Morita

"I was aware that Sony was struggling with a programming investment. So I asked a pointed question: “How do you like your Columbia investment these days?” Less than two years earlier, in 1989, Sony Corp. had plunked down $3.4 billion to buy Columbia Pictures Entertainment, and the studio had subsequently spent billions to bring on new leadership and settle lawsuits, then taken painful write-downs on big box office flops. Dick gasped at the question, unaware of my intent. Morita, a World War II vet from the Japanese Navy, was very western, but he had the calm reserve of the East, and he smiled a confident smile. Sony had weathered many storms, and it had learned lessons the hard way: Sony had led the world with the superior Betamax standard, only to lose the videocassette war to the VHS format, which was cheaper and ran longer and won wider distribution with Hollywood studios. In admirably polite style, Morita explained the strategy behind the Columbia investment. Sony wanted to supply content, particularly movies, to its hardware customers, and though Columbia faced some headwinds, patient management there would see increasing returns. Thirty years later, Columbia Pictures remains part of Sony’s entertainment group, one of the Big Five in Hollywood. I liked him instantly. My comment, while brusque, got us past the small talk and endless formalities. Within minutes we were deep in conversation about market demand, productivity, and production of HDTV sets and digital video recorders."

"“You’ve built an impressive HDTV set,” I said to Morita. “What if we were to buy ten thousand of ’em? What would it cost us?” Morita talked to his deputies and they retreated to a corner for a moment. When we reconnected minutes later, Morita smiled politely and said, “We can build them for seven thousand U.S. dollars apiece.” Which was a great price at the time, because in Japan they were not yet the commodity that they are now. We had seen ads for HDTV sets for $30,000. Then the visiting cable team was off by themselves, too. “Hey, John, we didn’t bring our checkbook, and I’m not authorized to spend anything!” said one CTO, concerned we were in the middle of a purchase order. The intention wasn’t to buy HDTV sets, I explained. A simple question like that will get you answers from Sony about how they’re thinking about high-volume production. What are they pricing sets at, how many can they make, and how quickly can they penetrate the market? All these things, just by asking a question."