Sony Corporation
Sony Corporation, founded in 1946 in Tokyo, Japan, has evolved from a small electronics company into a global leader in consumer electronics and entertainment. With iconic products such as the Walkman, PlayStation gaming systems, and innovations in television technology, Sony has established a reputation for quality and innovation. The company was co-founded by Masaru Ibuka and Akio Morita, who played key roles in its early success, including the development of the first transistor radio in 1955 and the Trinitron television in 1968.
However, Sony faced significant challenges in the 1990s and 2000s, notably losing market share to competitors like Samsung and Apple due to a lack of innovation and adaptability. Despite these struggles, the company managed to regain some momentum by refocusing its strategies under new leadership and investing in emerging markets such as virtual reality and video gaming. By 2021, Sony had positioned itself as a leading manufacturer of video game consoles and was actively expanding in the growing gaming market.
In recent years, Sony has also shifted its structure, changing its name to Sony Group Corporation and acquiring notable studios like Bungie to enhance its entertainment portfolio. The company continues to embrace its legacy of technological advancement while navigating the challenges of a rapidly changing digital landscape.
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Subject Terms
Sony Corporation
- Date Founded: 1946
- Industry: Electronics and electrical equipment
- Corporate Headquarters: Tokyo, Japan
- Type: Public
From humble beginnings in war-devastated Japan in 1946, Sony grew quickly into a premier consumer electronics company with a global reach. Famous for the popularity of products such as its transistor radio, Trinitron color television, Betamax videocassette recorder, Walkman portable cassette player, camcorder, Blu-ray disc player, and PlayStation gaming system, Sony developed a reputation as a leading innovator and manufacturer of high-quality products. Its purchase of CBS Records Group and two Hollywood studies made it a supplier of entertainment content as well. Through much of its first fifty years of existence, cofounders Masaru Ibuka and Akio Morita led the corporation. Ibuka provided engineering expertise, and Morita had leadership skills and a superb understanding of consumer trends.
Beginning in the 1990s, however, the company stumbled. Sales declined steadily from a peak of nearly $110 billion in 2008 to only about $74 billion in 2014. While these revenues placed it 116th in Fortune’s 2014 list of the top international companies, Sony was eclipsed by near-contemporary Samsung of South Korea (over $195 billion in sales) and the arrival of Apple in the US (over $180 billion in sales). The rise of these two rivals highlighted the causes of Sony’s problems. First, the company was overtaken in innovation and marketing by Korean outfits like Samsung, which released new products at lower prices than Sony’s. Second, Apple’s introduction of the iPod doomed Sony’s disk-based technology. Sony fell behind the times and found it increasingly difficult to catch up.
The company remained cautiously optimistic and reported that it had begun to experience a potential turnaround by 2017. At that point, it was ranked 105th on the 2017 Fortune Global 500 list, with revenues of around $70 billion. Sony capitalized on this momentum, and by 2021, it had improved its position on the Global 500 to eighty-eighth with $84.8 billion in revenue. Possibly due to the lingering impacts of the COVID-19 pandemic, Sony’s revenues again dipped in 2022 to $81.37 billion, or a decrease of 8.88 percent from the previous year. In 2023, Sony's revenue declined slightly, but the company ranked fifty-seventh on the Forbes Global 2000. By 2024, the company's revenue increased by more than 5 percent to $89.8 billion.
History
Ibuka and Morita met during World War II and decided to go into business together after the war, founding Tokyo Tsushin Kogyo (TTK) in 1946 with $500. Their first product success was a tape recorder introduced in 1950.
Two years later, under Ibuka’s guidance, the company licensed a new technology—the transistor—from Bell Laboratories. Far smaller and sturdier than vacuum tubes, the transistor promised a new realm of consumer products. In 1955, the company sold its first transistor radio, called Sony (from the Latin word meaning "sound"). By 1958, the radio was so popular that the founders renamed the company after it. Two years later, they introduced a transistor television.
In the 1960s, Sony engineers developed a new color television technology that produced clearer, sharper images than earlier TVs. In 1968, the company began selling its Trinitron television, which became a major seller and earned Sony a Technical Emmy Award. That year, Sony also formed a joint venture with CBS called CBS/Sony Records.
Sony’s next innovation was the Betamax videocassette recorder, introduced in 1975. The product sold well but soon faced competition. In 1977, Matsushita Electric developed a rival format named VHS, which it shared with other companies—a step Sony had not taken. Although judged superior in quality by critics, the Betamax succumbed to the marketing clout of its competitors. Company sales growth slowed from a spectacular 166 percent from 1970 to 1974 to only 35 percent from 1974 to 1978.
In 1979, Sony introduced a new hit, the Walkman. It was followed in 1985 by a video camera recorder—this time employing a format backed by more than one hundred companies, showing that Sony had learned the Betamax lesson. Sony drew another lesson from that earlier fiasco—if it owned content, it could have more say in the format used for content delivery. Thus, it bought out CBS’s share of CBS/Sony Records in 1987 and the following year purchased Columbia Pictures Entertainment, later renamed Sony Pictures Entertainment (SPE).
In the early to mid-1990s, however, Sony experienced problems. By this time, both Ibaku and Morita had withdrawn from operations. New technology standards became an issue again when the DVD format developed by Sony and Philips battled with one backed by Toshiba and Time Warner. The latter format won.
At the same time, Sony enjoyed new success with the PlayStation gaming system, which was launched in 1994. Troubles continued, however, and in the late 1990s, the company cut staff, reduced manufacturing, and eliminated outdated products.
The early years of the new century saw new Sony innovations—the PlayStation 2, PS3, and Blu-ray disc player. But Sony also saw a new challenge—digital music delivered without hardware. Sony was battered first by file-sharing ventures such as Napster and then by the iPod. There were other problems as well. Its smartphone business posted huge losses. Competition from low-cost manufacturers forced it out of the laptop business and continued to cut into sales of core products. During the second decade of the twenty-first century, Sony found itself facing many new issues.
When Kazuo Hirai became CEO of the company in 2012, he instigated an overhaul program aimed at turning Sony back around by scaling down the number of business areas being worked on and focusing on making the highest-quality products in areas where the company could best challenge its competitors. Additionally, the company found success in refocusing its involvement in the smartphone business to producing effective image sensors for the devices' cameras. Indicative of the company's desire to still be seen as an innovator, in 2016, Sony released its virtual reality headset for PlayStation 4, making it a major player in the reportedly up-and-coming virtual reality market.
By the time Sony released the PlayStation 5 in 2020, it had become the largest manufacturer of video game consoles and the largest video game publisher in the world. In April 2021, Sony Corporation changed its name to Sony Group Corporation after merging several of its subdivisions. In 2022, Sony acquired video game development studio Bungie, famous for such franchises as Halo and Destiny, for a deal estimated to be worth $3.7 billion.
In 2024, SPE acquired Alamo Drafthouse Cinema, a dine-in movie theater chain that filed for bankruptcy in 2021. The Sony Pictures Experiences branch was created to manage the cinema. SPE planned to reinvigorate moviegoing by implementing state-of-the-art projection, sound, and theater-management systems. Sony also released a home audio theater line called BRAVIA.
Impact
Sony’s impact on consumer electronics from the 1960s to the 1990s is unarguable. The products it innovated created new markets, but the competitive world of consumer electronics, combined with the ability of other companies to develop innovations of their own, made it difficult for Sony to secure a major market share. The ability of competitors to innovate was strengthened by Sony’s downsizing in the early years of the new century, as experienced Sony technicians and designers let go by the Japanese giant were quickly hired by Korean firms. In addition, the rise of hardware-free technologies like MP3s eroded markets in which Sony did have a strong position. Even in Japan, Sony was losing customers to Korean manufacturers such as Samsung and LG Electronics. It remained a top manufacturer of video games and video game consoles into the twenty-first century.
In its prime, however, Sony had another significant impact. In the early years following World War II, Japanese manufacturers hoping to break into the American market had to contend with a reputation for cheap, poor-quality products. Sony’s products, with their skilled engineering and high performance, helped undo that image. Although it lost market share over time, the company retained its reputation for top quality.
Sony suffered a double blow to its prestige in 2014. That year, Sony Pictures was to release a satirical movie entitled The Interview, which cast North Korean leader Kim Jung Un in a bad light. North Korea protested and threatened punishment against theater chains that showed the movie. Five major distributors dropped plans to screen the film, and Sony decided to pull the movie altogether. In the face of criticism for yielding to a dictator’s bullying, Sony was embarrassed further when corporate emails, which contained unflattering comments about Hollywood personalities and confidential details from contract negotiations, were hacked and made public. This raid on Sony was believed to be the result of a North Korean cyberattack.
Sony Corporation continued significantly impacting society and culture in the twenty-first century with several programs. With its Road to Zero plan and Sony Pictures' Sustainable Production Program, the company began using more renewable energy and lowered its greenhouse gas emissions. Sony's Global Social Justice Fund aimed to improve equality and limit discrimination.
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