Akio Morita Turned Sony's Tape Recorder Into a Global Electronics Brand

A bombed-out department store and a borrowed idea

In October 1945, Akio Morita, a 24-year-old Navy officer, walked into a burnt-out department store in Tokyo’s Nihonbashi district. The building, once a Shirokiya kimono shop, had been firebombed. Morita and his former Navy colleague Masaru Ibuka had a plan: build a company that made shortwave radios and other electronics. They called it Tokyo Tsushin Kogyo — Tokyo Telecommunications Engineering Corporation. The startup capital was ¥190,000, much of it borrowed from Morita’s father, a sake brewer who had expected his son to take over the family business.

The first product was a rice cooker. It failed. The second was a tape recorder, built in 1950 after Ibuka saw an American tape recorder at a Tokyo department store and decided Japan needed its own. The early Model G tape recorder was bulky and expensive — about ¥160,000, roughly six months’ salary for a mid-level employee. It sold poorly until Morita realized that the buyers who mattered were not consumers but institutions: courts, schools, and government offices that needed to record proceedings. He drove around Japan with a recorder in his car, demonstrating it to judges and school principals. By 1952, the company had its first stable revenue stream.

That sequence — a failed consumer product, a pivot to institutional buyers, then a return to the consumer market with a cheaper, better-engineered version — is the template for almost everything Sony did afterward. The rice cooker and the Model G are usually treated as trivia, the awkward prehistory before the transistor radio. They are better read as the origin of a method: identify a use case where the technology already pays for itself, sell there first, and use the revenue to drive down cost until the consumer market opens. Morita did not invent this approach, but he applied it with unusual consistency for four decades.

The transistor bet that changed the company

In 1952, Morita read that Western Electric had agreed to license transistor technology to anyone who asked. He flew to New York and signed a licensing deal for $25,000 — a sum that nearly bankrupted the company. Ibuka’s team spent months trying to manufacture transistors that would work reliably. The first working transistor radio, the TR-55, went on sale in 1955. It was small enough to fit in a pocket, a novelty at a time when radios were furniture.

The TR-55 was a commercial success in Japan, but Morita wanted to sell in the United States. He traveled to New York with a sample and approached Bulova, the watch company, which offered to buy 100,000 units — but under Bulova’s name. Morita refused. He wanted the Sony name on the product. The decision was risky: Bulova’s order would have paid for a new factory. Morita later said he told Bulova’s executives, “If you put your name on our product, our company will never grow.” He walked away. The gamble paid off when Sony’s own-brand radios began selling in American stores.

The Bulova episode is often told as a story about pride or brand ambition. It is more useful as a story about what a contract is actually buying. Bulova was offering volume and a guaranteed factory; what it was asking in return was the customer relationship. Morita’s calculation was that the $25,000 licensing fee had already been spent, the transistor was already in production, and the only asset Sony could not buy back later was the name on the case. A supplier can always find another order. A brand, once ceded, is difficult to reclaim.

The Walkman and the logic of personal audio

By the late 1970s, Sony had become a major electronics manufacturer, but Morita was looking for a product that would define the company’s next decade. In 1978, Ibuka asked his engineers to build a small stereo tape player for his personal use — something he could listen to on long flights. The engineers stripped a Pressman tape recorder of its recording function and added stereo playback. The result was the TPS-L2, a blue-and-silver device that went on sale in Japan on July 1, 1979, as the “Walkman.”

Morita was initially skeptical. He thought a tape player without a recording function would confuse consumers. But the market responded immediately. Sony sold 30,000 units in the first two months in Japan, and the Walkman became a cultural artifact of the 1980s. Morita’s insight was not technical — the components were already in Sony’s catalog — but behavioral: he understood that people wanted to carry their music with them, and that a device that did one thing well could beat a multifunction machine. By 1986, Sony had sold 50 million Walkman units worldwide.

The Walkman is the clearest case of a mechanism that recurs throughout Sony’s history: subtraction as product development. Removing the recording function removed cost, weight, and complexity, and it also removed a decision the user had to make. The Pressman was a tool for capturing sound; the Walkman was a tool for ignoring everything else. Morita’s initial skepticism is worth keeping in the story, because it shows the idea did not arrive as a flash of strategic genius. It arrived as an engineer’s personal request, was resisted by the chairman, and was validated only by the market. The lesson is less about vision than about how quickly the company could move once the signal came back positive.

The Betamax defeat and the lesson of format wars

Sony’s most famous failure was the Betamax videocassette recorder, launched in 1975. Sony believed its superior picture quality would win the market. But JVC’s VHS format, which offered longer recording time and was licensed to other manufacturers, outsold Betamax by the early 1980s. Morita later conceded that Sony had been too protective of its format. “We were too confident,” he told interviewers. The Betamax loss cost Sony billions in potential licensing revenue and taught the company that in consumer electronics, format adoption matters more than technical superiority.

Morita’s response was to push Sony into new categories: the Compact Disc, developed with Philips, launched in 1982; the PlayStation, launched in 1994, which became one of the most profitable products in Sony’s history. Each of these moves followed a pattern: Sony would develop a proprietary technology, then license it widely enough to create an ecosystem. The company learned from Betamax that owning the standard was less important than owning the best implementation.

What the format wars actually taught

The standard reading of Betamax is that Sony lost because VHS was licensed more freely. That is true but incomplete, and the incomplete version is the one that gets repeated. VHS also had a structural advantage that had nothing to do with licensing philosophy: longer recording time, which mattered enormously in the first decade of home video, when the primary use was taping broadcast television and movies off the air. Picture quality was a secondary concern for most buyers. Sony optimized for the variable its engineers could measure most precisely and underweighted the variable its customers cared about most.

The correction was not a single decision but a change in how Sony approached standards. The Compact Disc, developed with Philips and launched in 1982, was a joint standard from the outset — two competitors pooling patents rather than one company defending a proprietary format. The PlayStation, launched in 1994, was built on licensed third-party software development, which is the same logic applied to content rather than hardware. In both cases Sony gave up exclusivity in exchange for adoption. The pattern is not “license everything” but “identify which layer of the stack you can defend and give away the rest.” That is a more demanding discipline than either the Betamax approach or its opposite.

The globalization of a Japanese company

Morita moved to New York in 1963, a unusual step for a Japanese executive at the time. He wanted to understand the American market firsthand. In 1971, Sony opened a factory in San Diego, becoming one of the first Japanese manufacturers to produce in the United States. Morita argued that Sony had to be a global company, not a Japanese company that exported. He wrote a book, “Made in Japan,” published in 1986, which became a bestseller and a primer on Japanese management.

His approach to management was paternalistic. Sony employees in Japan had lifetime employment, company housing, and a corporate culture that emphasized loyalty. Morita believed that a company was a family, and that layoffs were a failure of management. This model worked during Japan’s postwar boom, but it came under strain in the 1990s when the Japanese economy stagnated. Sony’s electronics business, which had once dominated the market, began losing ground to cheaper competitors from South Korea and China.

The strain is the part of the Morita story that is usually softened. Lifetime employment and company housing were genuine commitments, and they were also only affordable while the company was growing fast enough to absorb surplus labor through redeployment rather than dismissal. When growth stopped, the model had no mechanism for shrinking. Morita’s own conviction that layoffs represented a management failure made the adjustment harder to make, because every reduction had to be justified as something other than a reduction. The paternalism that built loyalty in the 1960s and 1970s became a constraint in the 1990s, and Sony spent much of the following decade working through it.

A legacy measured in products, not market share

Akio Morita stepped down as Sony’s chairman in 1994 after suffering a stroke. He died in 1999 at the age of 78. By then, Sony was a different company: it had acquired Columbia Pictures in 1989 for $3.4 billion, a deal Morita championed, and it had become a conglomerate spanning electronics, music, film, and gaming. The Walkman had been superseded by the CD player and then the MP3 player, but the idea of personal, portable audio — Morita’s core insight — remained.

Sony’s market capitalization in 1999 was roughly $100 billion. In 2024, it was around $100 billion again, after a long period of restructuring. The company that Morita built had survived the transition from hardware to content and services, but it never again dominated consumer electronics the way it did in the 1980s. Morita’s legacy is not a market cap figure but a set of products that changed how people listened to music, watched movies, and played games. He was not a inventor in the technical sense — Ibuka was the engineer — but he was the person who decided what Sony would bet on, and he was right often enough to build one of the most recognizable brands in the world.

The flat market-cap line is the honest measure of what happened. A company that defined consumer electronics for a decade ended the next quarter-century roughly where it started in value, having survived by becoming something other than what it was. That is not a failure, but it is not the story the brand tells about itself either. What survives intact is the portfolio of decisions: the refusal of Bulova’s name, the subtraction that produced the Walkman, the licensing correction after Betamax, the move into content. Those decisions are portable. They can be studied by anyone running a company that makes a physical product and has to decide which parts of it to keep proprietary and which to give away.

Frequently asked questions

What was Akio Morita’s first product? A rice cooker, which failed. The company’s first successful product was a tape recorder, sold mainly to courts and schools.

Why did Morita refuse Bulova’s offer to buy 100,000 radios? Bulova wanted to sell the radios under its own name. Morita insisted on the Sony brand, believing the company would never grow if it remained an anonymous supplier.

What was Sony’s biggest failure under Morita? The Betamax videocassette format, which lost to JVC’s VHS in the 1980s because Sony was too slow to license it to other manufacturers.

Did Sony change its approach after Betamax? Yes. Later standards were developed with partners or licensed widely — the Compact Disc with Philips in 1982, and the PlayStation in 1994 with third-party software development. Sony kept the implementation and gave up exclusivity.

Was Morita an inventor? No. Masaru Ibuka was the engineer. Morita’s role was deciding what the company would bet on and how it would sell, which is why his legacy is a set of products and market decisions rather than patents.