Some companies thrive by swimming against the stream. Consider AST. Even as Japan and other Pacific Rim nations are making great strides in marketing their electronics and other high-tech equipment to the West, AST is selling its computers in the East. More than that, AST has just introduced a computer in Japan that offers compatibility with the dominant Japanese PC standard.
"We've always felt that the Pacific Rim provided an opportunity," says Jim Ashbrook, the company's vice president for product marketing. "Although that opportunity trails the U.S. in terms of PC penetration, it's still a very large market with great growth potential."
The company identified the Pacific Rim as a target several years ago and has taken the time to build the infrastructure necessary to succeed in business there. Take, for example, one of the key rules of global competition: Don't put too much distance between your manufacturing facilities and your marketing efforts. It's a rule AST follows closely.
"We started in Hong Kong, but we also put a factory there," Ashbrook says. The company opened a Hong Kong sales office at the same time. The investment has paid off. "That particular segment of our business has grown very rapidly," he says. AST has since expanded into Taiwan, Australia, and Japan.
The Japanese market presents several challenges to a PC manufacturer. Unlike in the United States, there exists no single PC standard (such as MS-DOS).
"The PC AT MS-DOS standard dominates in the U.S. to the exclusion of almost everything else other than Apple," Ashbrook points out. "In Japan, the NEC 98 standard has over 50 percent of the market, and the rest of the market is fragmented to the point where no one else has more than 5 percent. So there are more standards, but there is still a dominant player, which is what we have focused in on."
NEC's standard is not as open as IBM's. Companies can't simply duplicate the NEC BIOS and market NEC-compatible computers. Nor does NEC license its BIOS. In order to produce an NEC-compatible computer, AST spent two years working with a Japanese company to develop an NEC-compatible BIOS that respected NEC's proprietary technology.
Then, AST went one step farther. In addition to offering NEC compatibility, the AST Dual SX/16 is fully MS-DOS compatible.
"Our position is that [this approach] gives you the best of both libraries," Ashbrook says.
The dual system is already garnering some interest in Japan. Ashbrook met recently with representatives of a Japanese software association. "They were very interested in our PC," he says. "They felt the Dual SX/16 would be a perfect tool to train people on their de facto standard, as well as offering access to the world standard." AST should continue to find market potential for the Dual as a training tool as well as a productivity tool. Ashbrook believes that Japanese businesspeople age 30 and older are less computer literate than their United States counterparts and therefore present a sizable opportunity for AST.
Will Japan continue to offer large opportunities to Western companies willing market computers there?
"We think it will," Ashbrook says. "If you look at Japan on a PC per capita basis, they have less than half of what we have in the U.S. But what that says is that Japan is a tremendously technologically advanced country, but that there's still a tremendous opportunity to grow the PC business. Certainly they want to increase productivity in their offices."
AST believes that the Japanese computer market can best be approached from the high end. "American computer companies have the ability to keep product development on the leading edge. There are a great number of people in Japan who want to have leading-edge products and will, in fact, take advantage of American products. There's a market there, and people are hungry to get the kind of capabilities that we have."
AST, in fact, has for some time sold its standard line in Japan. The Dual SX/16 is an addition to its Japanese line, rather than the launch of an entire new line.
"We sell a number of computers in Japan," Ashbrook says. "Typically, these are high-performance 386s and 486s, using American CAD packages."
Ashbrook attributes the market for MS-DOS computers and American software to the delays required in translating software to the NEC standard. "People want the power and the design tools, so they're buying standard products in order to run CAD packages, development packages, and databases."
What are the cultural differences facing American computer companies seeking to do business in Japan?
"By American standards, it takes a long time to finalize the details of an agreement. There's an inertia, a time barrier in trying to finalize agreements," Ashbrook says. "There's a positive aspect, though. Normally, once you get an agreement put together, it stays together."