Toshiba Signs On to New PC Battle : Computers: Written off two years ago, the Irvine-based subsidiary bounces back with highly praised subnotebook.
When each new generation of portable computers is born, scores of manufacturers jockey for position to market the lightweight machines that increasingly mobile Americans will actually carry in their briefcases.
This year, the folks at Toshiba America’s computer division in Irvine have a gleam in their eyes. They say they are getting sweet revenge against critics who two years ago wrote them off as losers in the PC wars.
“We think we’ve got the best technology for the new generation of computers,” said Atsutoshi Nishida, 49, president of Toshiba America Information Systems in Irvine.
As evidence of Toshiba’s technological prowess and healthy comeback in the U.S. market, Nishida points to the company’s introduction this week of a color portable model that brings the power of the desktop computer to a briefcase-size device weighing less than five pounds.
The new PC, three years in the making, is already drawing praise from analysts.
“This new machine is great,” said Janet Cole, computer analyst at Dataquest Inc., a market research firm in San Jose.
“Toshiba had troubled times in 1991,” Cole said. “They came back in 1992 and have been doing well this year.”
A fierce price war and the recession hit Toshiba’s computer division hard, threatening its position as the No. 1 U.S. maker of portable computers. To turn the division around, parent company Toshiba Corp. in Tokyo sent Nishida to Irvine in April, 1992.
Toshiba had made some mistakes, Nishida said, such as failing to communicate clearly between those doing the engineering in Japan and those marketing the products in Irvine.
“I’ve tried to understand the customers much more,” said Nishida, 49. “I visited them and I really had to explain why they should buy Toshiba. I’ve also kept strong communication with Japan.”
In 1990, nearly 100 companies introduced notebook computers--portables weighing five to eight pounds apiece. The machines, with the computing power of desktop models, competed against Toshiba’s archaic laptop line. Prices fell dramatically as competition blossomed, and Toshiba was slow to cut its premium prices.
Toshiba’s share of the overall portable market fell from about 20% for 1990 to 14% for 1991, analysts said. Last year, though, the company’s market share climbed to 16%, according to market researcher International Data Corp. in Framingham, Mass.
Toshiba is expected to gain market share in 1993, but to do so it will face strong competition from IBM Corp. and Apple Computer Inc., Cole said. Both companies, she said, are beginning to regain sales they had been losing to so-called clone-makers--companies that sell unknown brands at very low prices.
Two years ago, the clone-makers based their computers on components made by suppliers such as Intel Corp. To turn those parts into “me-too” machines required little effort and a host of sellers ranging from warehouse retailers to department stores began selling PCs.
But the machines being introduced this year require more independent engineering because the technologies have become more sophisticated. That has helped force out a number of the clone-makers, leaving about 50 computer makers in the U.S. market.
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Other factors have helped weed out competitors. One of those is the increasing popularity of color screens, which are expected to dominate U.S. sales by 1995. The screens are produced in Asia and are hard to acquire for all except the largest companies--such as Toshiba, for which color models now make up 70% of sales.
The ongoing price war, too, has wiped out scores of clone-makers. As costs for models such as Toshiba’s came down, customers began opting for better-known brand names.
Now, as the industry prepares for the transition to the five-pound PCs, dubbed subnotebooks, Toshiba is ready with machines on both ends of the price spectrum.
Twenty or so competitors are expected to launch similar machines. As development costs have soared, hard-pressed desktop PC makers have spread their resources among fewer markets. Advanced Logic Research Inc., an Irvine computer maker, offers only a token notebook model in addition to its new line of desktops.
At Toshiba, Nishida is optimistic.
“We have been making a profit and the business is going very well,” he said last week. “We are still suffering from a shortage of products--we can’t make them fast enough.”
The company, which now employs 1,700 people, hired about 100 employees in Irvine in the past several months.
The company is now producing more PC parts in Irvine and importing less, Nishida said. It also plans to strengthen its local research and development operation, particularly in developing accessories for computers.
The Irvine subsidiary has also developed a technology to allow networks of computers to send data over cellular airwaves instead of wires, Nishida said. Such a product, to be launched next year, could be exported to Japan.
Industry followers acknowledge the turnaround.
“Toshiba fell behind in the technology curve,” said David Dukes, co-chairman of computer distribution giant Ingram Micro Inc. in Santa Ana. “Now they’ve got a lot of momentum in the marketplace.”
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Toshiba America’s resurgence isn’t a foregone conclusion. Apple and IBM will continue to be formidable rivals.
“Eighteen months ago, we weren’t even on the charts,” said Jim Bartlett, director of mobile computing at IBM. “Now we’re in the top three or four. That’s a significant turnaround.”
Toshiba also must look beyond the subnotebook category to another new product: a hand-held computer known as a personal digital assistant, which is a cross between a pager and a computer.
Apple was first in the category with its Newton MessagePad, which uses a stylus instead of a keyboard. But it has faced a storm of criticism for technical flaws in the initial product, introduced in August.
Nishida said Toshiba will launch its own personal digital assistant sometime next year, when the market will be more mature.
“In the end, other companies aren’t going to have the sufficient research and development to make products like this,” he said.
