With few products out so far, the playing field is still level-and some analysts say U.S. companies could leap Into the market with systems surpassing longstanding Japanese development plans. Not everyone accepts that scenario; skeptics cite Japan’s awesome manufacturing prowess. American firms have all but left the market for many components, so “U.S. firms will be dependent to a large degree on Japanese manufacturers,” says one Japanese analyst. Even If U.S. and Japanese firms collaborate, there’s a danger that the Japanese could learn the technologies and break away to beat American firms In manufacturing. Jeff Zavaterro, an analyst at Jardine Fleming Securities Ltd. In Tokyo, says, ‘The best the U.S. can hope for would be [selling] patent rights.’
Even If Japan controls hardware, Americans stand to profit In a traditional area of strength-software ‘The combination of American software and Japanese technology,’ says Nobuyuki Idol, 52, a Sony director, “will lead to good development of multimedia products.“That sets the stage for another bloody fight over software standards. Below, some of the big players.
Chairman John Sculley’s personal electronics push is only one part of Apple’s plan; he hopes to extend the Macintosh line and build a now generation of computers for business through Taligent a much publicized partnership with IBM. Stilt the biggest changes will come In the consumer arena. Apple won’t manufacture everything It sells; Sculley expects to tap the miniaturization skills of Japanese firms as he moves into gadget territory. The company also took some of Its communications technologies and spun off a new firm, General Magic, to bring them to market The most surprising now strategy. licensing Its patented software that makes computers easy to use and programs easy to develop. ‘If Apple pulls it off, they will become the Dolby for digital consumer electronics,’ says consultant Sheridan Tatsuno. ‘There will be a little apple on every consumer product out of Japan and the rest of the world.’ Apple’s $6.3 billion revenues could quadruple, Tatsuno predicts, ‘and It would be no work-just collecting royalties!”
Sculley says the new market Is ‘going to happen whether Apple does It or nor-but ‘if Apple doesn’t do it, we only have ourselves to blame:
While other companies are talking big about the digital future, Hewlett-Packard CEO John Young Is already rushing products to the fledgling market Last. April the Palo Alto, Calif.-based company unveiled the HP 95LX, a palm-size computer that is compatible with those made by IBM and retails for about $400. Consumers have snapped up more than 100,000 of the little wonders-and a stunning 1,1 00 companies are scrambling to wits software for it HP has also agreed to manufacture the $700 hardware unit for TV Answer, a Reston, Va, company that got approval earlier this year from the Federal Communications Commission to begin providing such Interactive TV services as home banking, shopping and bill paying. It’s a big strategic step for HP, a company that had largely stuck to technical computers and laser printer
Hewlett-Packard stated Its vision In a 1989 video that seems uncannily similar to Apple’s computer-of-the-future Knowledge Navigator tape. HP’s fictional machines even show a talking software secretary like Apple’s ‘Phil’ at the upper left corner of the screen. “We do get ribbed about that,” says HP vice president Robert Frankenberg, “often from Apple people.” He points out that no one in the company had seen Apple’s efforts when HP commissioned its tape. “We think that there’s a lot of room In this market,” Frankenberg says, land we only want major parts of it.”
Microsoft’s Bill Gates is bullish on his company’s prospects for the digital future. At this month’s Microsoft sponsored CD-ROM conference, he delivered a keynote address entitled ‘Multimedia at Your Fingertips’-and even borrowed John Sculley’s term, ‘personal digital assistants.’ Hardware makers will be looking for software to exploit the power of their machines. Most multimedia machines for the consumer market currently sport the compact Disc Interactive (CD-1) standard pioneered by Philips Electronics, but the real showdown will likely shape up between two computer-software companies: Apple and Microsoft Both companies want to extend the look and fool of their computer software Into the consumer-electronics arena. Each uses a graphical user Interface (GUI, pronounced “gooey”). Both companies are lining up supporters for multimedia, but Microsoft scored big with Its announcement earlier this month that Sony’s now CD ROM multimedia player will feature Microsoft’s operating system.
Little wonder that Apple Is turning up the heat In court. In a suit that could come to trial this summer, Apple claims that Microsoft ripped off its copyrighted operating system. In creating Windows for IBM-compatible machines. Microsoft has denied the charges-and has produced videotapes documenting programs with similar graphical features that were brought out well before the Macintosh appeared. Microsofts Windows will surpass Apple’s Macintosh this year to become the biggest-selling GUI. Apple is asking a hefty $5.5 billion, but the stakes are actually higher. the winner stands to collect vast royalties on the consumer-electronics products that use their standard. Tim Bojarin, president of Creative Strategies in Santa Clara, Calif, says, ‘Its a GUI war’– and It certainly is.
Open a video game and you find a computer, optimized for fun with special chips for zippy graphics and rich sound. That’s a lot like the sort of machines that computer makers are hoping to make for the consumer-electronics market Computer companies such as Apple will be hard pressed to beat video-game companies at their game, says Mike Saenz, founder of Reactor, a Chicago-based entertainment-software company. ‘if they think they’ve got a technology that can compete against the entertainment machines, they’ve got It wrong.’
Nintendo of America president Minoru Arakawa demurs, “We are not good In areas other than entertainment’ But he admits that ‘when we talk about how we can appeal to the boys, especially between 8 years old and 15, probably we are the best’ Some understatement-Nintendo expects to capture $4.8 billion of the projected $5.9 billion American video-we market In 1992. In Japan, Nintendo has already tapped the computer power within the game box: consumers use the consoles to bank at home, trade stocks and even to bet on lotteries and horse races. Nintendo has made deals with consumer-electronics companies Sony and Philips to come up with game grew, and announced it will bring out a $200 CD-ROM drive for games by the year-end-an incredible one third of the current price of the disc players.
Akio Morita’s Sony Corp. appears to be everywhere at once. Sony helps Apple manufacture many of Its computers and components, and makes a pocket-size pen computer In Japan, the Palmtop, that Is rumored to be undergoing an eventual Apple software makeover for the U.S. market Sony Is also said to be an Investor In General Magic, the Apple spinoff off. But Sony also supported Microsoft’s software standards In its now CD-ROM player.
Not that it’s any surprise. Like its archrival in Japan, Matsushita, Sony is covering all the bases in the emerging market It is well positioned for the coming fight. Sony and consumer-electronics giants Sharp and Casio are already adept at packing computer power into handhold electronic organizers. Sony also has market savvy that American computer companies lack-the Japanese giant knows the ins and outs of the brutal consumer–electronics business and has learned to thrive an the razor-thin profit margins. Lot the American computer companies brag about the strength of their technology, says Ron Sommer, the president and CEO of Sony Corp. of America ‘Our strength Is not only technology, but the marketing power to develop totally now markets where the consumer fools comfortable.’
Despite its manufacturing and retail wizardry, Sony doesn’t do everything right Its much-ballyhooed consumer CD-ROM reader, the DataDiscman, Is awkwardly designed; Richard Shaffer, editor of the Computer Letter, applauds Its under-$600 price tag but deems It “almost unusable.’ The giant could stumble. But it would be foolish to underestimate the company that created the Walkman.
