Will Windows 98 spur PC revival?

by Reiji Yoshida

Staff writer

The Akihabara district of Tokyo, famous for its abundance of electronics shops, once again was in an uproar in the middle of the night.

Neon lights flashed at shops that normally close hours earlier as thousands of personal computer enthusiasts milled around shortly before midnight Friday. Computer shop clerks shouted to lure customers as grim-faced police officers tried to push people back onto overflowing sidewalks.

Then, exactly at midnight, hundreds of people rushed into the shops as Japanese Windows 98 — Microsoft’s latest computer operating system — was released. “I want to buy it as soon as possible,” said Toshio Ariga, 33, a PC user for more than 10 years. “I’ll install it on my computer as soon as I get home.”

Although the new product features only minor improvements over Windows 95, which was released in November 1995, the festive mood in Akihabara on Friday was comparable to that which surrounded the release of the earlier version.

Industry sources said the huge crowd Friday reflected the dramatic growth of PC users in Japan over the past three years. “(The number of customers) is as large as when Windows 95 was released. I think the number of PC users is dramatically different now,” said Kazuhiko Oyama, general manager of marketing and sales for Sofmap Co., a major computer chop chain.

Rei Suzuki, Sofmap’s senior executive vice president, simply said, “I was moved” by the huge crowd. But one serious question haunts computer makers and shops: Can Windows 98 save the Japanese computer industry from the sales drought amid the ongoing recession?

Computer companies such as Sofmap have pinned high hopes on Windows 98 because its former version, Japanese Windows 95, triggered a PC boom and dramatically expanded — if not created — the consumer PC market in Japan.

When Windows 95 was released, thousands of beginning PC users rushed to buy the software and a computer. The scene Friday looked exactly like the one then. But Yano Research Institute, a Tokyo-based market research company, is pessimistic about the prospects for the computer market this year.

Based on interviews with dozens of major computer makers and distributors, the institute predicted in a recent survey that PC shipments in the domestic market will shrink for the second year in a row despite the release of the new Windows software. “Consumers are not receiving much of a bonus (this summer), and many major companies already have one computer for each worker,” said Tomoko Akagi, a researcher at the institute.

The institute said PC shipments will reach about 7.52 million in the 1998 business year, only 98.6 percent of last year’s figure, despite several optimistic predictions by computers makers and research companies.

On the other hand, some other research institutes, such as IDC Japan, predict a growth of several percentage points in PC shipments this year. But they agree with Yano that Windows 98 will not deeply penetrate the corporate market.

“Windows 98 is designed mainly for consumers. There would not be much advantage for businesses (to introduce Windows 98),” said Takahiko Umeyama, research vice president at IDC Japan, the Japanese subsidiary of International Data Corp., a high-tech research company.

Umeyama also pointed out that many companies are now forced to spend much of their information-related budget to cope with the millennium bug — the software problem that prevents computers from recognizing 2000 in documents and data.

But unlike the Yano institute, IDC Japan predicted home-use computer shipments will grow 25.5 percent from October through December. Umeyama pointed out that computers sold during the PC boom, when Windows 95 was released, have become obsolete. “At that time, most (consumers) bought a computer with a Pentium of between 75 and 100 megahertz. But now the central processing unit of an average PC is 200 or 250 megahertz,” he said, arguing that those users will welcome the arrival of the new Windows version as a good opportunity to buy a new computer.

IDC Japan also predicted that a number of low-priced PCs will hit the Japanese market this fall and that this will also expand the home-use computer market, especially for beginners.

Sofmap’s Suzuki, however, said that although he expects cheaper PCs to expand the market to some extent, such low-priced models will not be as popular as they are in the U.S. market.

Since spring, Sofmap has been dealing with cheaper PCs that are made in Taiwan. One model has a price tag of 99,000 yen and its performance matches a Japanese PC costing 150,000 yen, but sales of the Sofmap PC in Japan have not been good, Suzuki said.

Whether Yano Research Institute’s pessimistic view or IDC Japan’s optimistic one will prevail is up to the whims of the market.

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