Japanese Market Takes to Windows NT 4.0

Installed NT base expected to hit 2 million by December '97

Japanese businesses will more quickly adopt Windows NT as the operating system standard for their PC networks than users in other countries. This transition will be driven, in part, by the growing number of corporations in Japan now creating networked PC environments, says IDC Japan, a subsidiary of a US market research company International Data Corporation.

The Japanese version of Windows NT 4.0 was released on November 11. According to IDC Japan, NT 4.0J shipments will have reached 250,000 units by the end of December 1996, after just seven weeks on the market. This will push combined shipments in 1996 of Japanese Windows NT 3.51 and 4.0 to 600,000 units in total, including 150,000 units for NT Server and 450,000 units for NT Workstation.

IDC Japan forecasts that shipments of Japanese Windows NT 4.0 will reach 1.75 million units in 1997, a remarkable 192% increase from 1996 shipments of NT (3.51 and 4.0 combined). This sharp increase will owe much to the growing number of 32-bit business applications being introduced, a trend that is being fueled by the shift from Pentium to Pentium Pro processors.

Total shipments of Windows NT 4.0 in Japan will reach 2 million units by the end of 1997 (320,000 units of NT Server and 1.68 million units of NT Workstation). In 1998, furthermore, IDC Japan expects Windows NT systems to account for nearly 23% of all PC shipments in Japan.

IDC Japan estimates that 52% of Japanese businesses will have local area networks installed by the end of 1997, up from just 30% in 1995. The willingness of Japanese corporations to shift to Windows NT as the OS for their networked systems is much higher in Japan than in other countries. IDC's worldwide survey of information system users, conducted early in 1996, indicated that about 60% of the Japanese companies would consider converting from Unix systems to Windows NT. This ratio was higher than for companies in the US and Western Europe (50% and 37%, respectively). Only 11% of Japanese corporations indicated that they definitely would not switch.

One of the most promising markets for Windows NT systems in Japan is the engineering field, where Unix workstations have traditionally been used for CAD/CAM (computer-aided design/ manufacturing) applications. In this market segment, as the concept of "concurrent engineering" is disseminated, the needs for high-performance PCs as client terminals -- and for providing one system per employee -- are accelerating. To meet such market demands, about 300,000 PCs, many of them running Windows NT 4.0, will be introduced in the engineering field in 1997, according to IDC Japan.

Good News for Software Buyers

Sales of business software in Japan will top JPY200 billion in 1996, according to Gartner Group Japan. This is a 40% increase from 1995 sales, and nearly double the 1994 figure. The growth of software unit sales is not surprising, since the number of PCs sold in Japan rose by 68% in 1995 and will likely approach 50% growth in 1996. What is perhaps surprising, though, is that revenues have risen so sharply in the face of plunging retail prices.

Strong sales (7.5 million packages) of the Japanese version of Microsoft's Windows 95, released in November 1995, has fueled the software sales surge. Riding the Windows wave, other Microsoft products have also sold exceptionally well. Microsoft's Office 95 suite, for example, racked up about 3 million unit sales in 1996. The long-anticipated version 7 of the Ichitaro word processor, rival Justsystem's competitor to Microsoft Word, meanwhile, sold over 1 million units in the first month after its September 1996 release.

These surging sales have come at the expense of margin for many vendors, however. In the face of intensified competition, both software makers and distributors have been cutting prices to boost (or just maintain) market share. Microsoft Word, for example, has a street price of JPY7,500, about half of its suggested retail price. So while its unit sales will mark a 50% increase for 1996, this translates to only a 20% increase in value. And Justsystem's Ichitaro 7, which has a suggested retail price of JPY40,000, is commonly marked down by 60% or more, selling in shops at JPY16,000 or less.

The good news for buyers is bad news for some vendors. PC distributors readily admit that they make very little profit on the popular software packages; some, such as major wholesaler Software Japan, are facing growing difficulties. And, as we went to press, a major Mac software vendor, Seiwa Systems, was reported to have declared bankruptcy.

Home PCs begin to differentiate

Until now, home pc was simply a name to distinguish where and by whom a personal computer was used: by an individual at home as opposed to by staff members in an office. In terms of hardware and software, there was often little to distinguish a home PC from a business PC, aside from lower price and emphasis on preloaded personal productivity and leisure applications. Now, though, makers are set to differentiate the home PC from the office PC by adding other home appliance features.

With the advent of the year-end (bonus) buying season, Japanese manufacturers have introduced PC models that incorporate such features as a TV tuner, radio, video/audio capture, CD/DVD player, and telephone. With an emphasis on ease of use, the user can switch between these "home" functions via a remote control.

These home PCs are priced higher than ordinary PCs, typically in the JPY300,000 to JPY400,000 range. Manufacturers defend the higher prices, though, by pointing out the purchasers actually save money because they will not need to buy separately the other appliances that are built-in. Among the first such multi-function home PC models to be released are the Toshiba Brezza, Mitsubishi Apricot MS, and IBM Aptiva S. The Apricot MS, in particular, offers users Internet access without ever having to touch the keyboard.

Palmtops shun Intel, turn to Japan

Us-based intel has long been the dominant manufacturer of PC CPUs (central processing units), with an 80%-plus market share. With the market introduction of palmtop computers, though, that dominance may be threatened. Japanese electronics giants Hitachi and NEC are mounting a significant challenge in the palmtop market segment.

At the recent Comdex in Las Vegas, seven computer makers unveiled their newest palmtop computers -- and only one used an Intel CPU. Six of the palmtop makers had opted for CPUs made by either Hitachi or NEC. The resurgence of the Japanese chip makers in the palmtop segment is attributed to their strength in power-saving technology, an area where Intel lags. With palmtops poised to be the next focus of mobile computing, this strength gives Japanese makers a golden opportunity to increase their market share. Whether palmtop units will be big-enough sellers to make this a significant boost remains to be seen.

Virus Reports Average 58 per Month

From january to september 1996, 526 cases of computer virus infections were reported to the Information Technology Promotion Agency, Japan (IPA), a nonprofit organization affiliated with the Ministry of International Trade and Industry (MITI). These included 426 viruses affecting DOS/V IBM-compatibles, 91 infections of the NEC PC98 series, 7 Apple Macintosh infections, and just 2 infections of Fujitsu's FM series computers.

Most recently, 35 cases of virus infections were reported to the IPA in August 1996, and 45 in September. Most infections came from infected disks, followed by those transmitted through e-mail.

For information, or to report a virus, contact the IPA Computer Security office at phone 03-3437-2301, fax 03-3437-2537, or send e-mail to virus@adm.ipa.go.jp