by Akio Morita
On our thirty-fifth anniversary, we thought we should consider revising our trademark. Styles and fashions were changing in clothing, in product design, and in virtually everything, so we thought that perhaps we should consider changing the style of the letters of our name. We held an international competition, and we received hundreds of suggestions, along with hundreds of pleas from our dealers not to change. After reviewing all the suggestions, we decided not to make any changes. SONY still looked very good to us, and we decided, as they say today, that there was no point in fixing something that was far from broken.
SELLING TO THE WORLD: My Learning Curve
I
Although our company was still small and we saw Japan as quite a large and potentially active market, it was the consensus among Japanese industrialists that a Japanese company must export goods in order to survive. With no natural resources except our people’s energy, Japan had no alternative. And so it was natural for us to look to foreign markets. Besides, as business prospered, it became obvious to me that if we did not set our sights on marketing abroad, we would not grow to be the kind of company Ibuka and I had envisioned. We wanted to change the image of Japanese goods as poor in quality, and, we reasoned, if you are going to sell a high-quality, expensive product, you need an affluent market, and that means a rich, sophisticated country. Today, over 99 percent of all Japanese homes have color TV; more than 98 percent have electric refrigerators and washing machines; and the penetration rate for tape recorders and stereo systems is between 60 and 70 percent. But in 1958, the year after we produced our “pocketable” transistorized radio, only 1 percent of Japanese homes had a TV set, only 5 percent had a washing machine, and only two-tenths of 1 percent had an electric refrigerator. Fortunately, the Japanese economy began to grow vigorously from the mid-fifties onward. Double-digit increases in the gross national product and low inflation gave a great boost to consumer spending. Many people say Japan’s true postwar era really began in 1955, the year we introduced the first transistorized radio in Japan. The country’s GNP grew, amazingly, by 10.8 percent. Japanese households needed everything, and because of the high savings rate, which in those days was over 20 percent, the people could afford to buy. So with good and growing markets at home and potential markets abroad, the world was beginning to look bright to us.
As a new company, we had to carve out our own niche in the Japanese market. The old established firms were coming back into production with familiar brand names. We had to make our name familiar. We did it with new products—we even coined new names for some of them, such as “Tapecorder,” but found that there was a downside even to this kind of innovation. The tape recorder was virtually unknown in Japan when we introduced the first one. Since we obviously could not register the name “tape recorder” as our own, we came up with “Tapecorder.” The name Tapecorder became generic almost overnight, because we had the only machine on the market, but later, when our competitors began making tape recorders, it became a doubtful blessing because the public referred to any maker’s tape recorder as a “tapecorder.” From then on, we made it a point to display our company name prominently on our products, even if we also gave the products invented names, such as Walkman, so that the brand, company, and product names were all clear.
Despite rising affluence in Japan in the late fifties, we had a great deal of difficulty raising money and had to rely on friends and introductions by friends to people who might become investors. In this regard, we were lucky to have a board of advisers who had real stature. They could get us introductions to potential investors that we could not arrange on our own. Our chairman from 1953 to 1959 was Junshiro Mandai, former chairman of Mitsui Bank, and our advisers included Ibuka’s father-in-law, Tamon Maeda, the former cabinet minister; Michiji Tajima, who became director general of the Imperial Household Agency; Rin Matsutani, the man who hired Ibuka at Photo Chemical Laboratory, Ibuka’s first big job; and, of course, my father, Kyuzaemon Morita.
One of the businessmen our advisers recommended as a possible investor was Taizo Ishizaka, who later became head of the Keidanren, Japan’s Federation of Economic Organizations. Ibuka and I called on him and persuaded him to invest in our company, but a few months later, the Mitsui Bank asked him to become president of Tokyo Shibaura Electric Company (Toshiba), because it was having financial and labor troubles. The postwar antitrust laws were in effect then, and so he felt that even though Toshiba was a giant corporation and Sony was very small, he could not hold shares in another company that made some of the same types of goods. He gave his shares to his daughter, Tomoko. After Toshiba came out with its own small transistor radio—much later than our company—he advised his daughter to sell the shares. He told her no small company could compete with the giants of Japan’s electrical industry now that these companies had started to make the same things. Ishizaka’s daughter is a good friend of mine who lives near me. She used to say jokingly, “My father is a successful businessman and a big shot in Keidanren, but he doesn’t know how to make money for himself.” Like a dutiful daughter she had sold her Sony stock as her father recommended—and lost the opportunity to get rich on it.
Mandai, our chairman, was one of Japan’s great bankers. He had been the head of Mitsui Bank before the war and was still regarded almost as a deity by the staff. Like many others connected with the old giant financial combines, the zaibatsu, he had been purged by the Occupation authorities. We felt very lucky to have him with us. Ibuka and I had been having a difficult time borrowing more money from Mitsui Bank, which had been helping us from the beginning. One day Mandai took Ibuka and me to the bank to talk to some of the bank officers about our company. We had been trying to sell shares, and we hoped that Mandai just might mention the fact at the bank. To our surprise, as we made calls Mandai told everyone in authoritative tones, “My company has decided to increase shares, and I just might be able to arrange for you to buy some.” It was almost a command, coming from such a great figure. Several bank executives later told me how hard they struggled to get enough money to buy the shares; they felt they had to buy because Mandai had virtually ordered it. I don’t know anyone who complained, though. Several became quite rich on those early purchases, and I know at least one man who very quickly built a house on his early dividends.
We were doing well, although we still had tough competition getting our name known in Japan, where brand consciousness and brand loyalty are very high. Overseas we were all on an even footing. And perhaps we were in a better position abroad than anybody. Quality Japanese consumer goods were virtually unknown before the war. The image of anything marked “Made in Japan” that had been shipped abroad before the war was very low. Most people in the United States and Europe, I learned, associated Japan with paper umbrellas, kimonos, toys, and cheap trinkets. In choosing our name we did not purposely try to hide our national identity—after all, international rules require you to state the country of origin on your product—but we certainly did not want to emphasize it and run the risk of being rejected before we could demonstrate the quality of our products. But I must confess that in the early days we printed the line “Made in Japan” as small as possible, once too small for U.S. Customs, which made us make it bigger on one product.
I came to realize from my earliest experience in trying to sell the tape recorder that marketing is really a form of communication. In the traditional Japanese system for distributing consumer products, the manufacturers are kept at arm’s length from the consumer. Communication is all but impossible. There are primary, secondary, and even tertiary wholesalers dealing with some goods before they reach a retailer, layer after layer of middlemen in between the maker and the ultimate user of the product. This distribution system has some social value—it provides plenty of jobs—but it is costly and inefficient. At each layer the price has to go up, even though some of the middlemen may not even come in contact with the goods. The system is adequate for commodities and low-technology items, perhaps, but we realized from
the beginning that it could not serve the needs of our company and its new, advanced technology products. Third or fourth parties simply could not have the same interest in or enthusiasm for our products and our ideas that we had. We had to educate our customers to the uses of our products. To do so we had to set up our own outlets and establish our own ways of getting goods into the market.
We were bringing out some products that had never been marketed before—never made before, actually, such as transistorized radios and solid-state personal television sets—and were beginning to get a reputation as a pioneer. In fact some people called us the “guinea pig” of the electronics industry. We would produce a new product; the giants of the industry would wait to see if our product was successful; and then, if it was, they would rush a similar one onto the market to take advantage of our efforts. This is the way it has developed over the years; we have always had to be out in front. We have seen this in most of our major product developments, from small solid-state radios and transistorized TV sets (we built the very first one) up to today’s portable stereo player, Walkman; our small hand-held flat television, Watchman; and our compact disc player, Discman. We introduced stereo into Japan. We built the world’s very first video cassette recorder for home use; invented the Trinitron system, a new method of projecting a color image onto the TV tube; and we innovated the 3.5-inch computer floppy disk, which now has the highest storage capacity in the world for its size. We revolutionized television news gathering and broadcasting worldwide with our handheld video cameras and small videotape players. We pioneered the filmless camera, Mavica, the compact disc system, and invented eight-millimeter video. That’s only to name a few of the more easily recognizable things we have done.
In the beginning, when our track record for success was not established, our competitors would take a very cautious wait-and-see attitude while we marketed and developed a new product. In the early days, we would often have the market to ourselves for a year or more before the other companies would be convinced that the product would be a success. And we made a lot of money, having the market all to ourselves. But as we became more successful and our track record became clearer, the others waited a shorter and shorter time before jumping in. Now we barely get a three-month head start on some products before the others enter the market to compete with us with their own version of the product we innovated. (We were fortunate to get a whole year’s lead on the portable compact disc player, Discman, and almost six months with the Walkman.) It is flattering in a way, but it is expensive. We have to keep a premium on innovation. For many years now we have put well over 6 percent of sales into research and development, and some years as much as 10 percent. Our plan is to lead the public with new products rather than ask them what kind of products they want. The public does not know what is possible, but we do. So instead of doing a lot of market research, we refine our thinking on a product and its use and try to create a market for it by educating and communicating with the public. Sometimes a product idea strikes me as a natural.
As an example, I can cite a product surely everybody knows of, the Walkman. The idea took shape when Ibuka came into my office one day with one of our portable stereo tape recorders and a pair of our standard-size headphones. He looked unhappy and complained about the weight of the system. I asked him what was on his mind and then he explained, “I like to listen to music, but I don’t want to disturb others. I can’t sit there by my stereo all day. This is my solution—I take the music with me. But it’s too heavy.”
I had been mulling an idea over in my mind for a while, and now it was coming into focus as Ibuka talked. I knew from my own experience at home that young people cannot seem to live without music. Almost everybody has stereo at home and in the car. In New York, even in Tokyo, I had seen people with big tape players and radios perched on their shoulders blaring out music. I remembered that one time when my daughter, Naoko, came home from a trip she ran upstairs before even greeting her mother and first put a cassette in her stereo. Ibuka’s complaint set me into motion. I ordered our engineers to take one of our reliable small cassette tape recorders we called Pressman, strip out the recording circuit and the speaker, and replace them with a stereo amplifier. I outlined the other details I wanted, which included very lightweight headphones that turned out to be one of the most difficult parts of the Walkman project.
Everybody gave me a hard time. It seemed as though nobody liked the idea. At one of our product planning meetings, one of the engineers said, “It sounds like a good idea, but will people buy it if it doesn’t have recording capability? I don’t think so.”
I said, “Millions of people have bought car stereo without recording capability and I think millions will buy this machine.”
Nobody openly laughed at me, but I didn’t seem to be convincing my own project team, although they reluctantly went along. I even dictated the selling price to suit a young person’s pocketbook, even before we made the first machine. The Pressman monaural tape recorder was a relatively expensive unit, selling for forty-nine-thousand yen in Japan, and I said I wanted the first models of our new stereo experiment to retail for no more than thirty thousand yen. The accountants protested but I persisted. I told them I was confident we would be making our new product in very large numbers and our cost would come down as volume climbed. They thought we should start from a cheaper base than the Pressman, but I chose the basic configuration of the Pressman because many parts for the Pressman were available worldwide at our service centers, and we knew the unit was reliable. Therefore we could start out without worrying that the thing would turn out to be a mechanical failure.
In a short time the first experimental unit with new, miniature headphones was delivered to me, and I was delighted with the small size of it and the high-quality sound the headphones produced. In conventional stereo with large loudspeakers, most of the energy used to produce the sound is wasted, because only a fraction of it goes to the listeners’ ears. The rest of the sound vibrates off the walls and the windows. Our tiny unit needed only a small trickle of battery power to the amplifier to drive the tiny lightweight headphones. The fidelity that came through the small headphones was as good or better than I expected. I rushed home with the first Walkman and was trying it out with different music when I noticed that my experiment was annoying my wife, who felt shut out. All right, I decided, we needed to make provision for two sets of headphones. The next week the production staff had produced another model with two headphone jacks.
A few days later I invited my golfing partner, the novelist Kaoru Shoji, for a game of golf, and as we settled down in the car for the ride to my club I handed him a set of headphones and started playing a tape. I put on the other set and watched his expression. He was surprised and delighted to hear his wife, Hiroko Nakamura, a concert pianist, playing the Grieg piano concerto. He smiled broadly and wanted to say something, but he couldn’t because we were both hooked up to headsets. I recognized this as a potential problem. My solution was to have my staff add a button-activated microphone to the machine so the two people could talk to each other, over the music, on the “hot line.”
I thought we had produced a terrific item, and I was full of enthusiasm for it, but our marketing people were unenthusiastic. They said it wouldn’t sell, and it embarrassed me to be so excited about a product most others thought would be a dud. But I was so confident the product was viable that I said I would take personal responsibility for the project. I never had reason to regret it. The idea took hold and from the very beginning the Walkman was a runaway success. I never really liked the name Walkman, but it seems to have caught on everywhere. I was away on a trip when the name was chosen by some young people in our company, and when I got back I ordered them to change the name to something like Walking Stereo, or anything a bit more grammatical, but they said it was too late: the advertising had already been prepared and the units were being made with that name. Sony America and Sony U.K. feared they couldn’t sell a product with an ung
rammatical name like Walkman but we were stuck with it. We later tried other names overseas—Stow Away, in England, and Sound About in the United States—but they never caught on. Walkman did. And eventually, I called up Sony America and Sony U.K. and said, “This is an order: the name is Walkman!” Now I’m told it is a great name.
Soon we could hardly keep pace with the demand and had to design new automated machinery to handle the flood of orders. Of course, we helped stimulate sales by advertising heavily, and in Japan we hired young couples to stroll through the Tokyo Ginza “Pedestrian Paradise” on Sundays listening to their Walkmans and showing them off. Although I originally thought it would be considered rude for one person to be listening to his music in isolation, buyers began to see their little portable stereo sets as very personal. And while I expected people to share their Walkmans, we found that everybody seemed to want his or her own, so we took out the “hot line” and later did away with one of the two headphone jacks on most models. I had been convinced the Walkman would be a popular product, but even I was not prepared for the response. I posed with my once-skeptical project team at the five million mark and I predicted they had only seen the beginning. Since the first Walkman went on sale, we have sold more than twenty million in more than seventy different models—we’ve even made waterproof and sand-proof models—and there are more versions to come.
It is interesting that what has happened with Walkman is that something that began by taking away features from a fullscale recording and playback unit has now come almost full circle. We have put back—or made available with add-on devices like tiny speakers—all the features we removed in the first place, and even added some new ones, like the capability of copying from one tape to another.
My point in digressing to tell this story is simple: I do not believe that any amount of market research could have told us that the Sony Walkman would be successful, not to say a sensational hit that would spawn many imitators. And yet this small item has literally changed the music-listening habits of millions of people all around the world. Many of my friends in the music world, such as conductors Herbert von Karajan, Zubin Mehta, and Lorin Maazel, and virtuosos like Isaac Stem, have contacted me for more and more Walkmans, a very rewarding confirmation of the excellence of the idea and the product itself. As a result of developing small, lightweight options for the Walkman series, we have been able to miniaturize and improve the quality of our standard headphones and introduce dozens of new models, and so we have become one of the world’s largest makers of headphones. We have almost 50 percent of the market in Japan.
