If Sony Makes the Effort, It Deserves Prize
Our changing world. Sony Corp., the Japanese electronics giant, has just named an American and a European to its board of directors, the first foreigners elected to the board of a major Japanese company.
The appointments mean “that Sony is a real international company,” says the American, Michael Schulhof, 46, the vice chairman of Sony’s top U.S. subsidiary, who holds a doctorate in physics from Brandeis University. The European director is Jakob (Jack) Schmuckli, a Swiss citizen who is president of Sony’s operations in Europe.
Apparently Sony is multilingual, too, because neither of the new directors is fluent in Japanese. “I speak enough to be polite,” says Schulhof, but that’s no problem because “English is the language of business and science. At a technical company like Sony, there is understanding among technical people.”
To be sure, lack of language skills hasn’t kept either man from big jobs. Schulhof negotiated Sony’s $2-billion acquisition of CBS Records last year, and Schmuckli oversees Sony Europe’s $3.7 billion in sales--23% of the company’s $16-billion worldwide total.
But appointing them to Sony’s 35-member board is important because it signals that Sony wants to be known as a global citizen more than a Japanese one. And that presents both opportunities and ambiguities for countries where Sony sets up shop. Specifically, if the U.S. government is giving research grants, does a Sony qualify or only American-born companies?
The question is at the heart of global business. And Sony, a name--from the Latin sonus for sound--coined with global sales in mind, is a good case study.
Patents on Laser Lens
Sony was the first Japanese company to license Bell Labs’ transistor, for its pioneering radios in the 1950s, and the first to sell shares on a U.S. stock exchange in 1960. In 1962, to better understand the American market, Sony’s co-founder Akio Morita moved to New York with his wife and children, ages 10, 8 and 6 at the time.
Morita learned well. Sony today has more than $4 billion in U.S. sales, produces at six locations and is able to attract talented Americans--like Schulhof, a one-time fellow at Brookhaven National Laboratories, who went to work for Sony in 1974 because he found a place where physics was more welcome than finance.
The priorities are a Sony strength. “We ask the advice of financial people,” says Schulhof, “but they cannot decide on new products or markets. We invested heavily in compact disks before there was any market.”
The company not only leads the world in compact disks but also holds patents on the laser lens that is a CD player’s critical part. More than gadgetry, it sells technology.
Now Sony has set its sights on taking the lead in high-definition television, the next development in video. But not from Japan alone--Sony will do most of its HDTV research at its facility in San Jose.
That makes it eligible for some of the $30 million in HDTV research grants being offered by the Defense Department. (Other foreign firms, Philips of Holland and Thomson of France, are also in line.)
So Sony’s ambition presents opportunities--but also a threat to potential U.S. competitors. For Sony’s HDTV efforts are aimed at winning new customers in the motion picture business--for high-definition film editing and camera equipment. Years ago Sony won from U.S. competitors the business of supplying broadcast equipment to TV studios. Now it hopes for a similar victory in motion pictures.
It’s making the commitment: Two weeks from now Sony will raise $1.7 billion through a sale of shares. “The money will be invested in hardware, particularly to expand semiconductors (a critical element of HDTV),” says Schulhof.
And it’s making progress--Panavision, the big camera maker for movie studios, will use Sony’s technology with its new lenses.
The question, of course, is whether it’s proper for a tough competitor like Sony, still a Japanese company after all, to get U.S. government help?
Perhaps surprisingly, the answer from a lot of top U.S. business people is yes. “That’s OK,” says one, the president of a major corporation. “It makes the effort, it deserves the prize.”
That fair-minded Americans will find themselves agreeing with that sentiment is quiet evidence of how the world is changing.
