The Birth of Sony: From War-Torn Tokyo to Global Giant
If you wanted to start a business, Japan after World War Two was probably the worst place for that… However, inside a bomb-damaged office building in the middle of Tokyo, two engineers began their dream company against all odds. And fast forward to today, SONY is everywhere.
From consumer electronics, to music, movies, video games, and even an entire line of robot dogs… SONY does it all. and here we will discuss everything and every point about Sony global success, History of Sony, and Sony’s humble beginnings about the factors of Japanese tech giants.
But with their hands in so many industries, they’re faced with the brutal reality about business: Enemies are everywhere. Throughout their history, SONY has faced many battles – including being stabbed in the back by Nintendo and potentially infiltrated by the North Korean government. So, in this video, we’re unraveling the entire history of SONY… Their rise from a struggling radio-repair service to a $100 billion empire.
Who was Akio Morita and His role in Japanese tech giants:
TAT: Akio Morita was born in Japan in 1921, and from a very early age he was groomed to take over the family business. For the past 14 generations, his family had run a brewery that had passed down from father to son. Even from just 10 years old, Akio was attending all the company’s board meetings.
However, he seemed more interested in tinkering with radios and phonographs than running the family business.
And he begged his father to let him study physics and engineering instead of economics. Surprisingly, his father agreed, and this decision potentially saved his life. After Japan bombed Pearl Harbor, the army drafted millions of military-aged men – but since Akio studied physics, he could design weapons for the army instead of fighting on the front lines.
So in 1944, Akio got an engineering job in the navy. And that’s where he met his future business partner: Masaru Ibuka. Akio and Masaru quickly bonded over their shared passion for technology. They hated using it for war though, and they both dreamed of building technology that made people’s everyday lives better.
Nevertheless, the world was at war. And as engineers, Akio and Masaru knew that Japan’s military technology was years behind the US, so it was only a matter of time until they were on the losing side of the war. In August of 1945, their prediction came true. The US dropped atomic bombs, and Japan agreed to a complete surrender.
Akio and Masaru’s job at the navy suddenly disappeared, and for now, they went their separate ways. Akio began teaching at a university, whilst Masaru decided to start his own small company. At this point though, Japan was one of the worst places in the world to be starting a business. Most major cities had been firebombed to ruins.
Almost half of the people had nowhere to live, and the homeless froze to death on winter nights. The police were also nowhere to be found and there were no legitimate jobs. This meant many young women resorted to sleeping with American GIs in exchange for food. Whilst many young men joined the Yakuza, essentially the Japanese mafia.
Given this bleak situation in Japan, it’s kind of crazy Masaru had so much optimism about starting his business. But he wanted to build a company where engineers could work to their heart’s content – and he was determined to make it happen no matter what.
And so Masaru began working on his first product, an electric rice-cooker… However the rice cooker either drastically undercooked the rice or burnt it to a crisp. And so the product failed horribly.
Masaru then tried making an electric heating blanket.. which was unsafe, and also failed. But Masaru just kept going, believing every failure put him one step closer to succeeding.
And eventually he found what the market needed. Back during the war, the Japanese government had gone around opening up radios and cutting the wires so that they couldn’t receive long distance signals with US propaganda.
Now that the war was over though, all these radios needed fixing, and Masaru began offering a radio-repair service. This let people listen to foreign news and music, and as a result Masaru’s business was featured in one of Japan’s largest magazines. Masaru’s old friend Akio happened to read the magazine article, and once he learned about Masaru’s business, he reached out to see if he could help.
Akio and Masaru soon decided they wanted to setup a company together where they’d work on developing new products. But first Akio had to ask for his father’s blessing. Remember that for almost 300 years it had been his family’s tradition to go into the brewery business. Surprisingly though, his father allowed Akio to break tradition, and follow his passion.
And he even gave Akio and Masaru ¥190,000 yen to help them get their new business started. So in 1946, Akio and Masaru formally incorporated the ‘Tokyo Telecommunications Engineering Corporation’ – the company that would eventually become Sony. With that name, some money, and a growing team of engineers, all they needed now was something to sell.
Sony’s Key Innovations: Transistors to Trinitron
It took a few years of trial and error in Sony innovation journey, but in 1950, Akio and Masaru started making a new kind of tape recorder for the government in transistor technology, which wasn’t a big success, but it did lay the foundation for a portable version, which was the company’s first hit product. But then, just as the tape recorder business was getting exciting, a new technological innovation changed everything.
In 1952, Akio and Masaru learned that the company that invented the transistor was offering other companies the chance to license the technology in exchange for a royalty. The transistor was completely revolutionizing electronics. And so, Akio traveled to the US and negotiated ruthlessly until he secured the licensing deal for Japan, meaning they could use transistors in their products.
However, during this trip, Akio was stunned when he saw the towering skyscrapers in the US. And on his way back to Japan, he also stopped by Germany, which was already making an incredible economic comeback after the war. It was clear Japan was lagging behind other countries. When he finally returned home, Akio’s waiter placed a little paper umbrella on his dessert and told him it had been “made in Japan”.
The waiter was just hoping to amuse him, but instead Akio felt a deep sense of shame about his country. From this moment on, he had a new sense of purpose. Akio was determined to make the words “made in Japan” actually stand for something.
But it wasn’t going to be easy. Now they had the license to make transistors, Akio and Masaru had the chance to turn their company into a global brand, so they needed a name that could be used all around the world.
Flipping through a dictionary, they stumbled upon ‘sonus’: the Latin word for sound. They combined this with ‘Sonny’, which was the slang word for a young man. And together this gave them the name: ‘SONY’.
They didn’t officially rename the corporation until a few years later, but they began using the SONY brand on the new product they were making… transistor radios.
By using transistors, they believed they could make radios much smaller and more portable than the bulky radios that currently existed. However, when they began mass producing transistors, over 95% of them were defective.
The company’s funds started to run low, and they had to take out a bank loan to keep going. If their vision of a transistor radio failed, the business would be dead.
But by 1955, after years of practice, they made a breakthrough – and began selling their first radio, the TR-55. But Masaru still wasn’t content – he pushed his engineers to improve the tech further and make the product even smaller, which led to the TR-63, which was dubbed “the world’s first pocket sized transistor radio”.
Sony were a little sneaky with their marketing though… the TR-63 was actually slightly too big to fit in most shirt pockets, so the company produced shirts with extra large pockets so that when salesmen demonstrated the product, it always fit. The product was an instant success. It was a portable radio cheap enough to be a true mass-market product.
And this turned SONY into one of Japan’s most promising corporations. By 1957 they had over 1,200 employees. And by 1960, Akio started building a distribution network in the US. SONY then became the first Japanese company to get listed on the American stock market. But, whilst Akio’s expansion into the US was going great, Masaru was putting all his energy into a new product.
You see, color TVs had been around since the mid-1950s, but they were blurry, dim, and expensive, so most people still preferred black and white. Obviously though, the first company to make color TVs that matched the quality and price of black-and-white TVs stood to make a fortune. So there was a huge race to fix this problem, and Masaru wanted to win.
Starting in 1961, SONY began developing their own color TV, and instead of just improving the existing technology, Masaru decided to engineer it completely from scratch.
But almost every single TV they manufactured had weird visual defects, so SONY had to sell them for half as much as they cost to make just to get rid of them. This started to look like the biggest failure in SONY’s history.
But as always, Masaru didn’t give up. He had his team completely reimagine how color TV worked. Masaru poured his heart and soul into improving the image quality, bringing down costs, and fixing all the issues with mass production. Eventually, they had created a new product called the Trinitron, which had a brighter and sharper image than every other color TV on the market. And because of the superior quality, SONY could charge a higher price.
Over the next few decades, SONY became the world’s largest TV manufacturer, selling around 280 million Trinitrons. The product even won the company an Emmy award in 1973 for its contribution to television. And so, after the success of Trinitron and SONY’s global expansion, SONY was a big name in consumer electronics.
They’d became known for quality, helping to improve the perception of “made in Japan” products, just like Akio had set out to do all those years ago… But he wouldn’t be able to enjoy the moment for long. Sony was about to enter a battle that threatened to destroy everything they’d built.
Nowadays with streaming services like Netflix, you can watch TV shows whenever you want – but back in the mid-1970s, TV shows aired live at one specific time. If you missed it, you were out of luck.
Betamax vs. VHS: Lessons from the Format Wars
At least, that was the case until SONY stepped in. In 1975, they introduced a video cassette recorder called Betamax. Now people could just pick a channel, set a timer, and Betamax would record whatever was playing so they could replay it whenever they wanted.
The product initially looked like it was going to be a huge hit, but then Betamax got a serious competitor: VHS.
You see, just like how we have different file formats for digital videos today, video cassettes had different formats too like Betamax or VHS. But here’s the interesting part. Even though Betamax had superior image quality than VHS, and was widely considered the better technology, VHS ended up winning the format wars.
Why? Because the VHS was cheaper, and could store 4 times as much content. So even though Sony’s product was superior, for the average person VHS made more sense.
So, all the millions Akio and Masaru had invested into Betamax were lost in just a few years. However, as SONY was bleeding money, Akio made an audacious bet: he said If his next product failed, he would leave the company.
Walkman Revolution: Redefining Portable Music
Akio was regularly taking flights all over the world, and he often wished he had a way to listen to music. So, in 1979, Akio came up with the idea for the SONY Walkman: a portable music player that played audio cassettes, which you could listen to via headphones.
Back then though, people generally only wore headphones if they had a hearing impairment, and deafness was generally considered something shameful in Japanese culture.
Plus, tape recorders had been around a while, and they could record audio as well as play it back. So almost everyone thought the Walkman was a dumb idea, and that Sony was about to have another failed product.
However, Akio believed the idea of a portable music player you could take anywhere would be popular, so he declared that if it didn’t sell over 30,000 units, he’d quit.
Sure enough, the Walkman became a massive hit. As obvious as it may be to us today, being able to listen to your own music wherever you were was an exciting new concept back then.
And the Sony Walkman went on to sell around 385 million units. And yet, SONY were only just getting started in their plans to disrupt the music industry.
Firstly, they setup their own record label, which was initially a partnership with CBS records. Then, they made another partnership with Philips, where they agreed to research and develop new technologies together.
It took them 14 years, but the end result was they created the Compact Disk, or CD: a completely digital way to store audio.
However, if the CD couldn’t offset the costs of 14 years of research and development, and recoup the $30 million they invested to build the CD factory, everything would come crashing down…
But luckily, this is where the diversity of SONY’s business became a massive advantage. The CD gave SONY 4 streams of income.
Firstly, SONY’s record label got some revenue from the CDs produced in the new factory. Secondly, SONY let other companies make CDs in exchange for a royalty. Thirdly in 1982, SONY started selling their first CD-players. And finally, their record label sold music from some of the world’s most famous artists on CDs.
This led to a crazy snowball effect. When SONY got royalties from other companies, it meant the CD format was growing in popularity. This naturally led to more CD-player sales, driving up the demand for music, which SONY’s record label produced, and then subsequently distributed on CDs made in their own factory.
So basically whenever one of SONY’s income streams grew, the others naturally increased as well. CDs completely turned SONY’s financial situation around. Eventually, global production reached hundreds of millions per year. Using this money, in 1988 SONY completely acquired CBS Records and their music catalog for $2 billion.
Sony’s Entertainment Empire: From Spider-Man to PlayStation
This eventually became SONY Music Entertainment, which is the world’s second largest record label as of today and has produced albums from Bob Dylan to Michael Jackson. SONY had become a dominant force in music.
But, as always, they wanted to expand even further. And so SONY once again decided to enter an entirely new industry: video games. Before we get to the next chapter, it’s time to answer a question I get a lot: how do I make these videos?
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In 1991, Nintendo released the Super Nintendo Entertainment System, which SONY helped build the audio system for. It was an instant classic, but it had some glaring weaknesses.
Mainly, the games came in cartridges, so developers had to use specialized computers to make games for it, and they had extremely limited file-sizes. So, it was a very complicated process… to make very technically limited games.
Now that SONY and Nintendo had a working relationship though, SONY proposed a solution. To build an external system that let their console play CD-based games.
It was a solid Idea, and SONY got to work on it right away… But they also had another idea: They could potentially make an entirely new console that only used CDs, not cartridges. In Nintendo’s opinion, this was a step too far.
If a lot of game developers made the switch from cartridge-based to CD-based games – which they likely would – SONY could launch their own console and take all the developers with them.
Nintendo grew increasingly suspicious that SONY would betray them. And so, Nintendo decided to betray SONY first. To the shock of everyone at SONY, Nintendo publicly announced they’d be making the exact same CD-based technology SONY had pitched them, but they wouldn’t be working with SONY.
And to make the betrayal even worse, the company Nintendo was partnering with for this project was Philips – the same company SONY had created the CD with in the first place.
Everyone at SONY was furious. But ultimately, this was probably one of the worst mistakes Nintendo ever made. Because SONY decided to push on with the project without Nintendo.
And in 1994, what would have been the Nintendo Play Station instead became the SONY PlayStation. Since the PlayStation used CDs, it was a much more attractive platform for game developers to build on, and the games themselves could be way more ambitious than those made for Nintendo consoles, which used cartridges.
Plus, SONY simply had more resources than Nintendo. So SONY packed their console with so much more technology – it made the SNES look like a kid’s toy by comparison.
Nintendo did release their own competitor, the Nintendo 64, but only 400 games were made for it during its lifetime, whereas the PlayStation got almost 8000 games.
Because of all this, the PlayStation went on to sell over 100 million units, and nearly a billion games. SONY had won the console wars. Gaming was now a serious business for them, and they followed up this success with the PlayStation 2, which became the best-selling game console of all time, with over 150 million units sold.
And this also taught SONY an important lesson. A lot of iconic franchises like Ratchet & Clank, God of War, and Gran Turismo originated in the PS1 and PS2 era, and SONY realized that owning intellectual properties like these was a massive advantage.
And so, they decided to double down on that for PlayStation in the future and apply the same strategy in their other divisions as well.
In fact, SONY had their eye on one popular character in particular. And this would result in one of the most profitable bets they ever made, and a whole lot of drama. Sony wanted even more industries to conquer, so in 1989, they bought the movie studio Columbia Pictures Entertainment. That became SONY Pictures Entertainment; one of the 5 major movie studios of today.
However, in 1998, Marvel was recovering from a brutal bankruptcy, and SONY Pictures saw this as an opportunity. They approached Marvel to buy the film rights for Spider-Man – their most popular character. There was a lot of negotiation, but since Marvel was in such a desperate need for cash at the time, they ended up agreeing to an outrageous deal.
SONY bought the film rights for Spider-Man for a sum of just $7 million, plus a $10 million payment for every movie they made, and 5% of its box-office revenue. But given Spider-Man’s popularity, this was a crazy discount, and it gets even wilder. As long as SONY releases a Spider-Man movie every 5 years and 9 months, they have the exclusive right to make Spider-Man movies… forever.
So, SONY Pictures wasted no time. Their first Spider-Man movie – starring Tobey Maguire – came out in 2002. It made $825 million on a budget of around $140 million. And this was just from one film, so their investment had already been an incredible success. Over the years, Spider-Man has been a nearly $9 billion asset for SONY, so it’s crazy to think that they paid just $7 million for his film rights.
Having said that, the deal could’ve been even better for SONY. You see at the time when they bought Spiderman, Marvel actually offered them all of their characters for $25 million. But SONY executives said nobody cared about the other Marvel characters, and so that’s why they only bought the rights for Spiderman.
Given the billions of dollars the Marvel Cinematic Universe went on to make, it’s crazy to think SONY could have bought all the characters for just $25 million. However, the SONY team wouldn’t dwell on that for long, as they were about to be involved in one of the largest data breaches in history.
Resilience and Risk-Taking: Sony’s Survival Through Challenges
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Go to shipstation.com/magnates today and sign up for your free 60 day trial. That’s shipstation.com/magnates In 2014, Sony employees went to their computers to find an ominous message saying they’d been hacked by a group called “Guardians of Peace”. The message read: “We’ve obtained all your data including your secrets”. And they weren’t bluffing.
The hackers stole terabytes of data from Sony, including all the personal info of Sony employees. The hackers then publicly leaked a lot of SONY’S sensitive information online. This included confidential emails between Sony executives, some of which were very embarrassing, like one where a Sony exec had called Angelina Jolie “a minimally talented spoiled brat”.
The hackers also leaked copies of several unreleased Sony movies. They then decimated SONY’s infrastructure, wiping lots of their data. The hack was dubbed “the most serious cyberattack ever made against US interests”. So, who was the group behind all this? Well, shortly before the hack, SONY Pictures was due to release a comedy film called ‘The Interview’, which mocked the leader of North Korea.
And soon the FBI and President Obama declared that North Korea was to blame for the hack: “We can confirm that North Korea engaged in this attack.” However, many prominent cybersecurity experts remain skeptical that this was the work of North Korea, and details of the hack still remain a little hazy to this day.
But either way, whilst this hack was brutal for SONY, it certainly hasn’t slowed them down. SONY has continued to expand into new industries, including life insurance, banking, biotechnology, robotics, and electric cars. The humble company started by Akio and Masaru in war-torn Japan has exceeded even their wildest expectations.
Whilst SONY has had plenty of failures along the way, they’ve always been willing to take more risks, and continue to innovate. They’ve also listened to feedback. For example, the founders actually hired a huge critic of their products so he could help make their products better. Years later, he ended up becoming Sony’s president.
Looking back over SONY’s many products, movies, music, and games – it’s fair to say that the world wouldn’t be quite the same place without them – so let me know what you think about SONY in the comments below. Now, if you enjoyed this video, then you definitely don’t want to miss the The Awadh Times Essentials article is free for a limited time for our users, which are actually amazing and motivational.
