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Micron to spark price war in Japan

Capitalizing on the rising acceptance of U.S. PCs, the Japanese division of Micron Electronics has announced plans to become the low-price leader in Japan within three years.

Capitalizing on the rising acceptance of U.S. PCs, the Japanese division of Micron Electronics (MU) has announced plans to become the low-price leader in Japan within three years, according to a report in Nikkei Personal Computing, a major Japanese computer publication.

Price will be Micron's main weapon, according to the report. Overall price cuts are expected to allow the company to compete more effectively against Dell and Gateway 2000, both of which have seen increasing sales in Japan.

The magazine reported that Micron is selling a 266-MHz Pentium II system for 264,900 yen, or $2,226--a rock-bottom price for a Pentium II system. The standard configuration of the Millennia XRU Micron mini-tower with a 266-MHz Pentium II chip and 64MB of memory sells in the U.S. for $2,999.

In addition, Micron said it would shorten delivery periods to Japan from its plant in Idaho and possibly begin local production. Currently, it takes around two weeks for PCs to arrive in Japan from Micron's Idaho facilities.

"This is the time for us to invest in the Japanese market," said Manuel De Pena, president of Micron Japan, in a prepared statement.

Although Japanese businesses and consumers have tended toward national brands in the past, less-established U.S. players in the Japanese market, such as Dell and Gateway 2000, have fared relatively well. In a poll earlier this summer by Nikkei Best PC Magazine, potential PC buyers said that, among the U.S. companies, IBM was the most likely choice (27.8 percent), trailed by Dell (23.5 percent) and Gateway 2000 (18.8 percent).

Despite the company's palpable optimism, the Japanese market remains a formidable one. In 1992, Compaq entered the Japanese market with desktops that cost about 50 percent less than what Japanese manufacturers offered. The "Compaq Shock," however, failed to turn into market share. Among other reasons, the company could not establish strong relationships with local wholesalers, corporate users, or dealers, all of which had long-standing and cozy alliances with local manufacturers, according to various analysts and Compaq executives.