MADE IN JAPAN – AKIO MORITA

New company was formed on May 7, 1946, in Tokyo called Tokyo

Telecommunications Engineering corporation, which we call it as Sony

Corporation by some Twenty people on the Third floor of a bombed out

department store in downtown Tokyo. The founders of Sony were Akio Morita

25 years old, having physics background, Masaru Ibuka, 38-year-old electronics

designer.

The devastation of Tokyo after the Second world war and due to dropping of

an atomic bomb on Hiroshima on August 6, 1945 was extensive, with an

estimated 46 percent of the population having had their houses and factories

destroyed. To earn money to survive newly recruited employees of Tokyo

Telecommunications worked on a Rice cooker, which used the electrical

connectivity of wet rice, but once the rice was cooked, it would no longer be

moist and thus the electrical circuit would be broken. Despite having so many

prototypes and testing, it was never released in the market.

So, Ibuka developed a short wave adapter that was fitted to AM Radio, which

enabled the listener to hear the short-wave radio broadcasts. The Product

yielded a positive response during the post war in Japan, these made them to

diversify into manufacturing of different parts like phonographs, small heating

pads and a variety of other products.

As Ibuka’s objective was always to manufacture High-Tech Equipment, therefore

when a tender for audio mixing units and studio broadcasting equipment by the

Japan Broadcasting Company, Ibuka submitted a bid which was accepted as he

had a close friend inside the company Japan Broadcasting, who was in charge

of engineering reconstruction department.

He saw a tape recorder machine created by Ampex and using magnetic tape

manufactured by Minnesota Mining and 3M, when he went to deliver the Mixing

unit to Japan Broadcasting. He managed to bring the tape recorder to his

factory, to give his workers live demonstration. Except the company accountant,

everyone liked the idea of going to manufacturing tape recorders.

Main hurdle was the company knew nothing about how to manufacture Magnetic

Tape. So, Ibuka, Morita and Nobtoshi kihara made efforts to learn how to

manufacture Magnetic tape. Initially they tried using Cellophane, but was

rejected due to material can be stretched too easily distorting the sound. They

also tried using craft paper as the base onto which the magnetic coating was

applied. Once they were able to source some better plastic material, they were

then able to start producing magnetic tape of consistent quality and durability.

First tape recorder of the company was launched in 1950, a big machine

weighing 35kg at 1,70,000 yen(US$470). The machine worked well, but nobody

had clue about what the tape-recorder is and what could we do with it. So

Morita to sell the tape recorders, demonstrated one machine to the Japan

supreme court, and they immediately bought 20 units since the stenographers

were in short supply. They also added a smaller, sturdier unit for schools so they

could add Japanese soundtracks onto the 16mm educational films being used, as

a result Sales increased gradually.

Company got caught up in patent dispute around this time. The new tape

recorders were built using an AC bias recording system, which was created and

patented by Dr. kenzo Nagai in Japan of Anritsu electic, a subsidiary of Nippon

Electric Company. So Ibuka and Morita bought half ownership of patent in 1949

and they learned that the application filed for U.S. patent on the technology

during 1941, but the application had never been processed due to the outbreak

of the war. Sony won the three-year court battle, which was going on when the

Balcom Trading Company of Tokyo imported some tape machines from U.S.,

which used the AC bias recording System.

Company’s goal was to produce a radio small enough to fit into someone’s

pocket, which would have never been possible without transistors. For this to

happen Morita went on tour to the United States and Europe in search of new

ideas for their company, whereas Ibuka worked on developing high – frequency

transistors which could finally be used to produce a compact, transistor radio. So

in 1953, a licensing agreement for the transistor was signed by paying a

licensing fee of $ 25000.

Ibuka and Morita wanted to come up with a new name for their company. The

company current name in Japanese was Tokyo Tsushin Kogyo Kabushiki Kaisha -

a real mouthful. Since the English translation – Tokyo Telecommunications

Engineering Company was not much better, it was decided to think of a

completely new name. they first came up with a name “SONNY”. Due to the fact

in Japanese. “SOHN-NEE” means to lose money, therefore eventually rejected it

because sound in ‘Latin’ was Sonus, the Japanese had a slang word for bright

sound they called “SONNY”. Finally, they came up with a name for the company

“SONY” because it didn’t mean anything in any language and therefore was

made available in all countries in the world.

Sony released the first transistor radio in 1955 and its first small pocket

transistor radio in 1957. By 1958, the company’s name was changed to SONY

CORPORATION and in by end of 1958, the company was listed on the Tokyo

Stock exchange. During this time, SONY CORP had great difficulty in handling

financials to fund company’s growth in spite of having connections with former

chairman of Mitsui Bank and former cabinet ministers and other business on its

Boards of advisors.

Sony was continually being first to market with new innovations, such as transistor

radio and first solid state TV set in 1959. Due to this company got a reputation

as the ‘GUINEA PIG’. Sony would take advantage of being first into the markets,

where ad other manufacturers would sit back and see whether markets emerged

for those products. To keep Sony at the leading edge, up to 10 percent of the

company’s sales were committed to research and development.

Most of Japanese companies tend to work through Japanese trading companies

to develop international sales operations. But Morita decided Sony would set up

its own sales offices being the first one to be established in New York. Morita

also resisted the urge to move the company into OEM deals – making a radio

and putting someone else’s brand name on it, as he was more focused on getting

a Brand Recognition for Sony.

Morita slowly build up a network of trusted advisors who were familiar with the

American business scene and who would could give a more likely suggestion on

how to build a business there. His network comprised of Business associates from

various manufacturer’s, lawyers and accountants. By 1960, about half of Sony’s

turnover was from markets outside Japan. To develop its own sales network and

to act as a distributor for Sony products, they decided to form a U.S. Subsidiary

called Sony Corporation of America. With a market share capital of $500,000,

the company was established in February 1960.

In late 1960, Sony corporation decided to raise equity funding in U.S. capital

markets by selling Sony common stock as American Depositary Receipt. The stock

offering was highly successful, raising more than $4Million. Sony also opened

new showroom in Ginza district of Tokyo, where people could get familiar with

Sony products without any sales pressure.

Sony continued to diversify its range of consumer electronics by adding more

products. In 1969, the Sony U-Matic video recorder was released, featuring

three quarter inch wide video tapes, whereas earlier videotape units were

large, expensive and used mainly by broadcast stations. Sony then perfected a

home video unit, using a self-contained half-inch video tape cassette about the

size of a book.

Sony entered the Desktop calculator market, but discontinued it as future

projection about the number of companies were planning on entering that

market which would force the company to provide discounts on its products to

secure a market share. In colour television technology, Ibuka had a team working

on the technology called Trinitron – an innovation in which the electron beams

generating the TV picture were packaged in one compact, highly efficient unit.

The new technology was introduced in 12-inch and 7-inch TV sets, which was a

niche markets which the competitors ignored and moved on to colour TV’s.

Since the inception of Sony Corporation of America, Sony established Sony

Overseas and operated in Zug, Switzerland to handle marketing of Sony

products in Europe. They also established in United Kingdom, Germany and

France as Sony UK, Sony Germany and Sony France. They also opened

showroom on the Champs Elysees in Paris, set up Sony-CBS Records and

established a new research canter in Japan. Sony decided to set up its U.S.

factory on west coast location in the industrial park on the outskirts of San Diego,

California, as they thought it would make good business sense since by 1971,

Sony was shipping most of their products to U.S.