Market research paper about NEC losing Japanese PC market

[SamIAm]

Something to peruse if you're curious about what was probably receiving most of NEC's attention in the last years of the PCE and at the dawn of the PC-FX:

wayback://cob.sjsu.edu/WEST_J/Papers/WestDedrick2000.pdf

tl;dr - With the PC-98, NEC had a stranglehold on the Japanese PC market through most of the 80s and early 90s. Its proprietary architecture, which existed in part to facilitate word-processing in Japanese, needed a custom OS, and that in turn caused the software library to be mostly exclusive. Then, in 1991, a Japanese version of MS-DOS came out that handled all word processing in software, effectively allowing ordinary consumers to buy international-standard IBM clones for the first time. Later, and more importantly, Windows 3.1 in 1993 was compatible with both IBM clones and PC-98 systems, thereby erasing all of NEC's exclusivity. Fujitsu started building clone systems in 1995 and selling them at extremely low prices, and NEC basically missed out on an enormous computer-buying boom in the late 90s and lost a ton of market share.

It's a story I mostly knew already, but it was interesting to see all of the details. I hadn't appreciated just how much of a watershed Windows 3.1 was in Japan, and how great the implications were for NEC. They must have been extremely frustrated not to have been able to stop Windows 3.1 from coming out for their platform.

[SignOfZeta]

Maybe it's because I'm on a phone but I can't figure out how to see past Page 1.

[CrackTiger]

Maybe it's because I'm on a phone but I can't figure out how to see past Page 1.

My phone just auto downloaded a 20 page pdf.

Thanks a lot Sam.

[esteban]

Something to peruse if you're curious about what was probably receiving most of NEC's attention in the last years of the PCE and at the dawn of the PC-FX:

wayback://cob.sjsu.edu/WEST_J/Papers/WestDedrick2000.pdf

tl;dr - With the PC-98, NEC had a stranglehold on the Japanese PC market through most of the 80s and early 90s. Its proprietary architecture, which existed in part to facilitate word-processing in Japanese, needed a custom OS, and that in turn caused the software library to be mostly exclusive. Then, in 1991, a Japanese version of MS-DOS came out that handled all word processing in software, effectively allowing ordinary consumers to buy international-standard IBM clones for the first time. Later, and more importantly, Windows 3.1 in 1993 was compatible with both IBM clones and PC-98 systems, thereby erasing all of NEC's exclusivity. Fujitsu started building clone systems in 1995 and selling them at extremely low prices, and NEC basically missed out on an enormous computer-buying boom in the late 90s and lost a ton of market share.

It's a story I mostly knew already, but it was interesting to see all of the details. I hadn't appreciated just how much of a watershed Windows 3.1 was in Japan, and how great the implications were for NEC. They must have been extremely frustrated not to have been able to stop Windows 3.1 from coming out for their platform.

This is fascinating, thank you.

I never found any strong evidence of MS DOS/Windows disrupting the Japanese market, but figured that it must have played a role.

[Mathius]

I'm going to savor this tomorrow when I have more time. I kinda already knew this story too but thanks to Sam I'll get a front row seat.

THANKS AGAIN SAM!

[exodus]

This is fascinating, thank you.

I never found any strong evidence of MS DOS/Windows disrupting the Japanese market, but figured that it must have played a role.

well I mean the ultimate evidence is that we know it happened, based on the windows and mac OS being the only two major operating systems in Japan still.

[esteban]

This is fascinating, thank you.

I never found any strong evidence of MS DOS/Windows disrupting the Japanese market, but figured that it must have played a role.

well I mean the ultimate evidence is that we know it happened, based on the windows and mac OS being the only two major operating systems in Japan still.

Well, how much was caused by NEC failing/unable to swoon key developers/software (let's say, in the corporate realm)... to have their hardware platform remain viable?

I'm not saying it would have been possible for NEC to fend off *everything*, but they might have been able to maintain/carve out distinct markets and battled it out...

Like I said, I always wondered if there were some massive clients who would have stayed with NEC if specialized software/services were robust...

[SamIAm]

A good concept to be familiar with when thinking about what happened with Japan and PCs is the Galapagos effect.

The Galapagos islands, as I'm sure you all know, are where Darwin realized many of the important basics of evolution. Among other things, he drew insight from birds with beaks adapted to eat animals particular to the islands. The Galapagos effect, at its most basic, just means that a unique environment will produce unique species. As a metaphor for socio-cultural phenomenon, however, it has something of a negative connotation. The implication is that the unique species probably won't ever do well outside of its environment, as well as that it has an isolating effect by preventing other species from getting in. When the outsiders do eventually force themselves in, it's also the unique species that typically loses out since it simply doesn't have the numbers to put up a fight.

You can imagine why this gets applied to Japan a lot. In fact, I think "Galapagos effect" is originally a Japanese-coined expression. Japan is geographically, culturally, historically, and linguistically a very unique environment, and it's watched a lot of unique species come and go over the years. One of the most relevant and concerning cases of this is with computers, and our friend the PC-98 is right in the middle of it. If anyone is interested, I'll try to tell that story now.

Japan has long been known as a high-tech country. Japanese people started making great cameras not long after rebuilding from WWII, followed by great cars and consumer electronics. In the hey-day of the 1980s, people around the world assumed that Japan would be a leader in computers, too, but as the 1990s came and everyone and their grandma bought a PC, that surprisingly didn't happen.

Actually, the thing that Japanese people find more frustrating is the success of the iPod and the iPhone in the 2000s. As the birthplace of the Walkman, Japan had all the tech-pedigree it needed to make the dominant portable MP3 player. Smartphones are an even bigger deal, because before the iPhone came around, Japanese cell phones were by far the best in the world. They were so feature-loaded that it was literally embarrassing for foreigners to show their phones to a Japanese person - believe me, I would know. Japanese phones and music players alike should have ruled the world, but they didn't. So what happened?

The old favorite scapegoats of Westerners are a supposed lack of ingenuity and an insular, rigid corporate culture inherent to Japan. I won't pretend these factors don't exist, but I do think a lot of people overlook the Galapagos effect when thinking about why Japan is where it is today.

To understand the situation with computers, let's go back to the very early 1980s.

This is when the first big wave of consumers buying PCs happened in the West. Systems like the Apple II and the Commodore 64 sold by the millions. When you think about what you can do with these simple 8-bit machines, your options are pretty limited: you can learn how to program, you can play games, and you can mess with rudimentary paint and music programs that don't often result in getting much useful work done. Probably most important of all, though, is that you can do word-processing. If you're coming from a typewriter, the backspace key alone makes these PCs well worth the investment, and they weren't even that expensive: for less than $1000 in 2018 money, you could buy a Commodore VIC-20 and a dot-matrix printer, use a TV as a monitor, and start cranking out documents.

If you remember anything at all from this post, remember the fact that this sort of cheap, easy word-processing for the everyman was not available in Japan in those days, and that the reason is the Japanese language. For effective word-processing in Japanese, you need a font with thousands of high-resolution characters that take up huge amounts of memory, you need a high resolution graphics chip and monitor, and you need a sophisticated input system for the user. The word processors that did exist in the 1980s were both expensive and so painfully slow that nobody in their right mind would want to use them unless they absolutely had to. To most of the people who bought them, cheap computers like the MSX were basically gaming consoles that happened to have keyboards attached, and little more.

While things did slowly get better, it wasn't until the mid-90s that the relatively fast input system that everyone uses today came more fully into being. Meanwhile, you can imagine how effectively not having the extremely useful feature of writing their language impacted the Japanese public's thinking about PCs.

On top of this is what's in that research paper about the PC-98. Japan's dominant PC until 1995 was highly expensive, and it ran on an operating system that kept foreign software out and Japanese software in. Is it any wonder that computer culture in Japan at the time was stagnant? About the only thing PCs were really good for outside of an office, again, was playing games.

In the West, it seems like the general public was very quick to embrace the idea that PCs should be our central hub for everything, even long before it was technologically feasible. In Japan, this didn't happen...and there is your iPod and iPhone problem.

You would be amazed at how many Japanese devices from the early 2000s don't even connect to PCs. There are digital camaras that save to SD cards designed to be inserted directly into printers, with no PC compatibility for any component at any stage. I bought a fancy phone in 2005 that had a decent built-in camera and MP3 playback capability, and when I asked the lady at the store for a USB cable to connect it to my PC, she blinked at me and told me there was no such thing. She was right, too; when I looked into it, the only way to get photos out was to email them, and it turned out that the phone was designed to record MP3 from an analogue input.

The iPod embracing the PC for the hub we all wanted it to be was key to its success. And as for the iPhone, I think the key there is that it was designed to be another hub. Japanese cell phones were neat, but they were ultimately a bunch of features loosely strapped together, any one of which could come and go. For those to evolve into smartphones would have many taken years, and their designers would have had to stumble into it almost by accident. Even now, it looks to me like people in Japan adopt PCs with reluctance and not with enthusiasm. They don't even teach kids how to type in most schools.

I've been writing this for too long, so I'm just going to end it. Anyway, take another moment to reflect on the enormous impact that Japan's unique language has had on its modern history. One does have to wonder how all of that will evolve going into the future, as well.

[TheClash603]

SamIAm just read your whole post and I'm happy to see a well thought out and thorough interpretation on the subject.  Is this something that is published about extensively in Japan, or is this largely an idea you've formulated?  I'm not sure if I agree 100% with what you said, but I'm 200% enjoying thinking about what you said.

[Gypsy]

Really interesting post Sam. I enjoyed reading it, and had to let you know.

[Mathius]

You coulda gone on a bit longer, Sammy. I was just getting in the zone when you got tired of that loathed Japanese pastime; typing. 

[Psycho Punch]

This is an awesome thread, thanks for sharing.

[seieienbu]

When I was in college there were a few Japanese exchange students that all used Macs.  I asked one about it one day and she told me that she hated Microsoft and most Japanese people were the same.  She didn't say that she hated windows Windows or Microsoft computers or anything, she said specifically that she hated Microsoft.  She said that Macs had better support for Japanese language.  At the same time I recall a couple of other Japanese students only using Microsoft Messenger for sending instant messages so it couldn't have been that universal.

This would be, uh, 15 years ago or so.  At the time it was trendy to have an apple in the states too so I can't really say that I learned anything from this.

[Psycho Punch]

I think she was just a japanese version of the common Apple fanboy

Reminds me of Linux and GNU people, which always go out of their way to tell you that Micro$$$oft is evil and Windows sux! :derpcat:

[Gypsy]

When I was in college there were a few Japanese exchange students that all used Macs.  I asked one about it one day and she told me that she hated Microsoft and most Japanese people were the same.  She didn't say that she hated windows Windows or Microsoft computers or anything, she said specifically that she hated Microsoft.  She said that Macs had better support for Japanese language.  At the same time I recall a couple of other Japanese students only using Microsoft Messenger for sending instant messages so it couldn't have been that universal.

I think she was just a japanese version of the common Apple fanboy

Reminds me of Linux and GNU people, which always go out of their way to tell you that Micro$$$oft is evil and Windows sux!

Average Linux user:

[xcrement5x]

Nice read Sam, thanks for the writeup!

[JoshTurboTrollX]

I <3 this thread!  Thanks Sam for the awesome link and synapses! 

[seieienbu]

I think she was just a japanese version of the common Apple fanboy

Reminds me of Linux and GNU people, which always go out of their way to tell you that Micro$$$oft is evil and Windows sux! :derpcat:

That's definitely a reasonable assumption.

[esteban]

SamIAm just read your whole post and I'm happy to see a well thought out and thorough interpretation on the subject.  Is this something that is published about extensively in Japan, or is this largely an idea you've formulated?  I'm not sure if I agree 100% with what you said, but I'm 200% enjoying thinking about what you said.

Yeah, this was a great post by Sam.

Hmmm.....

[dshadoff]

I agree with some of your points, but ultimately disagree with several.

Through the first half of the 1980's, Japanese and American "hobbyist" computer culture was relatively analogous... but Japan was basically doing what they often do: take a look around the world, take what's good, put their own twist on it, and let the culture evolve around it.  This is why NEC computers were similar to, but not 100% compatible with, MS-DOS machines.  As I recall, they changed two crucial BIOS calls to create the differences.  Note that the innovations with computers were minor at best.

What happened next was a huge cultural difference:  American adoption occurred in two places: the business, and to a lesser degree, the home.  (The internet came several years later).

Business saw the opportunity of streamlining many tedious processes, in order to make their businesses more profitable.  This was necessary, as Japanese competition was rendering many businesses unprofitable.  Also, corporate changes made it easier to reduce or repurpose staff in the event of streamlined processes.  Japan didn't actively investigate any of this for several reasons: 1) Japan loves paper.  It is only now, 25 years later, that they are actually looking to reduce paper and rubber stamp usage. 2) Japan doesn't tend to like change, and didn't feel that reducing costs was a necessary step until after the bubble burst in the early-to-mid 90's. So no investment. And Japan was afraid that reducing effort was not going to make their overall businesses profitable, as surplus workers would still need to be paid (at that time).

Meanwhile, back in America, the most common uses of computers after Windows arrived were word processing - as a result of which managers lost their secretarial support (but this would not have gone well in Japan, land of paper), email - which may have been treated similarly in both locations, and spreadsheets - not sure about the impact in Japan, but I still feel a delay would have taken place, because internal company policies change slowly.

In the home, many people in America saw that computers would be the future, and bought them "for their children", but didn't really know what to do with them until the internet came. So they became game machines.  But Japanese people never considered that such an investment in themselves was necessary; if it was necessary, the company would certainly train them.  And besides that, homes really didn't have a lot of extra space for such a monstrous machine (back in the 90's, computers were all tower-sized with CRT monitors).

Once the internet came, Americans were keen to communicate with other people (though primarily in English), but Japan had "VANs" which were Japanese-specific, and served similar purposes.  I get the feeling that most people in Japan didn't see the purpose of getting on the internet at first... to communicate with foreigners... in English... it would have been a mere curiosity and limited to small group of people.  Not to mention, ,this was about the time that the economic bubble burst in Japan.  So Japan was about 5 years late to this party.  And since Japan is still (even now) primarily a cash-based economy, e-commerce was not trusted so quickly, and many people still didn't even have credit cards while Amazon was already thriving elsewhere in the world.

In short, the familiarity with computers in America is what caused people to think in terms of "digitize everything", which didn't really occur to Japanese people. Which is why Americans wanted everything to be connectable, but Japanese people didn't really think that way (at first). Oh sure, some did - the programmers - but not the retail market.  And perhaps Japanese electronics firms were forced by management to actively remove such functionality from early designs "for market considerations".  We will probably never know.

And I'm sure that Microsoft's belief that "everybody loves to fiddle with drivers and reboot several times before success" was not met with appreciation in Japan.  The "do it yourself" mentality that was a requirement for early computing... pretty much doesn't exist in Japan.

Dave