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Sunday, October 3, 1999 Published at 12:04 GMT 13:04 UK


Business: The Company File

Japan's Electronics Giant

The Playstation is Sony's latest electronics hit

The death of Akio Morita marks the end of an era for Japanese business - a period in which it became the most successful in the world. BBC News Online looks at the achievements of Sony, the company Morita founded.

Japanese electronic giant Sony has long a knack for finding innovative products - and selling them abroad.


[ image: Portable mini-disc players are one of Sony's latest products]
Portable mini-disc players are one of Sony's latest products
It is the world's largest electronics company, selling $50bn worth of goods and making profits of $1.5bn.

In the l950s Sony made its first breakthrough product, developing the transistor radio in 1955. The pocket-size radio was an overnight sensation, capitalising on the new technology of the transistor invented in the United States in l947 (for which it paid a license fee of just $25,000).

New products galore

Sony's pioneering role in consumer electronics continued with the development of products for the growing world of television in the l960s and l970s: first the video tape recorder, then an improved colour television tube (Triniton), and finally the camcorder.


[ image:  ]
Although Sony's Betamax technology was eventually superseded on the consumer level by the technically inferior VHS standard, Sony became the most trusted brand name in America, its biggest market.

In the consumer audio business, the innovative Walkman - developed after Mr Morita became bored on long plane journeys between the United States and Japan -was not its only success.

It has carried on its innovation with the launch of the compact disc (CD) and the less-successful mini-disc, and it is betting heavily on the success of DVD (digital versatile disc) which can play movies through television sets and personal computers.

Sony also makes computer chips, floppy disc drives and other computer components, giving it a grasp of the technology underlying its success.

Playstation Hit

But currently it is the Playstation that is the key to Sony's success. Its home video game system has 70% of the world market, and contributed half of Sony's total profits last year.

Since it was introduced in l995, the Playstation has sold more than 50m units, and overtaken Nintendo and Sega as the market leader.

It faces fierce competition from Sega, which is launching its Dreamcast console, with Internet capability, in Europe this month, and Nintendo, whose faster game console has better graphics. Sony will hit back with the launch of its Playstation2 in March 2000. As well as improved graphics, the Playstation2 is backward compatible, allowing users to play their existing Playstation games on the new machine.

Entertainment Flops

Sony's biggest failure has been its attempt to move into the entertainment business.

In the 1980s it bought Columbia Records for $2bn, and then Columbia Studios and Tristar Pictures for $4.9bn.

It also owns the Loews cinema chain with 2,700 screens at 450 movie theatres in the United States.

One-third of its sales now comes from the entertainment division, which is now expanding into online sales.

But the film studios have had relatively few hits - one of the last being 'Men in Black' in 1997 - and contribute little to profits. Earlier in the decade, flops like The Last Action Hero and Godzilla forced Sony to write off $3.2bn.

In contrast, the music business has been relatively profitable, with a string of superstars like Celine Dion, Mariah Carey, and now Lauryn Hill. However, a very public row with George Michel, who took Sony to court to be freed from his contract, did its image little good.

Other Japanese electronics companies which bought film studies, like rival Matsushita, which purchased Universal and MCA studios, have now sold off their holdings.

But Sony is determined to hang on, turning itself intself an online business, Sony Online Entertainment.

It plans to sell music over the Internet and offers Internet gaming and DVD sales.

Major restructuring

Like other Japanese exporters, Sony has been hit by the fluctuations of the yen and the major recession in Japan, although it has always remained profitable.

Of Sony's $50bn in worldwide sales, one-third is in the United States, while 27% in is Japan and 23% in Europe.

In March 1999 it announced a major restructuring which closed 15 of 70 Sony factories with a loss of 17,000 jobs or 10% of the workforce -something that had been unprecedented for a Japanese company, with its philosophy of jobs for life.

But despite a decline in profits, if Sony can still continue to innovate, its future as a company will be assured.



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