WHEN INFO WORLDS COLLIDE "CONVERGENCE." IN OUR VIEW, THIS BORING BUZZWORD DOESN'T EVEN BEGIN TO CAPTURE THE MOUNTING VIOLENCE OF THE UPHEAVAL RESHAPING INFORMATION TECHNOLOGY TODAY. WE SAY, CALL IT A COLLISION.
By MICHAEL H. MARTIN REPORTER ASSOCIATE JOYCE E. DAVIS

(FORTUNE Magazine) – We're not just talking about the digital dust kicked up as cable companies war with phone companies--or what's happening as young PC titans, having successfully bashed heads with mainframe suppliers and server makers, look up to see older consumer electronics giants crashing onto their turf. More momentous is the way the rapid spread of information technology is turning the struggle to seize the competitive high ground--and capture fast-growing new markets--into a truly global free-for-all.

Listen to Intel's Andy Grove, CEO of the worldwide king of chipmaking: "The U.S. may be the high-tech fashion center, but it's not the only market or the most dynamic market anymore. It's less and less the focus of our marketing." Last year more than 55% of Intel's revenues and 37% of its pretax profits came from outside the U.S.

By far the brightest area in the infotech firmament is Asia. Yes, Europe remains important as a big, rich market and as a center of considerable innovation, particularly in telecommunications (for more, see the page on Hot Products following this article). But industry leaders like Grove clearly view Asia as the next big thing. As a pool of potential consumer demand, the region boasts not only eight out of the world's ten fastest-growing economies, but also the vast and still largely untapped markets of China and India. Established technological powerhouses such as Japan and Korea have recently begun pushing their way into new markets--and look stronger than ever. "The Asians are rising again," says Richard Zwetchkenbaum, a research director at International Data Corp.

Now peer beyond all this, and you get a glimmer of what's really dazzling: More than half the 2.5 billion humans on this planet under the age of 20 reside in Asia. Coupled with its economic dynamism, this means the region and its entrepreneurs may one day play the leading role in creating and driving the technological innovation that is at the heart of the information revolution.

Already, if you want to find out what tomorrow's consumer may be buying, there's no need to stroll the streets of San Francisco's Multimedia Gulch. No, you'd do just as well to take a trip to Tokyo's Electric Town. This is a neon strip of electronics stores in central Tokyo, about half a mile from the Imperial Palace, a place packed with teenagers, yuppies and, on one recent evening, U.S. sailors. Almost every store doorway seems framed by rack after rack of tiny, colored "walk-around" telephones, most no more than four inches long.

What you'll see are the signs of a huge new digital market that took off like crazy last year--one that few Americans have heard about. These hot sellers are called personal handyphone systems. A PHS unit works like a cellular telephone with a more limited range. You have to be within a mile of the base station, vs. about seven miles for a cell phone, and can't operate the gizmo in a fast-moving vehicle. But a PHS is extraordinarily inexpensive; when they first appeared, the cost was 70% less than that of a cell phone. Reason: The capital investment needed to set up a system is low. Rather than build million-dollar cellular base stations, three main Japanese PHS providers rely on lots of small, radio-relay antenna boxes, which they suspend from utility poles, balconies, and trees. For all their limitations, PHS's were an instant hit with teenagers, who love being able to hang out and talk on the phone at an affordable price. Says Makoto Sugiura, 17: "It's kind of cool to be carrying a PHS around. It's part of our fashion."

Many analysts said that PHS would be no more than a fad. Wrong. Within a few months the market expanded beyond its youthful base and signed up more than one million subscribers. In response, Japan's major cellular companies, such as NTT DoCoMo, snapped to, cutting prices dramatically and touting the advantages of their own systems. The PHS companies came back with an even more aggressive marketing campaign. The result: Japanese consumers reaped the benefits of lower prices, and subscriptions to both PHS and cellular skyrocketed to a total of 12 million this year. Now analysts predict this will reach over 25 million in 1997.

More is coming. Earlier this year the Japanese government approved alliances between PHS and cellular companies, a corporate coupling that has already produced its first child: a combination PHS phone/pager. The cellular company provides paging service, while the PHS company handles the voice calls. With this purely domestic wind behind their backs, Japan's PHS companies are moving out to sell systems in Hong Kong, Thailand, Australia, and in less developed Asian countries.

Some 3,500 miles southwest of Tokyo, the city-state of Singapore offers another glimpse of the technofuture in action--in this case, one being driven by government investment as well as consumer appetite. As part of their much ballyhooed plan to become the world's first "intelligent island" by the year 2000, Singapore officials have since 1991 invested over $2 billion in state-of-the-art technology infrastructure, including computer networks that now offer three million citizens some of the most advanced finance, freight-forwarding, and government-document-processing systems in the world.

In practical terms that success means individuals can use multi-media versions of ATMs, scattered across the island, to do things like buy zoo tickets, settle parking fines and, soon, pay insurance premiums. Trading firms use a special computer network system called TradeNet to submit import and export permits electronically, cutting approval time from the previous two-day minimum to about 15 minutes. LawNet enables legal firms to access statutes and court notices directly, which sometimes means instant answers for clients.

Combined with a telecommunications system rated the world's best as long ago as 1991, this kind of information-intensive investment is clearly luring multinational companies--among them Citibank, Hewlett-Packard, and Reuters--to use Singapore as their regional data hub. What's not yet clear is whether it will pay off in a big explosion of local entrepreneurship, since that's an economic input no bureaucrat can order up on demand.

A final word: Our aim in this special report is not to provide definitive answers about who will prevail as info worlds collide across borders, but simply to shed light on some of the more interesting opportunities and challenges that process is creating. The story that follows describes how the Japanese are faring in their bid to catch up with U.S. rivals in the PC market. Next up is a look at why Korea's consumer electronics giants believe that one way to capture the multimedia future is by snapping up battered American brand names like Zenith and AST.

We end with a gallery introducing eight cool non-American companies and the entrepreneurs behind them--six Asian, one British, and one Israeli. None of this crowd is likely to turn into the next Bill Gates or even a cyber-mogul-in-the-making like Japan's Masayoshi Son. But together their stories vividly illustrate how the digital revolution is changing--and revitalizing--business cultures across the planet.

REPORTER ASSOCIATE Joyce E. Davis