Sony is a world-leading consumer electronics company that is also engaged in a range of industries, from video gaming to motion pictures to financial services. The firm offers a diverse product lineup, such as the Walkman brand of portable audio players, the VAIO brand of personal computers, and the PlayStation brand of video game consoles. Sony is often viewed as Matsushita Electric’s rival, although the former is much stronger in entertainment and the latter more so in white goods. In fiscal year 2007, Sony had sales of over $70.3 billion. Based in Tokyo, Japan, Sony has a truly international presence— operating in more than 150 countries and employing more than 163,000 people.
Over the years, Sony has attracted much attention from scholars of business. Widely discussed topics include Sony’s battle with Matsushita in the videotape formatting wars in the 1970s; the firm’s successes in launching Walkman products; and Sony’s recent struggles in developing its entertainment business. Many scholars have also used Sony as a case study by which to examine the management practices between Japanese and Western firms.
Established in 1946 as Tokyo Tsushin Kogyo, Sony was launched as a partnership between Akio Morita and Masaru Ibuka. Amid the chaos after World War II, the firm began its operations from a bombed department store and offered radio repair services and small electric gadgets, including Japan’s first tape recorder. In the 1950s Sony began to study the advanced markets of the United States and Europe to learn from and import technologies. The company’s turning point came when Sony obtained a license to produce transistors from Bell Laboratories in 1954, and launched a transistor radio in 1955. Sony’s successes in these products enabled the firm to list on the Tokyo Stock Exchange in 1958.
In fact, Sony soon became a global company. Following the establishment of Sony Corporation of America in 1960, the company launched branches in Switzerland, Hong Kong, and the United Kingdom. During the 1960s, Sony developed a range of electronics, beginning with the transistor television and transistor videotape.
Sony is widely known for creating its own proprietary standards that are not compatible with rival manufacturers. This was epitomized in the 1970s and 1980s when Sony entered a videotape formatting war with Matsushita. Matsushita was the parent company of JVC, whose VHS format eventually won over Sony’s Betamax format. While Sony had been the first to launch the videotape in 1975, it was unable to establish the Betamax format as the industry standard. Compared to its rivals, Sony had been less willing to collaborate with other firms and less responsive to consumers who valued longer running times and portability over technological sophistication.
From the late 1980s, Sony began to diversify out of consumer electronics into a multinational conglomerate. The company’s initial steps were in the entertainment industry, first in music and motion pictures and later in video games. Sony launched its music venture through Sony Music Entertainment in 1988, after acquiring the American music company CBS Records. It expanded into the film business through Sony Pictures Entertainment in 1991, after acquiring the American motion picture company Columbia Pictures. Sony’s initial foray into the video game business with Nintendo stumbled as the partnership faltered. However, the company continued to develop this business through its subsidiary Sony Computer Entertainment, and introduced its first PlayStation console in 1994.
Sony continued to diversify in the new millennium, most notably through a joint venture with the Swedish telecommunications firm Ericsson to develop a mobile phone business. The company also began to offer financial services, which included banking services through Sony Bank and life insurance services through Sony Life Insurance.
Sony faces several challenges amid the rising tide of globalization and increasing competition. One is a threat from foreign rivals such as Philips and Samsung, who also have large global market share, advanced research and development (R&D) facilities, and expansive distribution networks. In addition, the firm faces competition from companies in developing countries that can offer low-priced alternatives. Sony also faces increasing cost pressures from rising raw material prices. The company’s future lies in its ability to capitalize on its brand image and diversified product range, form strategic alliances to pursue collaborative R&D, and invest in growing markets such as semiconductors.
- Se-jin Chang, Sony vs. Samsung: The Inside Story of the Electronics Giants’ Battle for Global Supremacy (Wiley, 2008);
- Peter J. Coughlan, Competitive Dynamics in Home Video Games: The Sony Playstation (Harvard Business School, 2001);
- Aaron Frisch, The Story of Sony (Smart Apple Media, 2004);
- Shu Shin Luh, Business the Sony Way: Secrets of the World’s Most Innovative Electronics Giant (Capstone, 2003);
- Atsushi Osanai, Dilemma Between New and Existing Technologies: Separation and Coexistence of Old and New Technologies in the Television Development Division of Sony Corporation (Kobe University, 2007).
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