Prices, remain high by world standards, however, making it difficult to differentiate Compaq's products from those of Japanese computer makers. For example, NEC will build a joint venture facility in Shanghai, China with Chang Jiang Computer to make PCs. But more importantly, is that NEC has substantially redesigned its 9800 series architecture enabling the company to use industry standard sub-systems rather than the more expensive hard disk drives and other peripherals previously required for the company's proprietary PC architecture. This use of industry standard products, along with offshore production, now puts NEC in a position to match the prices of anyone attempting to seriously undermine NEC's stranglehold on the Japanese market. A predication by this analyst, which goes very much against the prevailing wisdom of many commentators now following the Japanese PC market.
Exact figures vary between analysts and research institutes.
As a result, NEC was able to essentially match these prices, while create fear and doubt among potential customers with Compaq's ability to support them adequately. Hence, NEC continued to dominate major corporate accounts, and when did loose out it, Fujitsu and IBM were the main winners. But now that NEC has redesigned its 9800 series to use mainly industry standard sub-systems, while increasing offshore production, its cost penalty, for using small production runs of parts made specifically for its 9800 series architecture, is largely gone. For PC makers and industry in general the message is quite simple. Enjoy the high profits of Japan's inflated prices for a few months to recoup start up costs, but don't give your competitors one moment of respite to change their operations.