IV. Tiny machines, giant market

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Over the last decade laptop computers have continued to gain market share. In the last few years demand for these machines has

begun to increase dramatically. In 1989 sales in the United States were 570,000 units. In 1990 this rose to 830,000 units and industry experts were predicting 5 million by 1995. As they become lighter and more powerful, laptops will be replacing desktop computers more fre­quently.

A number of MNEs are currently vying for position in this mar­ket. The Japanese have the inside track because of their expertise in areas such as liquid crystal display (LCD) screens, floppy disk driver, memory chips, and miniaturization techniques. As a result, by 1991 Japanese firms such as Toshiba, NEC, Sharp, Mitsubishi, and Epson held 40 percent of the ILS. laptop market.

In an effort to ensure that they do not lose this battle, many.U.S. manufacturers are also entering into agreements with Japanese

-firms. For example, Compaq worked with Japan's Citizen Watch Com­pany to miniaturize Compaq's laptop components to fit into an 8 1/2 11-inch package. IBM has joined Toshiba to develop color laptop screens. Apple is producting a new laptop with Sony, and, AT&T is working with Matsushita Electric to build a notebook computer. Mean­while Texas Instruments is trying to get back into the market by selling laptops designed with the Japanese partner. Others are simply having Japanese firms to produce the machines for them. For example, AT&T has ordered 2,'500 machines from Toshiba, Grid, and AST Research.

The U.S. market is not the only target for these firms. The Japanese market also/has a high demand and by 1991 laptops ac­counted for 43 percent of ail personal computers (PCs) being sold. It is estimated that by 1995 this share will be -over 50 percent. Demand in Europe is also quite brisk. In 1991 one-eighth of all PCs sold were laptops. By 1995 it will be one in three. This certainly helps to explain why Italy's Olivetti is building a new line of laptops in its Nuremberg, Germany factory and has, signed a deal with Digital Equipment to pro- -vide the firm with machines for the U.S. market.

The biggest challenge in this market will be staying on the cutting edge of technology. There are now so many firms in the industry that those who do not offer state-of-the-art machines can expect their share to drop quickly. Some of the most likely developments will include improved graphics quality; color LCD screens; smaller and more sophisticated chips that will allow the

emergence of sophisticated notebook computers; smaller (1.8-inch) hard disk drives that can store more information; nickel-hydride batteries mat will have 50 percent more life that those currently operating laptops; flash memory cards that will be used in place of a hard-disk drive and reduce both power consumption and weight will be more reliable and take up less space.

Clearly, laptops are going to become smaller, lighter, and more powerful. They will replace many desktop units and dramatically change the way many individuals, including salespeople and others who are on the road constantly, do their jobs. The demand is huge and the profits are highly attractive. Unfortunately, the market is crowded and those who hope to prosper will have to remain flexible and alert to changing market conditions.

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