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Japan's PC market on the mend

The market records a 16 percent increase in the third quarter of fiscal year 1998, led by the consumer segment and more female buyers.

Japan's PC market recorded a 16 percent increase in computer shipments for the third quarter of fiscal year 1998, and a government forecast is showing continued gains through March based mostly on the strength of the consumer market.

According to research from Japan's Electronic Industry Development Association, PC makers shipped over 1.8 million computers from October to December of 1998, a 16 percent increase over the same period a year ago.

The good news for PC makers: that translates to the biggest increase in almost two years. The upturn followed an increase in the previous quarters' shipments of 9 percent, itself the first increase of any kind since early 1997. The bad news: pricing pressure constrained revenue growth in the fourth quarter to $3.47 billion, an increase of only 4 percent.

For the fourth fiscal quarter, the association is forecasting a 5.1 percent rise to 7.2 million units shipped. The consumer market and a marked increase in the number of women buying PCs, in particular, will be the primary driver of the growth through the March timeframe.

Sales to women have jumped to roughly 25 percent of total in-store sales, compared with less than 10 percent in the first half of 1998, Yoshi Takayama, a senior managing director at NEC told the Nihon Keizai Shimbun, a major Japanese business daily.

Cutbacks in investment by companies, which generally account for 70 percent of PC purchases, continue to limit the overall growth rates, but observers are expecting that corporate buyers may start spending more in April. That is the month when the government is scheduled to implement new tax breaks for investment in information technology in an effort to boost the economy.

The association surveys 23 PC makers, which account for about 95 percent of the Japanese market.

Bloomberg contributed to this story.