Sony Corporation

Sony Corporation

Fact File:

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Founders: Ibuka Masaru and Morita Akio.

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Distinction: Remade the global consumer electronics marketplace.

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Primary Products: Electronic devices, movies, TV shows, recorded music.

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Annual sales: $63.082 billion.

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Number of employees : 189,700

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Major competitors: Matsushita, Philips Electronics, Time Warner.

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Chairman and CEO: Nobuyuki Idei; President Kunitake Ando.

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Headquarters: Tokyo, Japan.

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Year founded : 1946

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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

attention.

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

intrigued.