Byting Japan

EXECUTIVES AT APPLE COMputer's Japanese subsidiary are still laughing about the time a shipping-company employee drove up in a refrigeration truck to pick up crates filled with Macintosh computers. He had seen the company's rainbow- hued apple logo on the boxes and assumed they contained fresh produce. The irony was fitting: in the first few years after the 1983 entry of Apple into Japan's $7 billion personal-computer market, its Macintoshes, unsold, were gathering dust on the shelves of computer shops in Japan.

If Apple staff members in Japan can laugh today, it is because the company has succeeded in dramatically reversing its fortunes there during the past four years. Since 1989 Apple has increased its market share in Japan nearly fivefold, to 5.4%, selling 120,000 machines in 1991. That is still small compared with giant NEC, which controls more than 50% of the personal-computer market in the country, but Apple hopes to reach a 7% share and sell 50% more computers this year, for $500 million. Maneuvering its way among behemoths like NEC, Fujitsu, IBM and Toshiba is no mean achievement for Apple, especially since overall personal-computer sales have slumped during the past two years. Says Satjiv Chahil, marketing vice president for Apple Pacific: "I think we have won Japan's respect."

In the process, Apple (worldwide sales: $6.3 billion) has joined a select group of American companies that have debunked the myth of Japan as a fortress impenetrable to outside products. But cracking the Japanese market has had deeper significance for the California-based company: with profit margins steadily shrinking in the personal-computer business, CEO John Sculley has set out to expand Apple's business into advanced consumer electronics like CD-ROM players and personal digital assistants (PDAs), far more powerful versions of the electronic pocket diaries developed by Japan's Casio and Sharp. Sculley believes Apple has a key advantage because it pioneered software that makes computers simple and fun to use.

Sculley's vision enticed electronics giants Toshiba and Sharp to form alliances with his company earlier this year. Apple is contributing software know-how and product design to manufacture a CD-ROM player with Toshiba and a PDA with Sharp; the Japanese firms are providing manufacturing expertise along with key components such as flat-screen displays. Says Sculley: "We cannot afford to fund these projects by ourselves. These alliances give us a chance to be players in an important growth area." Agrees Toshiba's Takehiko Kotoh: "In the 100-m race, Apple is the top runner. They are very quick to move, and they are very open about what they are doing."

No one in Japan would have spoken so flatteringly of the U.S. firm four years ago, when Apple was doing nothing right in that market. The company had priced its best-selling equipment too expensively -- a Macintosh Plus at $2,842 in 1989 had a tag more than 60% higher than the U.S. price. Apple left marketing and distribution exclusively to a subsidiary of Canon, which saw little point in exerting itself on behalf of a lazy American client. Worst of all, Apple had not taught its computers to speak Japanese. In early 1989 only six software programs were available in Japanese, and a computer without software is about as useful as a phonograph without records.