Famicom

The japanese borrow a lot of words from different languages, and it's no different with english. So a lot of japanese would understand what famicom means. On another note, most other systems in japan also use english words. Like "Mega Drive" "PC Engine" and "Playstation"
 
Not to mention Pokémon, which is called Pocket Monsters in Japan.

Why they abbreviated it for "western" markets I'm not sure...
 
Some ideas:

- In the U.S. in the late 1980s (as I recall), there was a cartoon/toy franchise called Monster In My Pocket, and Nintendo wanted to avoid any possible confusion or lawsuits based on that.

- "Pokemon" makes it sound more Japanese, and thus was done as a marketing move to cash in on the "anime craze". This seems somewhat unlikely though, since the names of various characters and Pokemon were apparently changed to make them sound less Japanese.
 
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