The skill and perseverance of Japanese engineers is recognized

          around the world.  The Japanese nation is known for producing

          innovative minds with strong self-moivation, and it has been this

          which has raised Japan to a high level of technological

          industry.  Especially in the field of calculators and cameras,

          the Japanese have established a reputation for producing similar

          products as the competition at lower prices.  New systems

          developed by other companies are revamped and a similar model is

          offerred for a lower price.  This recurring cycle of Japanese

          technology improving an original invention at a lower price is

          especially manifest in the computer industry.  American computer

          manufacturers, led by I.B.M., are seen as the leaders in the

          industry; however, the Japanese are coming on strong.  Currently,

          I.B.M.  is responsible for over fifty percent of annual sales of

          computers in the world.  In 1980, they spent one and a half

          billion dollars on research, more than the entire Japanese






                                        - 1 -










                                         1
          computer industry of that year.  Japan sems anxious to increase

          research and production and thereby break I.B.M.'s stronghold.


            Japan is challenging the United States' computer industry

          through the use of a markedly non-American business strategy.

          For instance, Japan sells "plug compatibles" which are hardware

          that run I.B.M.  software, but cost less than the equivalent

                           2
          I.B.M., hardware.   Some American experts argue that "plug

          compatibles" show technological weakness but, in fact, to produce

          computers that can be used interchangeably shows great technical

                     3
          capability.   Japan's production of "plug compatibles" is

          consistent with Japanese theory on the technology of computers.

          They let a major, usually an American company create a demand by

          the introduction of a new system, and a couple of months later,

          Japan meets the demand at lower prices.  Another way Japan's

          computer economy is different from that of the United States' is

          Japan's subscription to a method of production involving

          subsidiaries.  Japan's hardware companies contract software

          production to subsidiaries or small independent software houses,

          so they can concentrate on the research and production of



          ----------

          1. G.Gregory, New Scientist,"Japan Challenges the Computer
                        ___ _________
          Giant",97:28,Jan.6,1983

          2. Ibid.

          3. Ibid.



                                        - 2 -










                   4
          hardware.   Often, acertain package of software is sold with the

          machine, but more of software later.  One Japanese company,

          Hitachi, has sixteen subsidiaries researching and developing

                                                 5
          software for use on Hitachi's hardware.


            Another aspect of Japan's computer economy is its preferential

          treatment by government.  American industry prides itself on

          capitalist theory, including a minimal amount of government

          intervention.  Japan, on the other hand, has a government which

          plays a fairly active role in the business of computers.  They

          form commitees to develop methods with which to better

          production, and the Japanese government also encourages

                      6
          exportation.   Japan is careful not to cause a direct

          confrontation with major companies, such as I.B.M., but rather

          they concentrate on exporting small, personal computers, a market