Sony and the name they refused to sell (2026)

In the spring of 1946, in a Tokyo that was mostly ashes, an engineer named Masaru Ibuka rented a room on the third floor of the Shirokiya department store in Nihonbashi and put twenty people to work in it. The company they registered that year reported sales of 12.5 trillion yen in the year to March 2026. 1 2

Ibuka was thirty-eight, and had spent the war running Nihon Sokuteiki, a company that made measuring instruments. On a wartime research committee he met Akio Morita, a navy lieutenant thirteen years younger: the eldest son of a Nagoya family that had brewed sake since the Edo period, and a physics graduate of Osaka Imperial University. 3 4

Morita was expected to inherit the brewery. Ibuka travelled to Nagoya with him to ask for the son, and Morita's father let him go with a line that settled the next fifty years: whatever it is you want to do the most, do it. Tokyo Tsushin Kogyo was registered on 7 May 1946 with 190,000 yen put up by Ibuka's father-in-law and Morita's father, and just over twenty employees. The prospectus Ibuka wrote called for an ideal factory where engineers with sincere motivation could work to the highest level. 1

The early years were short of everything except nerve. Post-war rules froze bank withdrawals, so the company needed cash it could earn from ordinary people, fast. Ibuka designed an electric heating cushion — wire between two sheets of paper — and the employees' families sewed them at home. It scorched futons, so the company sold it under another name. An electric rice cooker he built from a wooden pot and aluminium electrodes, by the company's own account, was his first failed prototype. 1

This episode follows the story in seven parts: the room over the department store, the recorder that sold one unit, the transistor licence the ministry refused, the name Morita would not sell, the player with no recording button, the two bets that cost the company, and the questions the story leaves with a founder.

One recorder sold

By 1949 the company had work but nothing of its own to sell. Then Ibuka heard a tape recorder at the NHK broadcast centre, where the American occupation had brought one, and said: this is it, this is what we must do. Nobody in Japan was making magnetic tape, and nobody at the company knew how. One engineer cooked iron oxalate in a frying pan borrowed from the company kitchen, stirring with a wooden rice spoon, and stopped when the powder turned from brown to black. That became the coating. The tape itself was paper, because cellophane kept failing. 5

The G-Type went on sale in 1950 with an hour of recording time, 35 kilograms of machine and a price of 160,000 yen. Several months later exactly one had been sold. The H-Type followed in 1951 at 84,000 yen and 13 kilograms, and with it a market nobody had aimed at: classrooms. Rather than sell, one of Morita's people toured the country giving talks on teaching with sound, and schools began asking for machines. Engineers were stationed in six cities to keep them running, and every unit shipped in a wooden crate. 5

Two lessons came out of that year. Sales had piled up in one coal-mining district of Kyushu, and when the mines slowed the orders stopped. And when a rival finally entered the tape recorder business, the company's own sales went up. 5

Twenty-five thousand dollars

In March 1952, on his first trip abroad, Ibuka heard that Western Electric — the company behind Bell Labs — was selling the rights to the transistor it had invented, for 25,000 dollars the firm did not have. Japan's Ministry of International Trade and Industry refused him permission to make transistors: the technology was too advanced for a factory like his. While the company's man in New York kept working on Western Electric, describing a small firm that had built a magnetic tape recorder with no help from anyone, the ministry's answer was overtaken by the agreement that arrived from America. 6

The team's only guide was a book on transistors Morita brought home from the United States. Nobody would sell them machines, so they built their own, including a slicing machine assembled from a diamond grindstone Morita had bought abroad and a rusty milling machine. Kazuo Iwama, who led the work, spent months inside American factories where he was allowed to look and not to draw, and mailed his notes home from memory: nine pages one week, eight the next. An American company put the world's first transistor radio on the market for Christmas 1954. Sony's own prototype warped in the summer heat, and Japan's first transistor radio, the TR-55, reached shops in September 1955. 6

The name on the radio

In the United States with a sample in his bag, Morita took the radio to a watch company. They offered to buy 100,000 of them on one condition: that the radios carry their name instead of his. It was a bigger order than the young company could fill, and Tokyo's instruction was to take it. Morita refused by telephone, telling them he had fifty years to make his own name as famous as theirs. The name was Sony, from sonus, the Latin word for sound, and sonny. 6

The TR-63 "Pocketable Radio" followed in 1957, small enough for a shirt pocket and sold in the United States at 39 dollars 95 cents — one radio per person rather than one per family, in a country where three quarters of households already had one. In January 1958 Tokyo Tsushin Kogyo became Sony Corporation, against colleagues who did not want to abandon a name they had spent a decade building. 6

Sony was one of sixteen companies allowed to sell shares in the United States in 1961, out of more than a hundred applicants, and the issue sold out within an hour at 17 dollars 50 cents an American depositary receipt. Morita moved his family to New York in 1963 over his own board's objections, on the argument that he could not understand American customers without living among them, and in September 1970 Sony became the first Japanese company listed on the New York Stock Exchange. 7

A player with no recording button

In 1978 Sony's best portable stereo recorder weighed about 1.7 kilograms and was the size of a textbook. Ibuka, who loved music, took one on a business trip and complained about the weight. His request went to Norio Ohga — the music student who had once walked in to tell Ibuka everything wrong with his tape recorders, and who by then ran part of the company: keep the stereo, drop the recording. 8

In February 1979 Morita gathered young staff from engineering, planning, marketing and design and told them the product was for their generation: a cassette player with headphones, no recording function, in the shops before the summer holiday. He set the price himself at 33,000 yen, because it was the company's thirty-third year. The engineers told him it would never sell. The Walkman went on sale on 1 July 1979 and sold 3,000 units that month; by the end of August the first batch of 30,000 was gone, and sold-out signs stayed up for six months. Over 400 million were sold in the forty years to 2019, counting every version. 8

Two bets that cost them

Sony's first big defeat was a format of its own invention. The Betamax video recorder arrived in 1975 with a cassette the size of a paperback, the size Ibuka had held up for the engineers. A rival's format, VHS, was incompatible, held more on each tape, and was offered to every other manufacturer that wanted it. Sony's picture was better and Sony's format lost; by 1988 the company was selling machines in the rival format, and the executive who announced it told the staff they could not do business out of stubbornness. 9

Then came the expensive one. In 1989 Sony bought Columbia Pictures for 3.4 billion dollars, 4.8 billion including the liabilities it took on — the most a Japanese company had paid for an American one to that point. One weekly magazine put the studio's torch lady in a kimono on its cover: "Japan invades Hollywood". Sony also paid about 200 million dollars for the production company of the two men it put in charge, Peter Guber and Jon Peters, neither of whom had run a studio before. 10 11

In November 1994 Sony wrote off 2.7 billion dollars on the studio, on top of a 510 million dollar operating loss. Its shares fell 8.1 percent in Tokyo the next day, and an analyst told the Los Angeles Times what the announcement amounted to: behind the write-off was an admission that the Columbia investment had failed. Ibuka had died in December 1997, and Morita, who retired in 1994 because of his health, in October 1999. 4 12

The bill for that era came due in April 2003, when a weak set of results sent Sony's shares down 15 percent and wiped almost 8 billion dollars off the company, after a 111 billion yen loss in the first three months of the year. The company spent the next two decades rebuilding around games, music, film and the image sensors it puts inside other companies' cameras. 9 In the year to March 2026, Sony Group reported sales of 12,479.6 billion yen and an operating profit of 1,447.5 billion yen from continuing operations, having spun off its insurance and banking arm the previous October. 2 13

What to take from the story

The market kept telling these two men what their product was for. A beautiful tape recorder sold one unit until teachers found a use for it. A player that could not record was declared unsellable by the company's own engineers before it opened a market that ran for forty years. When the market disagrees with the plan, it is usually describing a customer you have not met. 5 8

Morita turned down 100,000 radios to keep a word nobody outside the company had heard of. That decision cost him a year of easy revenue and bought him fifty years of pricing power that came with his own name on the box. 6

The two big bets are the harder lesson. Sony lost the video format to a competitor whose picture was worse, because the other side shared its format and Sony did not, and it learned to agree standards with other people — the compact disc was built with Philips. Then it paid billions for a studio it did not know how to run, and the size of the cheque became the size of the education. Both times the engineering was right and the thing around it was wrong: who else has to say yes. 9 10

The two founders were also doing different jobs, which is worth noticing if you are building with someone. One walked the factory asking what can we make; the other walked the market asking who will buy it. The Walkman exists because both questions were asked about the same machine in the same month. 3 14