Gates Opens Windows too the East

Japan may be a leader in the business of high technology but all of Asia isn't . In fact, only in the past five years has the computer industry began to boom in the Asia-Pacific region. Worth nearly $20 billion in 1994, it's quickly becoming one of the world's most prized PC markets, one that has the major providers of PC's vying for a piece of the pie.

Suddenly, everyone from Asian governments to families have jumped on the technology bandwagon, partly due to falling PC prices, the high number of software programs in Asian languages now available and the realization that in order to compete in international markets they must 'boot up'. Market research firm IDC expects the regional market (the Asian-Pacific region is comprised of Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Phillippines, Singapore, Taiwan, and Thailand) to continue to expand 20 to 30 percent over the next few years. In other words, more than twice as fast as in North America where the market is more mature.

China, in particular, is emerging as a cash-cow for technology vendors.

Forecasters estimate a million PC's will be sold in China alone in 1995 at an approximate value of $1.93 billion. The reason for the exponential growth is not necessarily because the Chinese market is large, but because it hasn't been saturated yet, said Saiman Hui, director of research for IDC-Asia. "Since China began its open door policy 15 years ago, there have been a lot of economic reforms, and economic development has been enormous." China's economy has experienced a growth rate no other country in the world can tout: 13.8 percent in 1993 and 12 percent in 1994, compared to approximately three or four percent annually in the United States.

According to Hui, who was head of IDC's Asia-Pacific office, located in Hong Kong, this growth rate is particularly significant for PC vendors. Because the United States and Japan are already prepared to meet the high volume of systems that China demands (because, of course, they had to meet it here first) the competition is fierce for U.S. based companies. An astounding 90 percent of the need for desktop PC's will be met by companies outside of China, and only 10 percent from Chinese vendors. Those battling for the top three spots of U. S. suppliers are; Compaq Computer Corp., AST Research, and IBM Corp. In 1994, Compaq nudged AST(the leader in the Asia-Pacific region since 1990) out of the top spot. Since then AST has vowed to fight back, increasing investment and production in their China-based factory. Although most of the major U. S.-based PC vendors have factories in Asia, who wins ultimately depends on who can keep their costs down and production up.

Also fueling growth of the PC market is the Golden Card Project, which is implementation of mass numbers of Automatic teller machines (ATM) and point-of-sale terminals which require computers. This project, developed by The People's Bank of China, Shanghai Credit Card Network Co. in conjuction with Tandem Software Systems, will connect the sites to overseas credit card networks.

Winning the war on the software side of things, is none other than Microsoft Corp. In September, Bill Gates, chairman of Microsoft, and Chinese Communist Party Chief Jian Zermin signed an agreement standardizing the Chinese version of Microsoft Windows 95 operating system as the software development standard for China. The contract comes after a much-publicized disagreement between Gates and Zermin wherein Zermin accused Gates of not understanding the Chinese culture. Gates apparently convinced Zermin he had been studying the culture.

As for Apple, their presence was too little, too late. It is likely their home market share will grow over the years but what is driving the market is business and according to IDC, catching up with Windows-based systems will be difficult. Currently, Apple holds only 4.7 percent of the Asian PC market outside of Japan, down from 5 percent in 1993.

For now, those competing for market share in Asia, it is every man for himself.

[ Prism Online November 1995 Homepage ]

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