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February 8, 1988


By CBR Staff Writer

With the Iowa caucuses taking place yesterday, the 13 candidates for the White House are off and running, and one candidate tipped to do well in Iowa, Democratic congressman Richard Gephardt of Missouri has turned Apple’s Macintosh computer into an election issue. Gephardt is campaigning on a protectionist platform, and has picked up on the fact that the basic Macintosh, which sells for about $1,500 in the US, is the equivalent of $3,100 in Japan. Gephardt sees this as Japanese protectionism in action – hidden barriers, he implies, prevent the Macintosh competing fairly with local products. But as the Washington Post points out, if there are faults in this pricing disparity, they are nothing to do with the Japanese, everything to do with the approach of many US companies to marketing in Japan. Apple argues that the machine in question is a Japanese language version of the Macintosh, and you don’t have to be very up in these things to know that Japanese language processing, requiring substantial extra circuitry for screen memory and character generators, adds significantly to the cost of any computer. But Apple also points out that it prices the machine not on a cost-plus basis, but on the basis of what the market will bear. It wants the Japanese Mac to be seen as a premium product, and has priced it accordingly. Could it lower the price and still make a profit? Almost certainly. Should it do so? According to the Post, its Japanese salespeople and distributors believe it should – and that if it did, the machine would become a market leader. It is widely argued that too many American – and British – companies do not do well in Japan because they are doing well enough in their home market and in easier foreign markets that they don’t find it worth the extra effort. Maybe that should be the election issue.

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