GADGETS: Window on Japan; A crop of Web sites and cool stores are looking to sell the latest Japanese gizmos to Western technophiles.

Byline: Emily Flynn (With Kay Itoi in Tokyo)

Douglas Krone can see the future. It's filled with lightweight notebooks boasting battery lives of more than eight hours, camera phones the size of credit cards and pocket MP3 players with the storage space of desktops. But Krone doesn't have mystic powers--he just looks at what's already popular in Tokyo's technology mecca, the Akihabara district. Then he sells this future to American and European technophiles willing to pay premium to be the first in their town to have Japan's latest gizmos.

Krone launched his business, Dynamism.com, from his bedroom in 1997 at the age of 22, having just graduated from Chicago's Northwestern University. For a 50 percent markup, he translated Japanese instruction manuals into English and imported the latest miniature laptops, PDAs and other gadgets for wealthy Westerners from Frankfurt to London, New York to Los Angeles. Dynamism is privately held, and Krone won't release financial data. But he says profits have roughly doubled every year since its inception, and Krone has moved out of his bedroom into an office with 12 employees on Chicago's luxury shopping street, Michigan Avenue. The company counts among thousands of private and corporate customers high fliers like Marc Benioff, CEO of Salesforce.com. "There are all these fantastic things that come out of Japan and don't get offered elsewhere. We change that," says Krone.

Competitors have popped up everywhere: Japan-Direct.com in Osaka, Kemplar.com in Colorado, Icube.us in Los Angeles and even brick-and-mortar alternatives like New York's trendy Compact Impact boutique (tkny.com) and London's Skill (skill2k.com). Today they sell everything from faddish Japanese high-tech kitsch (like sushi-shaped USB memory drives, inflatable speakers and key-chain cameras) to solar-powered iPod and mobile-phone chargers, pocket-size TVs with built-in TiVo-type recorders and camcorders that fit in a fist. One hot new product is an organic light-emitting-diode PDA, not yet widely available in the West. The PDA screens represent an advance over liquid-crystal-display (LCD) screens, which require backlighting. OLEDs emit light themselves--making them thinner, brighter, faster and lighter, while using less power and offering higher contrast.

The logistics are tricky: Dynamism not only translates all the manuals but also erases the Japanese software for laptops and replaces it with Windows in English. Many of these companies offer warranties that include the cost of overnight shipping to and from Japan for repairs. Increasing competition has driven down the markups in this niche from 50 percent to 30 percent, on total sales of about $10 million annually, estimates Randy Sparks, CEO of Japan-Direct.com.

And a new threat is rising. These companies make their money by exploiting the lag time between the introduction of products in Japan and abroad. That gap has declined from 18 months to six or fewer since 1997, says Krone. The new Sony PlayStation Portable, a palm-size media player for watching movies, playing games and listening to music, nearly sold out the day of its Tokyo launch in mid-December. It's coming to America and Europe this (not next) March. In an unprecedented move for a Japanese gaming company, Nintendo debuted its newest handheld Game Boy-cum-PDA in the United States in November, 10 days before the console came out in Japan. Of the $1 billion worth of notebooks Panasonic sells each year, nearly half are now being designed in the United States, up from a third five years ago. ...