ward, which conducts computer systems sales for the Tokyo metropolitan area, all the sales staff (more than 50) have been equipped with the company's Libretto mininotebook for use in the field. "[Our sales staff] use the Librettos to give presentations, and they keep all their customers' historical data stored in them," says Masaoki Tajima, senior manager of Toshiba's personal computer marketing division. He adds that they also use Lotus Notes for groupware applications, via a local server and network installed in the branch office.

Fujitsu's Kato tells a similar story. "Our sales people have adopted notebooks. We call it 'sales force automation.' They take their notebook computers to customer sites to give sales presentations." In some instances, he says, a salesperson will access the Internet at a customer's site, often via a mobile phone that Fujitsu is bundling with some of its notebook models for wireless transmission of data, and log onto one of Fujitsu's intranets "to pull off information for sales purposes."

Besides such in-house examples, NEC's Adachi claims he sees fair use of portable computers by customers in the medical and financial industries. "But they tend to use subnotebooks - about 1.5 kilograms," he says. "The 3.5-kilogram portable computers are too heavy; even 2-kilogram (machines) are too heavy, or too large to carry about, when you don't drive."

Expensive toy, or useful tool?
Some observers remain skeptical about the general state of mobile computing in Japan. "The notebook PC is still mostly a status symbol," maintains Takahiko Umeyama, senior PC analyst for Tokyo-based market researcher IDC Japan. "The high-tech image looks cool for business users - you can take a notebook [with you] to give a simple demonstration. But it's mainly for show, like driving an expensive automobile, especially for university students, consumer users, and young business users."

While Umeyama concedes there are examples of serious mobile computing use in certain industries - he, too, singles out the insurance, retail sales, and financial sectors - he insists that these are the exceptions that prove his point. Given the relatively low PC penetration rate in business, and a lingering "allergy" to keyboards, mobile computers "are mostly an image product," says Umeyama.

Not all analysts entirely agree. "There is that [image] side to mobile computing," acknowledges Naoki Sato, a PC analyst with Deutsche Morgan Grenfell, a securities company in Tokyo. "But many business people are using these computers because they need to, just as I do."

Not surprisingly, vendors support such a view. "It's a huge misconception," argues Toshiba's Tajima, countering Umeyama's assertion. "We have conducted our own surveys that show people are using [mobile computers] for e-mail, presentations, etc. They are even being used on the shinkansen." Tajima also cites a recent order for 40,000 Librettos from a large life insurance company, to be used by its sales force in the field. "Now, they can't all be for image," he asserts.

Different needs
So, why don't we see more evidence of mobile computing in public places, as we do in the US? "It's because of the geographical difference," opines Sato. "When you travel in the US, you are probably gone two or three days at a time. In Japan, it's only two-and-a-half hours to Osaka [from Tokyo], so you can get there and back in one day, and still write a report at your desk."

And, as noted earlier, the majority of Japanese business people - unlike their US counterparts - don't commute by car or drive to visit customers during business hours. Instead, they take a bus, train, or subway. This, says NEC's Adachi, helps account for the popularity of subnotebooks and now the mininotebook, including NEC's DOS-based Mobile Gear and its new Windows CE handheld computer. The same reasoning prompts Fujitsu's Kato to consider that Java-based Network Computers could well impact Japanese corporate computing, for "then we wouldn't have to think about what applications we need to carry around [on heavy notebooks]."

US users, by contrast, "are not as keen on subnotebooks because of the squashed keyboards and small screens," notes Adachi. "They require a key pitch and screen size similar to the desktop for mobile computing."

This assertion is backed up by a recent survey that NEC jointly conducted with JD Power, which indicates that 30% of mobile computer users (the so-called power users) in the US have portable PCs with features and power approaching desktop models. But in Japan, only 5% of the portables used can boast the same.

When a subnotebook is too big
Besides the popularity of subnotebooks, Japan is also the only market where the mininotebook, championed by Toshiba's Libretto, is taking on a market life of its own. "It's a Japanese-only phenomenon, according to our foreign analysts," says IDC Japan's Umeyama. "It's not happening anywhere else, yet."

But Toshiba, which leads the global mobile computer market with a 21% worldwide share, is hoping to change that. This summer, after racking up some 165,000 shipments in the first 15 months since the Libretto's April 1996 release in Japan, Toshiba began shipping the Libretto overseas.

The Libretto measures just 210 x 115 x 34 mm, and weighs only 850 grams (less than 2 pounds). Yet it is powered with a low-end Pentium microprocessor, runs Windows 95, and comes with an 810MB hard disk and preinstalled applications like Microsoft Word and Excel.

"We pretested [the Libretto] in the US, and increased the key pitch [the distance between the centers of any two keys] to 15 millimeters from the 13 millimeters used with the Japanese model," says Tajima. "We spent three years developing it, after Apple came out with its Newton in 1993 and failed. But we felt there was a market for the right design." Yet it remains to be seen if this design will prove right for American users, where the small keyboard may prove to be a hurdle too big to overcome for those serious about mobile computing.

Where we're heading
All this attention given to the diminutive doesn't mean Japanese electronics manufacturers are neglecting the high end of portable computing. They dominate key technologies like CD-ROM drives and LCD displays, and these are continually being refined for power users.

Currently, 12-inch LCDs are the popular choice, with 13-inch displays emerging. Manufacturers say they are also preparing high-end portables with 14-inch displays, even though this will increase the overall A4 (210 x 297 mm) dimensions of the notebook and so likely limit its appeal.

The good news is that with the size of LCD displays stabilizing, analysts are predicting big declines in prices. IDC Japan's Umeyama says that by the end of the year, or early in 1998, he expects to see some notebook prices plummet to within $200 of an equivalent desktop computer. If that happens, Japan will not be the only market where the ratio of portable computers soars.

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