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Media eyes trend-setting Sony’s loss of momentum

by Mark Schreiber

Special To The Japan Times

Let’s travel back 62 years. On the evening of Dec. 4, 1952, after NHK radio signed off its regular AM programming, an announcer proclaimed: “Tokyo Tsushin Kogyo and NHK now commence a joint experimental stereo broadcast.”

In principle, stereophonic sound reproduction requires separation of the audio signals into left and right channels. In 1952, the technology did not yet exist to broadcast, or receive, in stereo.

So how was this amazing feat achieved? By using two broadcast stations. Two microphones were positioned at separate points in front of a live orchestra, with the pickup of one transmitted via NHK 1 and the other via NHK 2. To hear the stereo effect, home listeners needed to have two radio receivers tuned to the two stations.

It was thus that NHK and a small company then known as Tokyo Tsushin Kogyo (Tokyo Telecommunications Engineering Corp., now called Sony) pulled off the world’s first stereo radio broadcast.

Since its founding by Masaru Ibuka and Akio Morita in May 1946, Sony has had a remarkable run. Starting with recording tape, open-reel tape recorders and the humble transistor radio, its innovative home electronics products came to impact globally on leisure and lifestyles. Its celebrated products include Emmy Award-winning Trinitron TV monitors (1968), the Betamax home VCR (1975), the Walkman personal stereo player (1979), the Mavica electronic camera (1981), PlayStation game console (1994) and the Aibo robot dog (1999).

In the process, Sony established itself as a worldwide brand, and one that enabled the designation “Made in Japan” to be associated with innovation, high quality and good value for money.

True, there were occasions when Sony hit a speed bump on the road to success, such as the failure of its Betamax VCR format to compete with rival VHS. And as with Japan’s other consumer electronics manufacturers, it had to scramble to cope with the soaring value of the Japanese yen and rapidly changing consumer market trends.

One such change occurred around 1989, at the peak of the late, unlamented bubble economy. That year, a think tank called the Hakuhodo Institute of Life and Living published a report titled “Kando Horumon” (emotional hormones), which noted that since the material needs of Japan’s consumers were largely fulfilled, they no longer sought satisfaction from possessions. Future spending, therefore, would be based on expectations of emotional satisfaction. In other words, “owning” counted for less than did “feeling.” As consumer lifestyles diversified, their discretionary spending shifted from passive activities like watching TV to overseas and domestic travel, or the celebration of special events such as the kaikin (sales release) of Beaujolais Nouveau wine on the third Thursday of November.

With its assets inflated by the bubble economy, Sony sank its capital into businesses unrelated to manufacturing. In 1987, it acquired Columbia Pictures Entertainment. It was to diversify further into financial services, insurance and other fields unrelated to the core areas of manufacturing game-changing products sold under the Sony label.

The company’s current situation has not escaped notice by the media. The April 26 issue of business magazine Shukan Diamond featured a 30-page cover story titled “Sony Shometsu!!” (the extinction of Sony). Indeed, such a prospect, should it be true, fully warrants two exclamation points.

Sony’s television division — once a key pillar of its business — has not realized a profit in 10 years. The company is also reported to be in the process of selling off its money-losing personal computer division. Reflecting these troubles, credit rating firm Moody’s last January downgraded Sony’s corporate bonds to Ba1 — one of the lowest ratings that’s described as carrying a “low to moderate level of risk.”

Diamond’s shocking headline, however, did not keep its reporters from devoting four pages to touting the company’s R&D departments, which are hard at work on exciting devices that redefine the state of the art. One, a new audio technology called “Hi-rezo” (for high resolution), was introduced last year in the ZX1 Walkman. Few would disagree that its sound quality is stunning. The problem is finding enough consumers willing to pay its high cost — currently around ¥75,000.

While Sony was able to boost sales in its most recent fiscal period, Nikkan Gendai (May 16) notes that the company’s year-on-year profits declined by 12 percent from 2013, realizing a deficit of ¥128.3 billion. It suggests that company CEO Kazuo Hirai, who assumed his position a little more than two years ago, is failing in his pledge to turn around the company’s electronics business, and hinted that Sony’s current executive vice president and CFO Kenichiro Yoshida is waiting in the wings as a possible successor to Hirai.

While the company’s existence does not appear to be in imminent jeopardy, there’s no certainty that consumers of the future will be able shop for Sony electronic goods. In a Shukan Gendai (May 31) article titled “Famous Japanese corporations that will grow or vanish in the future,” Makoto Naruge, a former CEO of Microsoft Japan, makes this prediction: “Even if Sony survives, I suppose the Sony that we all know will disappear. Decades from now, the Sony that makes cameras may be vaguely remembered as a company that once made the Walkman and TVs.”

  • FYouMudFlaps

    Sad. I had a VAIO laptop and loved it.

  • Earl Kinmonth

    The first stereo radio broadcast was in 1925 by BBC Manchester. There were numerous other experimental broadcasts in the UK and the US before NHK made the broadcast this articles alleges to be the first.