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Chapter3   A Man Charmed by the Tape Recorder

A Man Charmed by the Tape Recorder

Masao Kurahashi became interested in Totsuko when Michiharu Tajima(*) told him, " I know a unique company where many young talented people are working. They are now developing an interesting machine which can record a person's voice and play it back immediately. This is yet a small and unknown company, but I'm sure it has a bright future. "

(*) Michiharu Tajima is a close friend of Tamon Maeda, and first-chairman of Sony

Kurahashi was working for a company called Yagumo Sangyo that managed the property of the Owari Tokugawa household, descendants of the Tokugawa shogunate. He learned of Totsuko, when he consulted Tajima, a Yagumo Sangyo advisor about a property problem.

At that time, in 1950, Totsuko was very anxious to increase its capital from 3.6 million to 10 million yen. Convinced of Totsuko's potential, Tajima suggested that Kurahashi also invest in Totsuko as well. Kurahashi decided to invest 500,000 yen in Totsuko stock by purchasing 10,000 shares at 50 yen per share. " Since you are going to invest in Totsuko, why don't you go and see with your own eyes what Totsuko is like, " Tajima suggested. So, Kurahashi went to Gotanda to see Ibuka and Morita at their shabby factory.

After his investment was discussed, Kurahashi was shown the G-type tape recorder and other Totsuko products.
Kurahashi was totally preoccupied with the G-type tape recorder he had just seen. " How can Yagumo Sangyo sell that tape recorder? " Kurahashi kept thinking, even after he returned to his office.
Kurahashi visited Totsuko a few more times and asked Ibuka and Morita for rights to sell the tape recorder, but Totsuko was reluctant to do so. Although they had been able to raise the corporate capital, Ibuka and Morita still did not feel secure financially. They were apprehensive about Kurahashi's solvency. Reading their minds, Kurahashi boasted, " The Tokugawa family in Owari has an art museum in Nagoya. Its historical collection handed down over generations includes many national treasures. If I mortgage them, I can readily obtain 100 million or 200 million yen. "

Kurahashi had no intention of doing so. He only sought to ease their doubts in order to secure his bargaining position. " Let our company buy fifty units when they are completed. " Finally, as he wished, Kurahashi purchased fifty tape recorders, costing 120,000 yen each. He wrote a check for 6 million yen and immediately carried the fifty G-type tape recorders to the Tokugawa family warehouse in Mejiro. He was overjoyed.

The next day, Kurahashi set about taking the tape recorders to prospective customers with a letter of introduction from Marquis Tokugawa. As might have been expected, all the names given by the Tokugawa family proved to be quite decent ones. Kurahashi priced the tape recorder at 168,000 yen, but nobody would say, " Too expensive. " On the contrary, they would say in admiration, " I have never seen such an interesting machine before. " But still, nobody would buy it. Kurahashi worked endlessly day after day, but could not sell a single unit.

A Tough Customer

  • Norio Ohga
Another person visited Totsuko while the company was trying to raise capital. This was Norio Ohga, a student at the Tokyo National University of Fine Arts and Music.

Although a music school student, Ohga was interested in mechanical things. As he had read much technical literature from abroad, he knew a great deal about foreign-made tape recorders. So Ohga asked many technical questions about the mechanisms of the G-type product, how the sound was amplified, what performance level the tape offered, and the lik.e The music sutdent even discussed what the tape recorder should be like. But on this occasion, Ibuka was so busy that he could spare only a short time for Ohga.

Ohga then spoke to many people and insisted, that " Tape recorders should be actively employed by music schools. Musicians must train themselves with a tape recorder just as ballerinas study dancing by looking at a mirror. " Even though tape recorders were considered a luxury which people could not afford so easily, the university finally approved the purchase.

The G-type tape recorder performed well in comparison with other tape recorders available in those days. But this product was adequate only for recording speeches and ordinary conversations. For music students like Ohga, the G-type left plenty of room for improvement in sound quality. The most critical problem was that transient sounds, like those made by a piano. These would all be blurred when recorded and played back. Thus, there was a limit to what the machine could do interms of recording music. Ohga discussed areas needing improvement with the people at the university. He prepared a sheet of specifications and presented it to Totsuko through Kurahashi. He noted what the frequency characteristics should be, and said that if wow and flutter could not be controlled below a certain level, the machine would not work.

  • A desktop tape recorder for broadcasting and commercial use completed in August 1950. Here, Mr. Kihara conducts the first demonstration at NHK.
Ohga visited Totsuko again to discuss the improved specifications. He was able to talk with Ibuka at some length this time. They thoroughly discussed the requirements for recording music and agreed that an impedance roller should be incorporated into the recorder so as to minimize the sound distortion, also known as wow & flutter. Iwama and Higuchi also participated in this discussion.

Athough Ibuka initially regarded Ohga just as " another music school student, " thinking that he could confuse him by throwing technical terms around, Ohga challenged Ibuka's expertise instead. " My goodness, " thought the impressed Ibuka, " His knowledge of tape recorders will put a professional to shame. " He fell for this meddlesome and magnanimous young fellow. From then on, Ohga would frequent Totsuko serving as a self-appointed, unpaid supervisor.

"Don't Come Back Until You Finish It"

  • The H-type tape recorder
Meanwhile, Morita and Kurahashi began to seriously examine their sales methods. They had learned by then that no matter how many new products Ibuka developed or despite any technical merits these new products may offer, customers would not buy them unless they knew how to use them. So they started to study how tape recorders could actually be used in order to generate demand. By accident, they came across an American tape recorder pamphlet entitled "999 Uses of the Tape Recorder." This pamphlet conveniently listed possible uses in alphabetical order. Needless to say, not all of the 999 uses were applicable in Japan, but Morita and Kurahashi continued their research and became convinced that the tape recorder could be used in a wide range of social activities.

At the same time, they stepped up engineering efforts to improve the machine itself. The G-type tape recorder was too heavy, bulky, and expensive to be sold as a consumer product. So they put all of their heads together and discussed possible ways to improve their tape recorder for home and school-use.
"The G-type tape recorder is too bulky. If we make a more portable tape recorder, it cannot fail to sell," stressed Ibuka. Inspired by this, Nobutosi Kihara went home and laid awake all night, thinking of ways to streamline and improve the product. The next day he drew up a plan as soon as he got to the office. Based on this plan, Kihara and the engineering staff began work on two prototypes. Together with their half finished prototypes, they locked themselves up in a hotel room at a hot springs resort in Shizuoka Prefecture, because Ibuka had to I'd them, "Don't come back until you finish it." He realized that if they worked in the office, they would be subject to too many distractions like phone calls and visitors. Ibuka wanted them to concentrate totally on their work. The outcome of this "Lockup Incident" was the H-type tape recorder for home-use.

"Dig a Trench Before You Drain Water"

  • Akio Morita himself prepared "Tape-based magnetic recording" - What is the tape recorder?
With its long-awaited completion, the H-type tape recorder became the first consumer tape recorder model and was marketed in March 1951. It weighed only 13kg, which was less than a third of the original G-type tape recorder. The H-type tape recorder, which came in a case, boasted a chic design, for it was the first Totsuko product designed by industrial designer Sori Yanagi.

With the introduction of the H-type tape recorder, Kurahashi's consumer education program and others activities began to pay off, and school orders increased. at that time, using audio visual aids in schools had just begun to become accepted in Japan (as it was incorporated into Occupation policy). The idea was to present 16mm educational films as a visual aid while playing NHK radio for listening. The intention was to move from Japan's pre-war educational style based on conceptional practices to one which made use of audio visual teaching aids.

Totsuko decided to take advantage of this trend by offering various radio programs on "sound cans" and editing them to suit the school's curriculum. Meanwhile, the Ministry of Education and NHK organized conventions with teachers all over Japan to discuss how to use the school hour broadcasts more effectively. Even though Totsuko was a small company with a tight budget, Ibuka and Morita were sympathetic and willing to lend several dozen H-type tape recorders for use at these conventions.
At the same time, Kurahashi and others thought about possible uses of tape recorder in subjects other than those offered in schools. They started discussing such possibilities with the Ministry of Education and teachers, in order to arrive at the most effective use of tape recorders.
Shortly after this study got under way, Morita summoned Kurahashi and said, "You are doing a very good thing. Why don't you tour around Japan and talk about what you have learned so far?"

  • 1955 - using audio visual aids in schools.
Thus, Kurahashi was assigned to give lectures at schools all over Japan as managing director of the Society for Sound Recording in Education, formed within Totsuko, on the theme of "How An Audio Visual Education Should Be Offered." This was done under the sponsorship of a private society, because if he had spoken as sales manager of the Tokyo Recording Company, people would not have come to hear him.

Not many people would have been interested in hearing a mere sales pitch for the tape recorder. In fact, Kurahashi never said, "Please buy the Totsuko tape recorder," or anything resembling that during his lectures. He only stressed the importance of an audio visual education and elaborated on the uses of a recording machine for educational purposes.

Perhaps because this approach was appreciated, Kurahashi received one request after another to speak on the subject. And Kurahashi, for his part, learned a lot from teachers and enhanced his understanding of the actual classroom situation. In an abacus class, for example, the tape recorder proved useful in reading consistent instructions for adding and subtracting figures. It also enabled a teacher to individually teach the students how to use their fingers. Another class, which turned noisy and kept ignoring the teacher's repeated instructions quieted at once when the teacher recorded and played back their babble.

As the saying goes, "dig a trench before you drain water." The education programs conducted by Kurahashi and others bore fruit, and the Totsuko tape recorder rapidly penetrated the school market throughout the country. Through this experience, Morita and his colleagues learned that the real and best market could be found only by developing the market itself.

Marketing Lessons for Morita

  • Ibuka and Morita talking with a factory employee.
One day, Morita noticed that tape recorders were selling particularly well in the Kyushu area. On investigation, Morita found that the entire Kyushu area was very well off due to a boom led by coal mining. This was gratifying for Totsuko, but sales in Kyushu in turn suffered as the coal mining boom suddenly cooled off and the regional economy started waning fast.

During the time it enjoyed extremely good sales in Kyushu, Totsuko depended almost totally on that single region. So when sales in Kyushu suddenly dried up, Totsuko, still a small company, was easily dragged into a loss. How could the loss be covered? Fortunately, the company somehow managed to get over this difficulty with slight sales increases in other regions.

"If we had depended on Kyushu alone, Totsuko would have gone bankrupt." It then occurred to Morita, what would have happened if the company had depended only on Tokyo and if Tokyo had been hit by a big earthquake? So he clearly realized how risky it would be for the company to limit sales to only one area.

"The wider the market, the better. If so, selling only in japan can be just as risky. It would be safer to depend on the entire world. We are not ready yet, but we must expand our market worldwide," Morita thought. With a big market, Totsuko could always find one region or another in which to sell its products, no matter what might happen in a particular locale. Thus, Morita and his colleagues agreed that it would be safer for the company to draw sales from as wide a market as possible. Though it might sound like a simple solution today, this proved to be a very valuable lesson to Morita and the others who had very little marketing experience.

One of the keys to Totsuko's success in tape recorders was the fact that they had the patent on AC Bias Recording. This patent enabled Totsuko to virtually monopolize the market. Yet the license would eventually expire, like any other patent license. Fully aware of this, Morita and the others worried very much about the expiration as that day was fast approaching. When the patent was about to expire, they heard that Matsushita Electric Industorial Co., Ltd would enter the tape recorder market. It could be nothing but a threat to have such a big company directly in competition.
But then something mysterious happened. As Matsushita Electric Industorial Co., Ltd launched its tape recorder sales campaign, Totsuko sales rose in collelation. Everyone puzzled over this phenomenon. After about a year, Totsuko had achieved a dramatic sales increase. As competition increased, Totsuko's sales increased further.

  • A production line of the P-type tape recorder.
Through this phenomenon, Morita and the others learned a strange lesson : one company should not monopolize a market even in such a small country as Japan. Markets would be stimulated by the presence of many competing companies. Totsuko, as a future leader in new product development, fully realized that it could not be effective in stimulating ting the growth of a new market. create a new market by itself alone.

It would be another story, though, if Totsuko products were inferior in performance to those of its competitors. But Totsuko had a five-year lead over its competitors, a lead that it had gained by tha sheer intensity of its efforts. Backed by this fact, Morita and his colleagues were confident that Totsuko products were highly competitive in both quality and price. As long as they persevered with this policy, they had no need to fear any competitors that might come along. In fact, Totsuko could only benefit from competition. Through those two lessons, Morita gradually but surely acquired sales and marketing expertise.

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