Japan, Sony’s headquarters.
“What’s going on? Why are our Walkman sales dropping last quarter? What is the Sales department doing?” Norio Ohga was furious. He was reprimanded by the President this morning.
This was because that in contrast to their drop in Walkman sales, AIWA Walkman’s sales were increasing. Sony had owned AIWA before, and because of AIWA had been making losses, Sony was dragged down too. Coupled with the financial crisis, Sony got to offload some of their assets, and that’s the reason why they sold off AIWA shares to Feng Yu.
But they did not expect that AIWA had already developed their new product at the time of the sales. Heitaro Nakajima had not told Sony about their product development. If Norio Ohga had known about this, he would never sell off AWIA shares. With this new product, AIWA would be making profits this year and will settle all their debts within 3 years.
Sony and AIWA’s agreement to work together against other competitors were still in force.
Now, it seems that this agreement was a success. The other Walkman brands could no longer compete with them. But Sony never expects AIWA to overtake them. From the last quarter sales, AIWA will be on par with Sony this year. What about next year?
Was this Norio Ohga mistake? Everybody had agreed on the sales of AIWA share in the first place, and he was only the Vice President. If the President and the board of directors did not agree, will the sales go through? These people just want to take all the credit, and if anything happens, he would have to take all the blame.
The sales department chief was standing in front of Norio Ohga, bowing his head, letting him scold. After Norio Ohga vented his frustrations, he asked the sales department chief to explain why AIWA’s market share was increasing and in which area their product was better than Sony.
AIWA was still using old production lines, and these production lines were producing single tape head. Single tape head only allows playing music and cannot do any recording. This lowered AIWA’s manufacturing cost and it was still in-line with China’s market at that time. Feng Yu was clear about this. Although China was slowly allowing the cassette player to have a recording function, it was not all regions. Without this recording function, AIWA Walkman can be sold everywhere in China.
Furthermore, people typically use Walkman to listen to music and seldom people will use the recording function. Walkman recording quality was also not as good as those bigger music players.
AIWA’s BEE system also have better sound quality and those that like to listen to music will prefer AIWA Walkman. Coupled with the headphones, AIWA’s technology was catching up with Sony, and this caused Sony’s sales to dip.
The most prominent was Japan and China market. In the Japanese market, AIWA well known for better quality products. Norio Ohga could still accept AIWA overtaking them in the Japanese market. But what about the Chinese market? Why was AIWA so popular in China?
In the past, AIWA had tried to enter the Chinese market. But at the time, they used the English characters AIWA brand, and no one knew about this brand. In the end, AWIA gave up. But since setting up Hong Kong Aiwa company and using AIWA (Chinese characters) to enter the Chinese market, the sales had overtaken Sony within a month.
Sony’s sales department chief had analyzed the situation and had come up with a few reasons. First, AIWA this brand name. It was easy recognized by the Chinese and they thought that it was a Chinese product. The advertising message, “AIWA electronics, I Love China” was emphasizing this too. Secondly, AIWA’s products did not position as a portable music player. Instead, it was marketed as a learning tool for people to learn languages. This resulted in parents to buy their Walkman for their children. Their first choice was AIWA Walkman. Thirdly, AIWA had shamelessly used other Walkman to make comparisons. They had used a Sony Walkman for comparison. By comparing, it clearly shows the differences in quality. Those music lovers all prefer AIWA Walkman!
There were a few other reasons, but those were not the main reasons. For example, AIWA had better sales distribution channels. Within a week, AIWA products can reach every major city in China, and there were TV commercials and soft advertising on the newspapers. AIWA had invested a lot in their TV advertisements. Another reason was AIWA had given their dealers higher profits, and those dealers prefer to recommend AIWA products to the consumers.
After listening to the report, Norio Ohga asked: “How are you going to explain for the Western markets?”
Europe and the US Walkman market leader had been Sony, and now AIWA was catching up. Are all those reasons given by the sales department chief relevant to the western markets too?
AIWA had also advertised in Europe and the US. The commercial showcased the quality of AIWA Walkman and AIWA gave up on having the traditional black color Walkman for different colors. The attractive exterior designs and colors attracted many female consumers.
Sony had not thought of this. Their Walkman was lacking in both the design and quality aspects. That’s why their latest model of Walkman was not doing well.
What worried Norio Ohga the most was why Heitaro Nakajima had kept such vital information from him. After that Chinese guy invested in AIWA, Heitaro Nakajima immediately introduce a new product. That means AIWA had more than one product. If AIWA continues to introduce better quality Walkman in the following year, then the market leader in the Walkman industry will no longer be Sony.
If this really happened, it would be a disaster for Norio Ohga. The current President bought Colombia Pictures and resulted in the company making losses. Many people wanted him to take over the role of President. As a shareholder of Sony, he had a high chance to take over this position.
But if Sony Walkman position as the market leader was overtaken by AIWA, Norio Ohga, the one who proposed the sales of AIWA’s shares, might not even keep his position as the Vice President!
No. AIWA cannot continue to grow. They must suppress AIWA and let them continue to help Sony ward off other competitors!
Norio Ohga had been focusing on the collaboration project with Nintendo and had neglected the Walkman market. If not, he would not let AIWA have the chance to develop so fast!
Norio Ohga suddenly remembered the reason why he sold off AIWA shares and why the board agreed. It was because AIWA was heavily in debt. The debts amounted to more than 10 times its market value!
In the past, it was because of Sony, the banks did not chase after AIWA for repayment. But now, it was time for the banks to go after AIWA for repayments.
Without funds, AIWA would not be able to get their manufacturing materials, and their growth will come to a standstill.
Nothing good will come by competing with Sony!
