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August 1997


By Bob Djurdjevic
The Japanese Are Coming.  Maybe.


"What do you think someone outside the computer industry might think if I told them I had just met the person who is in charge of IBM servers?," this writer asked Nick Donofrio, IBM's top nerd (top "technology officer" in "politically correct" jargon) when he was still the Big Blue's head of all server products.

"That I am a maître d' who waits on tables at an IBM restaurant," Donofrio was quick to retort.

No longer. Nowadays, nobody would confuse computer servers with head waiters anymore than one would mistake Le Big Blue for a Cordon Bleu chef. Everybody, including IBM - that ultimate corporate blue chip dining establishment - is in the fast food business these days. Everybody wants to be a server to the tens of millions of hungry Internet customers looking for food for thought.

That's because, unlike most humans who consume a maximum of three meals a day, the Internet users feast around the globe and around the clock - 24 hours a day. And if God somehow managed to lengthen the day or cancel man's need to sleep, the Cyber Cafes' patrons and their anxious "servers" would probably delight in the news.

But just as blood is said to attract sharks, the evolution from mainframe "glass houses" to consumer markets which the Internet has spawned has lured new overseas competitors, most notably from Japan. In 1996, five Japanese computer industry giants - Fujitsu, Hitachi, NEC, Sony and Toshiba - have entered the PC market in the U.S. And they did it with a bang, not quietly, as is the traditional Japanese way.

"We're not defenders; we're predators," declared David Hancock, a former Apple Computer executive, now with Hitachi, in an August 1996 interview. "It's war here, and we love a war!"

The current computer industry scenario is reminiscent of the stereo and TV wars in the 1970s, when Japanese predators swept away their American competitors in the consumer electronics market. In the aftermath of that battle, domestic vendors were relegated to virtual "has been's."

It was this American corporate debacle that prompted the former IBM chairman, Frank Cary, to declare in the late 1970s that the expected Japanese assault on the computer industry "must be halted at the beaches." So IBM slashed prices and boosted production in order to become the low cost producer and meet the Japanese challenge.

But the assault which the former IBM chief had feared never materialized. The Wintel (Microsoft Windows and Intel)-fueled PC revolution pulled the rug from under the feet of all mainframe-centric competitors, both domestic (IBM) and the Japanese.

Now, both IBM and the Japanese are singing praise of the "network-centric" world which is offering them a new lease on life. No longer touting their mainframe capabilities, they are selling PCs, network products and systems integration services.

And so it is NOW that the smaller fish in the domestic "PC server" pond (e.g., Apple, Compaq, Dell...) have good reasons to fret the Japanese technological "tsunami." Men from the Land of the Rising Sun have landed on the U.S. beaches, and are working their way into America's Heartland, albeit some 20 years later than Cary had thought.

Fujitsu's acquisition of Sunnyvale, California-based Amdahl Corp., of which Fujitsu had owned about 42% before its $850 million-takover, hints at a shakeout which smaller U.S. "server" competitors are facing. Just as IBM used its Deep Blue technology to "deep-six" the world chess champion (Gary Kasparov), the Japanese are likely to use their deep pockets to sink their American foes' market shares.

Bob Djurdjevic is president of Annex
Research, a Phoenix, Ariz.
consulting firm. He writes about
economic and global affairs. Visit
him at

For additional Bob Djurdjevic columns on geopolitical

subjects (published in The Washington Times, Chronicles

and other publications), visit the Truth in Media Web site

("Index of Djurdjevic's Columns" section).

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