Sony changes the melody to face Bose, Apple & # 039; s Beats
Sony changes the melody to face Bose, Apple & # 039; s Beats
The audio business seven years ago, he discovered that the staff prided itself on being the world number 1 in headphones, in terms of units sold. But he was appalled by the amount of $ 10 headphones sold with the minimum benefit at grocery stores.
"What is the point of that? Where is our brand image?" Mr. Takagi remembers telling the employees.
Let's move on to this fall and the international electronics show in Berlin, where Mr. Takagi was showing the latest version of his flagship product, a pair of wireless headphones with noise cancellation of $ 350.
Ichiro Takagi speaking at the IFA electronics fair in Berlin in August.
Photo:
Sony
The premium-price headphone market has been largely dominated by Bose, the popular industry pioneer among frequent travelers, and Beats, the fashion brand acquired by
Apple
Inc.
AAPL -1.59%
for $ 3 billion in 2014. Everyone shares the challenge of attracting listeners who already get free headsets with their smartphones.
Sony said that in May it has 11% of the headphone market in terms of revenue, the third largest segment. He did not name the first two companies.
The audio business, where Sony has been a player since the 1950s, is an excellent example of how it became profitable in recent years, even in a traditional hardware business that once seemed like a lost cause. For the year ending in March, sales of the audio unit increased for the first time in 20 years, after having fallen 80% since the peak.
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The global headphone market has expanded, thanks in part to services like Spotify.
More important to Chief Executive Kenichiro Yoshida, the home electronics division, which includes audio and televisions (another former money loser), posted operating profits of nearly $ 800 million for the year, which helped Sony achieve a overall record gain. Mr. Yoshida expects to match approximately that record in the current fiscal year: Quarterly earnings on Tuesday will give a progress report.
The rise of Spotify Technology SA and other music services has been good for headset manufacturers, increasing the time consumers spend listening. Streaming companies such as Spotify and Deezer, based in France, offer high resolution services that have expanded the market for higher quality headphones that cost hundreds or even thousands of dollars.
DMP-Z1 Digital Music Player Signature Series, which costs $ 8,500.
Photo:
Sony
The latest releases of Sony products include a pair of headphones for $ 280; an $ 8,500 portable music player for audiophiles goes on sale in December, with a gold-plated volume controller and a drum system designed to reduce noise.
In the first generation of portable MP3 music players, "the quality of the music sources was poor," said Sony's audio executive, Yoshinori Matsumoto. "We could not promote high-end listening devices because they highlighted the harshness." Now, better technology has "made high-quality music more accessible to both customers and creators," he said.
The audio has been parallel to Sony's highs and lows throughout its 72-year history. The Walkman in 1979 sparked a revolution in portable electronic devices, with Sony at the helm. But in the 2000s, Sony let Apple and the iPod take the dominant position.
A cyclist listened to his portable cassette player in Chicago in August 1981.
Photo:
Charles Knoblock / Associated Press
By 2011, the Tokyo company was almost giving up its old hardware products. "The attitude of management at that time was like, '' If it's more or less right, it's fine, '" said Mr. Takagi, the head of the audio unit.
That changed under then CEO Kazuo Hirai, who took office in 2012, and Mr. Yoshida, who was Mr. Hirai's financial director and became CEO this year. They pressured the audio team to launch cheap products and focus on some high-end models.
Mr. Takagi says that the new administration scrapped an organizational chart that had separate groups of engineers that focused on subcategories like the audio of a car. "I told them to look around the entire industry to find products that consumers are willing to pay extra," he said.
Sony Walkman MDR-3 headphones, left, the first portable stereo cassette player Walkman TPS-L2, second from the left, and a tape recorder TCM-100, in the center, which was exhibited at the exhibition "It's a Sony "in Tokyo in November 2016.
Photo:
News from Kiyoshi Ota / Bloomberg
Sony says the $ 350 headphones can detect the owner's facial shape, hairstyle and presence of glasses, as well as pressure changes in an airplane, all to optimize the noise cancellation function.
"Our latest model is clearly the best in terms of noise cancellation technology," says Mr. Takagi, who is in the habit of visiting electronics stores to hear what customers are saying to sellers. "It's obvious if you ask your ears."
Another Sony rival, especially for younger customers, is Beats. Mr. Matsumoto says that the competition has led Sony to highlight fashion and sound quality. "In China, hearing aids have become part of the attire for young people, and they have to have a style that people want to wear all the time, even when they're not listening," he said.
With the changes in Sony's audio strategy, more young engineers are raising their hands to join the department. "Sony was becoming exciting when I was looking for a job," says Mayo Tsuji, a 24-year-old Walkman planner who joined Sony two years ago.
Mr. Takagi said there is more innovation, such as headphones that transmit Internet music on their own without having to be connected to a smartphone.
"Audio will continue to be a profitable business while we continue listening to music," Takagi said. "If we continue to be a strong and respected player in the industry, the whole company will be also because audio is the origin of Sony."
Write to Takashi Mochizuki in takashi.mochizuki@wsj.com
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