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Struggling with low demand, computer firms become more competitive.

Struggling With Low Demand, Computer Firms Become More Competitive Many U.S. computer firms are being restructured following last year's modest 8.4% production increase, the smallest annual increase since 1975. However, Japanese computer firms are increasing their capabilities for both hardware and software products.

One way Japanese firms are attempting to offset lower demand is by expanding into European markets, traditionally a U.S. stronghold. To establish a foothold in 1990, Mitsubishi Electric purchased Apricot Computers, a UK PC manufacturer, and Fujitsu bought Britain's International Computers firm. Several Japanese firms have announced plans to market new laptop products in Europe, their current market share leader.

Longer-term capabilities are being established by increasing technical prowess. Fujitsu recently announced plans for building a [400,000-m.sup.2] R&D complex for communication, semiconductor, and computer products, and another center for software development, both in Chiba, Japan, according to a report by Nihon Keizai Shimbun, a Japanese publishing firm.

IBM will more than double its Japanese systems integration subsidiary this year, reflecting its increasing development of hardware and software.

"IBM is looking very carefully at its expenses, but we are sustaining our R&D investment," says Marc Brodsky, director of the technical staff at IBM's Research Center, Yorktown Heights, NY. "It's hard to compare IBM's investment to that of Japanese firms because they have so many subsidiaries."

Software is another area where Japanese firms are expected to increase their penetration, according to Michael Cusumano, author of the Japanese Software Factories.

Fujitsu, NEC, Hitachi, and Toshiba all have established "factories" with thousands of programmers writing software for consumer and industrial products.

"I don't feel that the factory model is the most efficient way to create software," says Brodsky. "We have had examples of improved software productivity and quality by concentrating on the methodology involved in its creation."

The short-term outlook for computer firms is not bright, with only a 6.9% increase forecast for 1991, according to Cahners Economics, Newton, MA. Cahners economists forecast that demand will rebound in 1992 with a 15.2% increase.

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Author:Studt, Tim
Publication:R & D
Article Type:column
Date:Apr 1, 1991
Words:342
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