Compaq builds to order in Japan

Compaq Computer (CPQ) is set to escalate the PC price war in Japan as it readies the launch of its build-to-order initiative next month.

Compaq Japan will begin making PCs on a build-to-order basis, which could result in 24 percent lower prices on systems, according to a report in the Nihon Keizai Shimbun, Japan's largest business daily.

By assembling computers only after orders are received from customers or resellers, the company saves cuts the cost of storing parts and finished goods.

The move mirrors Compaq's manufacturing strategy in the U.S. market, where in July the company announced a build-to-order program designed to compete with direct systems vendors like Dell and Gateway 2000.

In Japan, Compaq will manufacture 23 standard models in three desktop PC lines on a build-to-order basis, according to the report.

To date, the Japanese market has been dominated by NEC and its proprietary "PC 98" architecture, but Compaq's 1992 entry into the Japanese market heralded aggressive pricing and paved the way for increased acceptance of a more-open platform based on the same Windows-Intel PC architecture used in the U.S. NEC is expected to finally cave in and bring out standard-architecture PCs by the end of the year.

Compaq, despite its influence in the worldwide market, has not yet been able to make significant inroads into Japan, though IBM Japan and Apple Computer's Japan arm have done well. Both are typically ranked in the top five.

Compaq had a three percent share in the Japanese market in 1996, down from the year before, according to research firm IDC Japan. Research indicates NEC still holds about 33 percent of the PC market in Japan, with Fujitsu ranked second at 22 percent market share.

Last month, IBM Japan and major home electronics retail chain Kojima announced cooperation on a direct-order sales scheme for personal computers. Dell and Gateway already employ a direct-sales scheme.