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Dell Computer Fires Latest Shot In Japan’s PC Price War

January 21, 1993

TOKYO (AP) _ A personal-computer price war heated up here Thursday, with Dell Computer Corp. announcing it will sell low-priced computers directly to Japanese customers.

The Austin, Texas-based computer maker said it will sell PCs at prices that are sharply lower than those announced earlier this week by NEC Corp., which controls more than half the Japanese market.

NEC had announced its price cuts in response to new lower-priced computers introduced by Compaq Computer Corp., International Business Machines Corp., Apple Computer Inc. and other American PC makers.

Dell, which pioneered direct-marketing of PCs in the United States, plans to avoid Japan’s difficult distribution system by selling directly in Japan as well.

But the decision also represents a gamble, since Japanese are used to personalized service from long-term suppliers, and generally are not accustomed to ordering expensive goods by mail or telephone.

It also comes as Japan’s previously isolated computer industry faces hard times because of the country’s economic recession.

But the managing director of Dell’s new Japanese subsidiary, Katsumi Iizuka, said the bad economic conditions give Dell an advantage because of its lower prices and efficient marketing methods.

Dell’s cheapest computer in Japan with a 486 chip will be priced at 152,000 yen, or around $1,215, while NEC’s cheapest lists for 218,000 yen, or $1,745. However, NEC’s products are frequently discounted by dealers.

NEC uses a proprietary system that is not compatible with the IBM PC design used by Dell, which has become a de facto standard in many countries outside of Japan.

The handful of non-compatible proprietary PC designs in Japan has restricted demand for computers, but interest has grown with the introduction of lower-priced IBM-compatible American machines.

Dell said its new Japanese subsidiary would welcome orders from individuals but would focus on business customers.

As in the United States, it will provide free telephone technical support, along with a year of on-site servicing through a Japanese company.

Compaq Computer set off Japan’s PC price war in October with a lineup of low-priced computers, and other American makers have followed suit, in a series of shocks for Japanese makers.

″The domestic computer industry has had a wake-up call here,″ said William Howe, president of Intel Japan, the Japanese subsidiary of the American microprocessor maker.

″The way computers are distributed is going to go through some major changes,″ he said.

Dell, the world’s fifth-largest manufacturer of personal computers, says international operations, mostly in Western Europe, now account for about 35 percent of its total revenues, and are expanding faster than its U.S. sales.

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