Company history

Sony began in 1946 as Tokyo Tsushin Kogyo — “Totsuko” — set up by the ex-navy engineer Masaru Ibuka and the sake-brewer’s son Akio Morita in the burnt-out ruins of a Nihonbashi department store, with capital of ¥190,000 and about twenty employees. In an electronics industry where the giants competed on plant and distribution, a tiny firm could not hold its own on technology alone — so its first weapon was not a product but a patent. In 1950 Ibuka bought the high-frequency-bias tape-recording patent for $694 (¥250,000) and used it as a barrier that shut Toshiba, Hitachi and Matsushita out of the tape-recorder market until 1960, buying a decade in which to build real engineering and manufacturing muscle.

In 1954 Ibuka licensed Bell Labs’ transistor patent for $25,000 (¥9m), pouring most of the profit earned from tape recorders into semiconductors; where the licensor imagined hearing aids, Ibuka aimed at radios. The first Japanese transistor radio, the TR-55, followed in 1955, but at $56 (¥20,000) it was too dear for Japanese buyers. The answer came from Morita, who moved to New York, refused an American distributor’s offer to supply radios under its own label, and bet instead on exporting under Sony’s own SONY mark — an unusual choice for a Japanese maker of the day. The company renamed itself Sony in 1958, listed in Tokyo, and in 1961 became the first Japanese firm to issue an ADR.

The Trinitron colour television (1968), with its brighter single-gun tube, and the Walkman (1979) — which Ibuka pushed through over internal objections by stripping out recording to make a pure player — turned Sony into a global brand that helped define the world’s consumer-electronics market, with revenue nearing ¥1 trillion by the end of the 1970s. Yet in that same year, 1979, Sony also entered life insurance in a venture with Prudential, an early hedge against the fragility of living on hardware sales alone — the first crack in its electronics-only base, opened in the very year of the Walkman’s triumph.

The world’s first CD player (1982), co-developed with Philips, and the memory of Betamax losing to VHS on the sheer supply of content, pushed vertical integration to the centre of Sony’s strategy: own both the hardware and the software that plays on it. Sony bought CBS Records for about $2 billion in 1988 and Columbia Pictures for about $4.8 billion in 1989 — roughly $6 billion sunk into Hollywood in two years, a sum that made Sony a symbol of Japanese money buying “the soul of America.” Columbia then bled money and cost overruns, forcing a $2.6B (¥270bn) write-down in 1994; but a film studio and a record label were now permanent parts of the portfolio, and they would define Sony’s profits for the next thirty years.

In 1994 Sony launched the PlayStation. Choosing CD-ROM over cartridges cut developers’ costs and drew a wide field of outside studios; within six years it had shipped 100 million units and overturned the Nintendo-and-Sega order, and the PlayStation 2 (2000) made games Sony’s second pillar after electronics. But the wider the businesses spread, the thicker the internal walls grew: the 1994 “company system” sharpened each unit’s profit responsibility yet walled hardware off from software. When Apple swept the music-download market with the iPod and iTunes in 2001, the maker of the Walkman was left behind — beaten not on technology but by an organisation that would not let its own parts combine.

In April 2003 a downgraded forecast sent the shares limit-down for two straight days and dragged the whole Nikkei average with them — the “Sony Shock,” which laid bare a structural decline in electronics. Howard Stringer, the first foreign CEO (2005), could not stop the losses; the 2008 financial crisis and a soaring yen then drove Sony to its first-ever operating loss in the year to March 2009, and losses recurred until a record net loss of $5.7B (¥457bn) in the year to March 2012. From the iPhone’s arrival in 2007, the value Sony had bundled into hardware drained into the smartphone, and about ¥2.4 trillion of annual revenue evaporated in four years.

Kazuo Hirai, from the PlayStation side, became president and CEO in 2012, and his first move was less about what to grow than what to shed. He sold the VAIO PC business to a fund and spun off televisions in 2014, and in 2017 handed the lithium-ion battery business — a technology Sony itself had commercialised in 1992 — to Murata, which took on about 8,500 of its staff. Rather than close plants and cut jobs, Sony passed loss-making businesses on with their factories and people intact — a workable template for how a large Japanese firm can let go of a shrinking business.

What Hirai kept were five fields — PlayStation, CMOS image sensors, music, film and finance — and image sensors, spun into Sony Semiconductor Solutions (2016), grew past a 40% world share on smartphone cameras and carried the group to a record operating profit in the year to March 2018. Kenichiro Yoshida, a former CFO, took over in 2018 under the banner of “purpose,” fully acquired Sony Financial for $3.7B (¥396bn), and in 2021 renamed the parent Sony Group, hiving electronics off into a subsidiary and completing a pure holding-company structure. Net profit reached $9.4B (¥1.03tn) that year — one of the rare ¥1-trillion results by a Japanese company — with games, music and film together supplying nearly half of revenue.

In 2022 Sony bought the American studio Bungie for about $3.6 billion, extending the “IP as an asset” method learned in film and music into live-service games, and formed Sony Honda Mobility with Honda to build EVs from its sensing and entertainment technology. The reach of the group widened again — though the returns from mobility remained unproven — and the portfolio reshaping Hirai had begun reached a milestone: a company built on televisions a decade earlier was now an entertainment-and-technology group.

Hiroki Totoki, another former CFO, became president in 2023 and CEO in April 2024, and set about finishing the purification into an entertainment company. In September 2025 he partially spun off Sony Financial Group and re-listed it on the Tokyo exchange, cutting the parent’s stake to under 20% — letting go, in five years, of the very finance arm Yoshida had fully absorbed in 2020. Structured as Japan’s first tax-qualified partial spin-off, it returned finance to independent capital without triggering tax for the company or its shareholders.

In the same October, Sony split its stock five-for-one to widen its individual-shareholder base and pressed on toward a business concentrated on games, music, film and image sensors. Group sales reached about ¥13 trillion in the year to March 2025 with operating profit above ¥1.4 trillion — the shift into an entertainment-and-technology company achieved in the numbers — even as the open question remained whether a lighter Sony Group can raise its capital efficiency and whether a freed Sony Financial can grow on its own.