Japan PC downturn all but assured

Japan's largest PC manufacturers are facing the first year-to-year decline in PC shipments in five years, an alarming situation for these companies since the average selling price of computers is decreasing, making vendors that much more dependent on volume.

Falling consumer desktop sales will likely mean that market leaders NEC Corporation, IBM Japan, Fujitsu, Toshiba, and Apple Japan report decreased volume for the fiscal year ending in March 1998, according to Nihon Keizai Shimbun, Japan's leading business daily.

NEC shipped 10 percent fewer PCs in the October-December quarter than it did in fiscal 1996, and will likely report a fourth-quarter decline of 5 percent. For the year, Japan's market leader has lowered its target to 3.25 million PCs, a 7 percent drop off.

Second-ranking Fujitsu held its ground in the third quarter, but expects shipments to fall during the fiscal year's final quarter, Nikkei reported. Third-placed IBM Japan shipped slightly fewer systems than it did a year ago, like Fujitsu beating the industry's average decline.

Toshiba, which depends more heavily on its notebook product line, logged unchanged shipments. Demand for portables remains comparatively strong.

After discontinuing the low-end Performa line, Apple suffered a sharp year-on-year drop for the third quarter. The company has revised its expectations to zero growth for 1998.

The sour outlook is quite a change from the start of the year, when PC makers anticipated yearly growth as high as 20 percent. But the warning signs have been a long time coming: Japan's domestic PC shipments in the July-September period fell 6 percent, the first year-on-year drop since 1992.

The frantic pace of model revisions and high prices have been blamed for the slump. The Japanese market has been influenced by a consumption tax hike that went into effect in April 1997, and the Japanese economy's contraction.