Founders: Ibuka Masaru and Morita Akio.
Distinction: Remade the global consumer electronics marketplace.
Primary Products: Electronic devices, movies, TV shows, recorded music.
Annual sales: $63.082 billion.
Number of employees : 189,700
Major competitors: Matsushita, Philips Electronics, Time Warner.
Chairman and CEO: Nobuyuki Idei; President Kunitake Ando.
Headquarters: Tokyo, Japan.
Year founded : 1946
Web site: www.world.sony.com
Three decades ago, American gadget aficionados who wanted a state-of-the-art
TV always turned to Sony. From the time it was introduced in 1968, the
company's Trinitron picture tube captured widespread acclaim as a superior if
costly alternative to competing models that still relied upon an old-style vacuum
tube. One of several major Japanese firms that moved aggressively into the
U.S. television market when domestic companies diversified into other fields,
Sony had long targeted the country for expansion. It accordingly wasted no time
in establishing its brand here as a source for high-quality, advanced electronic.
The sparkling clear picture on its Trinitron sets helped bring it to the public's
Sony had been selling compact radios in the United States since the late 1940s.
In the 1960s, it added tiny transistorized televisions. Audiotape machines that
were popular at home followed, as did the industry's first consumer appliance for
recording and playing videotapes. (Although "Betamax" is now considered one
of the company's great failures, is still regarded by many as superior to the VHS
format that ultimately gained the upper hand.) Despite this costly miscue,
officials were eager to remain a leading player in the game and soon launched
another visionary item that would reach heights of unqualified success and serve
as their signature product for years to come: the Walkman personal stereo.
No content to manufacture just the delivery systems for music, televisions, and
movies, Sony then ventured into the actual production of such media by
acquiring some of the world's leading entertainment companies. It also expanded
into fields such as semiconductors and batteries, along with areas such as
cameras and computer monitors. Many of them became popular in their own
right, but none hit the big time quite like the PlayStation video gaming system–
a phenomena that revolutionized the industry upon its introduction in 1994, and
quickly became the dominant item in Sony's entire product line.
Serious competition began arriving almost immediately, however, and like most
of its peers the king of consumer electronics is now seeking ways to hold its lead
while positioning itself for the Internet Age.
Originally incorporated after World War II as Tokyo Tsushin Kogyo or the
Tokyo Telecommunications Engineering Corporation, Sony's seeds were
sewn when co-founder Morita Akio was born in 1921. Raised in a family in
Nagoya, Japan, that had brewed sake for generations, Akio spurned the career
path that was expected of him and decided to follow his intense passion for
technology. After graduating from Osaka Imperial University in 1944 with a
degree in physics, He was assigned to the Air Armory at Yokosuka for the
duration of the war. It was there that he first encountered Sony's other cofounder,
Ibuka Masaru, who was serving as an industrial representative on
Japan's Wartime Research Committee. Together, they developed thermal
guidance systems and devices for night-vision.
After the war, the pair established their company in Tokyo. The goal was to
apply various technological innovations that had been developed during the
preceding years to the production of new electronic gear for a general audience.
Masaru concentrated on the products, which initially consisted of things like
voltmeters and electrically heated cushions. Akio handled business matters,
which from the start included responsibility for marketing the new firm's devices
around the world.
Masaru's first breakthrough product was magnetic recording tape, which he
developed in 1949. The company then built an audiotape recorded to utilize it,
and introduced this to the Japanese market in 1950. The same year Masaru's
tape became available; the young firm also purchased rights from America's
Bell Labs to produce electronic transistors. The success of its tape recorders
generated resources that permitted creation of a compact radio in 1955 and a
pocket-sized version in 1957. Tokyo Tsushin Kogyo was up and running, but
the global businessman in Akio saw serious limitations in its name. After
searching dictionaries in different languages for a new corporate moniker that
could be pronounced by almost anyone, he came upon "sonus," the Latin word
for "sound." And so, in 1958, Sony was born.
From there, the sky was the limit. In 1960 Sony introduced an 8–inch
transistorized TV and set its sights on conquering America. Akio pushed Sony
to become the first Japanese company to offer shares on the New York Stock
Exchange in 1961. Two years later, Akio moved his family to the States for a
year so that he could more effectively examine the ways its consumers were
thinking and its businessmen were operating. He opened factories in the United
States and Europe, and used American-style ad campaigns to inject the Sony
brand name on the collective shoppers' consciousness worldwide. When
Trinitron sets caught on several years later, every Japanese company (including
Toshiba and Hitachi) that was selling electronics in the United States
benefited from the increased awareness.
Reaching back to its hugely successful introduction of magnetic recording tape
some two decades earlier, Sony also began looking, in the 1960s, for ways to
commercially adapt this technology to the burgeoning television market. In
1969, it introduced its first videocassette recording and playback device. Morita
Akio was promoted to chief executive officer of the company in 1971, and the
following year he created an affiliate to build and begin selling the "Betamax"
machine around the world. The new machine hit the stores in 1975 and
immediately attracted the attention of hardcore gadget aficionados, just as
Sony's Trinitrons did a few years before.
Like the TVs, however, these VCR players also carried an extraordinarily high
price tag. Initial models cost an astounding Rs. 2000 which at the time was just
a little less than some new automobiles. The price kept it from widespread
acceptance while inviting competitors to develop cheaper alternatives. One
company, Panasonic, came out with a similar machine two years later utilizing a
slightly different format that it called "VHS." Prices dropped dramatically as the
battle raged. While consumers generally felt the Sony machine provided a
superior picture, the Panasonic version could play longer tapes and far more
Hollywood films were released in its format. The public understandably turned
to the variation that gave it more content choices, and Sony ultimately pulled its
machine from production. Akio, who became chairman of the board in 1976,
was unwilling at first to produce recorders in the VHS format, and Sony never
managed to fully recover in the area it had actually pioneered.
After the Betamax fiasco, Akio was reluctant to go it along when entering new
fields. He began forming alliances with other electronics companies for the first
time, hoping to guarantee that subsequent products would create industry
standards instead of fighting them. However, he was still not afraid to
experiment. Around 1980, he pushed for the introduction of a small radio receiver
that users would listen to through headphones. Despite the felling by other
company insiders that there was little demand for it, the resultant Walkman
became one of Sony's best-selling items and remains the products with which it is
most closely associated by the general public.
The Walkman's enormous success, evolving from a personal radio to an audio
cassette machine, to a CD player increased Sony's desire to branch out still
further. In 1987 it acquired the CBS Records Group, the world's largest recording
company for $3.4 billion. Two years later, Sony entered the movie industry with
the purchase of Columbia Pictures Entertainment for about $4 billion. Other
major firms in these fields were eventually added, as were several insurance and
finance companies. Akio's place on the global business scene grew accordingly,
and he remained closely involved in Sony's management until poor health forced
his retirement in 1994. Ironically, that was the same year the company's biggest
hit of all time–the PlayStation computer-game platform–was released.
Like the Walkman, PlayStation was not initially well-received by some in the
company. Naysayers pointed out that Nintendo was already dominant in the
gaming field, and Sony certainly had not fared well in the past when trying to
buck industry standards. Nonetheless, an executive engineer named Ken Kutaragi
was allowed to proceed with technology he had been studying since 1984. And
the eventual results were truly astounding: PlayStation became an unqualified
success, tallying $7 billion in annual sales and accounting for 9 percent of Sony's
worldwide revenues and 27 percent of its total profits.
This alone, alas, has not been enough to help Sony overcome other problems. It
remains the world' second-largest consumer electronics firm, after fellow
Japanese company Matsushita, but its movie and recording ventures have been
bleeding red ink thanks to expensive bombs such as the 2000 film I Dreamed of
Africa. And while the initial release of PlayStation 2 was impressive–980,000 units
were sold during the first three days it was available in Japan–the company has
been hurt by its inability to produce enough to meet demand, and upcoming
entries in the market (such as Microsoft's highly anticipated gaming console) will
make the going even tougher.
In the spirit of its founder, however, current Chairman and CEO Nobuyuki Idei
continues delving into new arenas. These include a personal digital assistant that
will sell for under $100 and can interact with other Sony products. The company
is also developing smart cell phones and handheld computers. They are also
working on ways to connect everything them make–from the Walkman to
PlayStation–to the Web. Morita Akio, who died in 1999, would undoubtedly be