Speaker 1: Welcome to tex Stuff, a production from I Heart Radio.
Speaker 1: Hey there, and welcome to tech Stuff. I'm your host,
Speaker 1: Jonathan Strickland. I'm an executive producer with I Heart Radio
Speaker 1: and I love all things tech. And welcome to the
Speaker 1: third and and final, at least for now episode in
Speaker 1: our series about the history of Pana Sonic a k a.
Speaker 1: The Mattsushida Electrical Industrial Company. At the end of our
Speaker 1: last episode, I talked about how Konosuke Matsushida, who founded
Speaker 1: the company in nineteen eighteen, retired as chairman of the
Speaker 1: company in nineteen seventy three. He stepped into a more
Speaker 1: informal executive advisory role at that time. Now, I say that,
Speaker 1: but executive advisors in Japan can exert and any formous
Speaker 1: amount of control over companies even after they have officially
Speaker 1: stepped out of leadership roles. More on that as we
Speaker 1: go on. We also heard about allegations that Panasonic, along
Speaker 1: with several other major electronics companies in Japan, had practiced
Speaker 1: price fixing, both in Japan domestically, where the companies would
Speaker 1: sell products at a premium, and in the US market,
Speaker 1: where these same companies would sell products at a loss
Speaker 1: in order to undercut American electronics companies and kind of
Speaker 1: gain the market in the US. So while the company
Speaker 1: history has a lot of positive elements, there are at
Speaker 1: least a few smudges that warrant investigation. We'll talk about
Speaker 1: a few more of those in this episode, but we
Speaker 1: pick up in ninety three. Masaharu Matsushida, Kanasuke's son in law,
Speaker 1: is still the president of the company at that time,
Speaker 1: and uh Arataro Takahashi is chairman. Takahashi had played an
Speaker 1: important role in establishing matsushi It's relationship with the Dutch
Speaker 1: electronics company Phillips, and Phillips had really helped the Japanese
Speaker 1: company get up to speed on the consumer electronics industry. Essentially,
Speaker 1: Phillips was providing the technical know how and Matsushida was
Speaker 1: providing the access to the Japanese market, and it was
Speaker 1: a beneficial relationship. Phillips had retained a nearly thirty five
Speaker 1: percent stake in the company as a result. Uh and
Speaker 1: Takahashi was instrumental in getting that to happen. It's interesting
Speaker 1: to see that he became the chairman while Masaharu remained president,
Speaker 1: because typically it wouldn't work that way. So we need
Speaker 1: to consider how Japanese businesses typically handle succession, and this
Speaker 1: will become even more important as we go on in
Speaker 1: this episode. Now, it's not that different from the way
Speaker 1: many other companies handle succession, particularly those that tend to
Speaker 1: look within the company itself as opposed to bringing in
Speaker 1: a leader from some other company. In Japanese companies, it's
Speaker 1: typical for a president to move to a chairman position
Speaker 1: when the previous chairman retires, and it's not unusual for
Speaker 1: a chairman to take on one of those informal executive
Speaker 1: advisor roles on the board, so even when they're gone,
Speaker 1: they aren't really gone, or as Red Letter Media likes
Speaker 1: to say, nobody has ever really gone. Normally, one of
Speaker 1: the most senior level executive vice presidents of the company
Speaker 1: will then assume the role of president, and so seniority
Speaker 1: plays a massively important part in succession in Japanese businesses,
Speaker 1: as well as in wages. Typically, though, we learned there's
Speaker 1: also a tendency for control of a company to remain
Speaker 1: within a family, which could be another way that an
Speaker 1: outgoing executive keeps one hand on the steering wheel even
Speaker 1: after they've officially retired. Takahashi certainly had been around a
Speaker 1: long time. He had worked at the company since the
Speaker 1: nineteen thirties, and he played such an important role in
Speaker 1: getting that relationship with Phillips established, But in this case
Speaker 1: he sort of leap frogg massa Haru. I couldn't find
Speaker 1: much information on what was going on at the executive
Speaker 1: level at this time, but my assumption is that Konasuke
Speaker 1: felt that Massaharu was best left in the president position
Speaker 1: for a little while longer, and that he would move
Speaker 1: up to chairman in the future. And perhaps there wasn't
Speaker 1: someone that impressed Konosuke enough to step into the role
Speaker 1: of president, so he won Masaharu to remain there. Because again,
Speaker 1: while he was officially retired, Konosuke was still very much
Speaker 1: involved with the operations of the company that he had
Speaker 1: founded way back in nineteen eighteen. One of Kanasuke's directives
Speaker 1: was having a profound impact upon the company and really
Speaker 1: on the electronics industry in Japan in general, and that
Speaker 1: was his goal of getting wages in Japan close sor
Speaker 1: to what US companies paid their employees over here. And
Speaker 1: this wasn't just an altruistic desire to reward employees, but
Speaker 1: to encourage productivity and to be more competitive for skilled
Speaker 1: and educated workers in an increasingly competitive industry. But it
Speaker 1: also meant things had to change. From a production standpoint.
Speaker 1: Raising wages would mean increasing the cost of doing business,
Speaker 1: which would impact profits. So one of the things the
Speaker 1: company focused on was streamlining processes as much as possible,
Speaker 1: making them more efficient and economic. This included automating processes
Speaker 1: whenever it made sense to do so, and the end
Speaker 1: result was that by the nineteen seventies, Matsushido was one of,
Speaker 1: if not the most efficient large company in Japan, even
Speaker 1: over companies like Toyota. By nineteen seventy one, wages at
Speaker 1: Matsushida were comparable to those in West Germany, and you know,
Speaker 1: if you're young, you might not know that there used
Speaker 1: to be an East and a West Germany. By nineteen
Speaker 1: seventy two, just before Kanasuke would retire, the wages were
Speaker 1: actually pretty close to what employees were doing in comparable
Speaker 1: jobs in the United States. While this was happening, an
Speaker 1: external crisis made things more complicated for the company. In
Speaker 1: the autumn of nineteen seventy three, when a coalition of
Speaker 1: Arabic forces launched a surprise attack on Israeli forces. It
Speaker 1: created the yam Kapoor War. It took place during Yom Kippur,
Speaker 1: a Jewish holiday, and sometimes it's called the yam Kappur War.
Speaker 1: Sometimes it's called the Ramadan War. It was also coinciding
Speaker 1: with the Muslim holy month of Ramadan. And this war
Speaker 1: only lasted a few weeks, but the world was drawn
Speaker 1: into it because of various alliances, including the Soviet Union
Speaker 1: on one side in the United States on the other side.
Speaker 1: And the complexities of that conflict are well beyond the
Speaker 1: scope of this show, but the effects on industry are
Speaker 1: what I hope to focus on. It does play a
Speaker 1: part in techno oology. At the end of the war,
Speaker 1: a coalition of Arab countries decided upon an oil embargo
Speaker 1: against the US and other nations, and this led to
Speaker 1: a global energy crisis. As oil production slowed down. Japan
Speaker 1: was not immune to this crisis. The cost of raw
Speaker 1: materials increased, as did the cost of shipping stuff from
Speaker 1: one place to another. I mean that oil embargo was
Speaker 1: going to have an impact on fuel prices, which would
Speaker 1: make it more expensive to ship things, which meant that
Speaker 1: you had to charge more for your products, and you
Speaker 1: see how this becomes a ripple effect, and Mattsushida was
Speaker 1: trying to be as strategic as it could be to
Speaker 1: limit the effect that the crisis would have on sales figures.
Speaker 1: But even so, the company posted a decrease in profits
Speaker 1: in nineteen seventy four compared to nineteen seventy three. It
Speaker 1: also had more sales during that time, but it wasn't
Speaker 1: profiting as much. Even though it was selling more, it
Speaker 1: was making less money, and both sales and profit would
Speaker 1: be on the decline in nineteen seventy five. One product
Speaker 1: the company introduced in nineteen would fail to get traction
Speaker 1: in the market at all. So in the nineteen seventies
Speaker 1: a few companies were battling it out to create the
Speaker 1: definitive home entertainment media playback device, and this took a
Speaker 1: lot of different forms, all of which were in some
Speaker 1: level of competition against each other. Some of them were
Speaker 1: playback only devices, like you would have to go out
Speaker 1: and purchase a movie or TV show or rent one
Speaker 1: and play it on a device. So the Capacitance Electronic disc,
Speaker 1: which was made by our c A, was one of
Speaker 1: those types of devices. I actually have one of those
Speaker 1: literally at my feet right now, an old CD player,
Speaker 1: the laser disc player from m C. A Disco vision
Speaker 1: would also be another one, But I want to talk
Speaker 1: about VCRs. So VCRs, or video cassette recorders, are one
Speaker 1: of those technologies that had a huge impact on how
Speaker 1: we consume entertainment, and I might do an episode of
Speaker 1: out that in the near future about how the development
Speaker 1: of the VCR changed entertainment itself. And there were a
Speaker 1: few formats that all did the same general thing, but
Speaker 1: with different approaches. Generally speaking, these machines used magnetic storage,
Speaker 1: much as audio tape had. In order to store video
Speaker 1: and audio information, a VCR has at the very least
Speaker 1: an electro magnet that acts as a reading head, and
Speaker 1: as tape moves below this reading head, the tape induces
Speaker 1: a current to flow through that electro magnet because of
Speaker 1: the magnetic particles that are in the tape, and that
Speaker 1: flows through the VCR, and that current is a signal
Speaker 1: it's meaningful, it can be decoded, and that decoded information
Speaker 1: can be sent to a television and potentially an additional
Speaker 1: sound system as well, and that will play the media
Speaker 1: that is stored on the tape. Most VCRs also had
Speaker 1: the capability to write to a blank tape or record
Speaker 1: over an unprotected tape, and that meant this whole process
Speaker 1: could be reversed and the electro magnet would generate a
Speaker 1: magnetic field, and the magnetic field would be recorded onto
Speaker 1: the plastic tape that passes by during the recording process.
Speaker 1: I'm sure most of you have heard about the format
Speaker 1: war that raged between Sony's Beta max format and j
Speaker 1: v C S VHS format. But while those two would
Speaker 1: be the primary candidates for home theater systems, there were
Speaker 1: other formats that entered the fray, including one from Matt
Speaker 1: Sushida slash Pana Sonic, and that format was called v X.
Speaker 1: Matt Sushida only introduced a couple of models of VCR
Speaker 1: that used the v X format. The version released in
Speaker 1: North America was called the Quasar VR one thousand, also
Speaker 1: known as the Great Time Machine. The v X format
Speaker 1: used tapes that were kind of in a cassette form factor.
Speaker 1: They were larger than VHS tapes twice as thick really,
Speaker 1: and they would slide into the player lenkwise rather than widthwise,
Speaker 1: the way a typical VCR works, and it was marketed
Speaker 1: as the great time machine because you could set a
Speaker 1: timer on the VCR and tape content off the television
Speaker 1: and then watch it whenever you wanted to. So this
Speaker 1: is an early example of time shifting. I've watched videos
Speaker 1: of this technology and action, and it's pretty clunky stuff.
Speaker 1: The tapes take up a lot of space. Uh. And
Speaker 1: ultimately the format just didn't take off, and Matt Sushida
Speaker 1: slash Panasonic discontinued the players a couple of years later.
Speaker 1: It was clear that either Beta Max or VHS was
Speaker 1: going to win out in that war. Now here's a
Speaker 1: kind of crazy part of this story. I mean, sure,
Speaker 1: a company introduces a new format and it doesn't pan out.
Speaker 1: That's not unusual. We've seen it in other formats like
Speaker 1: HD DVD versus Blu Ray. But what is unusual in
Speaker 1: this case is that Matt Soshida slash Pana Sonic had
Speaker 1: a majority stake in the Victor Company of Japan also
Speaker 1: known as j v C, also known as the company
Speaker 1: behind the VHS format, which actually won the format war.
Speaker 1: So JVC started off as a Japanese subsidiary to the
Speaker 1: Victor Talking Machine company that was a US based company
Speaker 1: that manufactured phonographs and later became a record label. For
Speaker 1: a while, j v C was actually part of our
Speaker 1: c A, which had purchased Victor and that came along
Speaker 1: with it. But during World War Two, the Japanese part
Speaker 1: of the company split away from the rest of Victor
Speaker 1: and it became its own entity. In nineteen fifty three,
Speaker 1: Matt Sushida purchased a majority stake in that company, and
Speaker 1: so JVC was effectively a subsidiary of Matt Sushida. Now
Speaker 1: this means that the parent company, Matt Sushida, was putting
Speaker 1: forward a competing product against one from a company that
Speaker 1: Matt Sushida also owned, and also that format lost because
Speaker 1: ultimately the VHS format would win over VX and more
Speaker 1: noteworthy opponents like Sony's Betamax. JVC would remain part of
Speaker 1: the Matsushida slash Panasonic empire until the two thousand's. As
Speaker 1: for the VHS style of VCR, Panasonic would develop and
Speaker 1: sell those to great effect. The VX system not so much,
Speaker 1: but VHS that one worked like a treat. In nineteen
Speaker 1: seventy seven, the company released a brand of VCRs called
Speaker 1: mac Lord Masaharu Matsushida, who had traveled to the US
Speaker 1: and form agreements with various consumer electronics companies for VCR components.
Speaker 1: And this was the dawn of the home theater era,
Speaker 1: and so many things would change because of that, including
Speaker 1: the entertainment industry and the rise of the video rental business.
Speaker 1: But more than a format failure, the tumultuous events and
Speaker 1: the global consequences were likely a big burden for the
Speaker 1: executive team at Matsoshida. So perhaps it's not a huge
Speaker 1: surprise that in nineteen seventy seven, just four years after
Speaker 1: becoming chairman, Takaha she announced his retirement. And this is
Speaker 1: where we get another exception to the typical Japanese success plan. Konosuke,
Speaker 1: in his eighties and technically retired but still very much
Speaker 1: calling high level shots, decided that his son in law
Speaker 1: would become the new chairman, but an unlikely candidate would
Speaker 1: become the next president of the company. That candidate was
Speaker 1: Toshihiko Yamashita. He had been part of Matsushida's air conditioning division,
Speaker 1: so he was a cool guy, I'm sorry before he
Speaker 1: came into that role. The division, the air conditioning division
Speaker 1: was struggling, but under Yamashita, it turned around and it
Speaker 1: became the number one brand in the market in Japan. Now,
Speaker 1: out of the twenty six director level executives at Matt
Speaker 1: Sushida at the time, he was number twenty five in seniority.
Speaker 1: There was only one other director who was more junior
Speaker 1: than he. In other words, while he showed initiative and leadership,
Speaker 1: typically you would not expect him to be a candidate
Speaker 1: for the president of the company. That role would usually
Speaker 1: go to someone who had much more seniority than he did.
Speaker 1: But on January tenth, nineteen seventy seven, Konosuke Matsushita called
Speaker 1: Yamashita into his office. Kona Suke was eighty two years
Speaker 1: old at this point and he had been retired from
Speaker 1: Matt Sushida for four years, but he was clearly still
Speaker 1: calling or at least influencing, the shots at the company.
Speaker 1: Yamashita wrote in his autobiography that he had no idea
Speaker 1: what the meeting was going to be about. He was
Speaker 1: actually really nervous about it, and he says that when
Speaker 1: Kona Suke offered him the position of president, no one
Speaker 1: was more surprised than Yamashita himself. But is that true.
Speaker 1: We'll find out when we come back after these brief messages.
Speaker 1: So that last bit that I mentioned before the break,
Speaker 1: that Yamashita was the most surprised when it came to
Speaker 1: the fact that Kona Suke had decided to offer him
Speaker 1: the position of president of the company, that's actually debatable.
Speaker 1: When news broke that Yamashita would become president and Masa
Speaker 1: Haru would become the next chairman, the press pounced on
Speaker 1: this and they called it the Yamashita Leap, which was
Speaker 1: a sly reference to a different Yamashita. Haru Hiu Yamashita.
Speaker 1: He was a gymnast who won a gold medal in
Speaker 1: the nineteen sixty four Olympics. More than a few analysts
Speaker 1: predicted that this would turn out to be a bad move,
Speaker 1: that Yamashita was not senior level enough to really be
Speaker 1: the proper leader. As Barakona Suke, he saw that the
Speaker 1: company he founded had grown into a really enormous organization,
Speaker 1: and he had also seen that other companies that went
Speaker 1: through this process often struggled or they would even collapse
Speaker 1: under their own weight. Even companies in the United States
Speaker 1: where he had been so impressed during his tours, he
Speaker 1: wanted to learn from the mistakes of others and avoid
Speaker 1: the problems that often come along with explosive growth. Together,
Speaker 1: he and Yamasheeta identified that the company had really just
Speaker 1: grown too complacent. That while the electronics market in Japan
Speaker 1: was different than years past, the lagging sales could not
Speaker 1: all be blamed on market saturation or maturity, or economic recession. Rather,
Speaker 1: they concluded that the company itself just wasn't innovating enough
Speaker 1: or listening to customers as much as it should. Yamasheeta
Speaker 1: definitely shook things up. He felt that the managerial levels
Speaker 1: in the company were overlapping too much, and so he
Speaker 1: actually eliminated an entire management level in order to remove redundancy.
Speaker 1: He also encouraged employees who felt stagnant to switch to
Speaker 1: a different division and thus bring new perspectives and approaches
Speaker 1: to their new coworkers. He also gained a reputation for
Speaker 1: trusting the divisional business decisions to the executive management teams
Speaker 1: at the head of each division. He would only occasionally
Speaker 1: step in himself and direct things, and when you did
Speaker 1: step in, it could be more than a little disruptive. So,
Speaker 1: for example, there was a time when Yamashita essentially made
Speaker 1: a promise to our c A that Panasonic would create
Speaker 1: a four hour long VHS tape, and at the time,
Speaker 1: the internal teams at Matsushida had not yet even made
Speaker 1: a two hour tape. But a promise is a promise,
Speaker 1: and so their teams got to work feverishly tackling engineering
Speaker 1: challenges and ultimately producing the four hour tape, and that
Speaker 1: would go on to be one of the big successes
Speaker 1: for the company at this time because customers loved having
Speaker 1: that much tape to be able to record stuff. While
Speaker 1: matt Sushida slash Panasonic was briefly in the business of
Speaker 1: designing mainframe computers in the nineteen sixties, that environment was
Speaker 1: a little too competitive and Kona Suke had decided to
Speaker 1: withdraw from the computer industry. Yamasheeda took another look at
Speaker 1: the field and decided that the main frame business was
Speaker 1: still too competitive and it was also starting to peter out.
Speaker 1: There was a transition moving toward many computers and then
Speaker 1: micro computers, and so he decided that the company should
Speaker 1: still be in the business, but not in mainframes. He
Speaker 1: wanted to get into the semiconductor business. One of the
Speaker 1: big procedural changes that happened under Yamashida's leadership was in
Speaker 1: the way that the company would lay out its plans.
Speaker 1: Had been creating year long plans for the company, but
Speaker 1: they were finding that the volatility and markets, and the
Speaker 1: various challenges and trade agreements for international trade, as well
Speaker 1: as the fluctuations and currency value often meant that a
Speaker 1: year long plan could easily be disruptive by a few changes.
Speaker 1: It just was too hard to stay on track. He
Speaker 1: gets sidetracked too quickly. So instead, Yamashida and his team
Speaker 1: laid out a three year plan, and that gave them
Speaker 1: enough room to allow for some volatility. Things could go
Speaker 1: a little you know, Las Vegas crazy style for a while.
Speaker 1: Then they could settle down. And if you have three
Speaker 1: years to achieve a goal, even if it's a more
Speaker 1: ambitious goal than a year long goal, and it gave
Speaker 1: you more of a chance for success. This was all
Speaker 1: in an attempt to be more proactive rather than reactive.
Speaker 1: And the reason I bring this up is that we
Speaker 1: often see tech companies, and honestly companies in all industries
Speaker 1: give a fanatical dedication toward short term gains, and sometimes
Speaker 1: that's at the cost of long term success. You could argue,
Speaker 1: and I certainly have argued, that this is kind of
Speaker 1: tied with the business strategy of catering all your decisions
Speaker 1: in some way around returning value to shareholders, which is
Speaker 1: a strategy I'm not terribly fond of because it frequently
Speaker 1: isn't great for anyone in the long term, and it
Speaker 1: really feeds into stuff like speculation, which is not generally
Speaker 1: a good thing. In two, Panasonic was one of the
Speaker 1: first companies to develop a compact disc player. Now, the
Speaker 1: history of the CD actually dates all the way back
Speaker 1: to the nineteen sixties, and mostly in the nineteen seventies.
Speaker 1: Sony and Phillips were both independently developing this technology in
Speaker 1: the seventies, but then ultimately they would join forces Vultron
Speaker 1: style in order to further refine the technology and to
Speaker 1: establish standards. That would be important as it would help
Speaker 1: sidestep the issue of competing and incompatible formats on the market.
Speaker 1: That's something that tends to be a great frustration to
Speaker 1: consumers because there's nothing like going out and buying something
Speaker 1: that's going to run on some form of media player
Speaker 1: and find out that, oh, the media player you have
Speaker 1: isn't compatible with the media you bought. That's a terrible
Speaker 1: feeling and it does happen, so they wanted to get
Speaker 1: around that. So once again, Panasonic did not have a
Speaker 1: leadership role in the development of this technology, but the
Speaker 1: company was able to build out a CD player and
Speaker 1: launch it in two when player has first started hitting
Speaker 1: the market. However, this does mean I should probably talk
Speaker 1: a bit about how compact discs work, since I've done
Speaker 1: that for magnetic storage in this series. And if you
Speaker 1: look at a standard one sided compact disc, you'll likely
Speaker 1: see some sort of label on one side and the
Speaker 1: other side will be really shiny, almost like a mirror,
Speaker 1: and you put the disc in a player label side
Speaker 1: up or a CD drive and then the magic happens.
Speaker 1: But how is the data actually stored on the disk. Well,
Speaker 1: in this case, this is not a magnetic system. It's
Speaker 1: an optical system. That means that this is a system
Speaker 1: that uses light and optics like mirrors and lenses to
Speaker 1: encode and decode information. It's also a digital format, not
Speaker 1: an analog format. So let's start by talking about a
Speaker 1: blank CD as nothing stored on that glossy side. When
Speaker 1: a machine writes to c D, it uses a powerful
Speaker 1: lazy or to carve out tiny indentations in a spiral
Speaker 1: on that c D. The spiral actually starts near the
Speaker 1: center of the c D, So this is kind of
Speaker 1: the opposite of how a vinyl record works, where you
Speaker 1: would set a needle toward the outer edge of the
Speaker 1: record and the needle would spiral inward. So what you're
Speaker 1: left with are if you were to look at this
Speaker 1: under a microscope, you'd see a series of reflective surfaces
Speaker 1: on that CD as well as some little bumps, and
Speaker 1: those represent ones and zeros, respectively. A reflective segment is
Speaker 1: called a land that would be a one, and a
Speaker 1: bump is called a pit that would be a zero.
Speaker 1: So why is a bump called a pit? Well, it
Speaker 1: all depends on how you're looking at the c D.
Speaker 1: You look at the CD one way, you're looking at bumps.
Speaker 1: You turn the c D and you look at it
Speaker 1: a different way. You're looking at pits. And this is
Speaker 1: binary information ones and zeros, So that's a binary unit.
Speaker 1: You can think of this like a series of light switches,
Speaker 1: where one is a switch in the on position. And
Speaker 1: zeros in the switch in an off position. Using lots
Speaker 1: of bits, like millions of them, you can describe all
Speaker 1: sorts of stuff, including audio. So this brings us to
Speaker 1: digital versus analog, and analog recording is a record of
Speaker 1: a continuous input signal, but a digital recording is more
Speaker 1: like a very detailed description of an original input. So
Speaker 1: in a way, we can think of an analogy in
Speaker 1: which an analog signal is a script from a play.
Speaker 1: It's got all the stage directions in it, character and descriptions,
Speaker 1: it's got all the dialogue in it. Everything's in the script,
Speaker 1: But a digital signal is more like someone goes to
Speaker 1: the play and takes very detailed notes of everything they
Speaker 1: see and hear, and so they create as best a
Speaker 1: description of the play as they possibly can. So digital
Speaker 1: recording describe stuff like audio by breaking it down, So
Speaker 1: they might break it down into things like pitch and
Speaker 1: loudness and other values that can be expressed as bits. Moreover,
Speaker 1: there's also a concert we have to talk about called
Speaker 1: a sample rate. This describes how frequently every second the
Speaker 1: system is analyzing this signal in an effort to describe it.
Speaker 1: Higher sample rates require a lot more data, but they
Speaker 1: also result in a more faithful representation of the original sound.
Speaker 1: So to go back to our play analogy, let's say
Speaker 1: we've got two digital like observers, so this is two
Speaker 1: note takers. But our two note takers aren't able to
Speaker 1: just sit in the theater the whole time. They actually
Speaker 1: have to duck in and out. So one of the
Speaker 1: two observers is allowed to jump in every thirty seconds
Speaker 1: and they can stick around for a few seconds and
Speaker 1: jot down all the notes, and then they have to
Speaker 1: duck back out until the next thirty seconds comes around.
Speaker 1: The other one can only go win every five minutes
Speaker 1: for a few seconds at a time and take very
Speaker 1: detailed notes, but then they have to leave and wait
Speaker 1: another five minutes. At the end of this very strange experience,
Speaker 1: the one who ducked in more frequently will probably have
Speaker 1: a better understanding of what was going on in the
Speaker 1: play from moment to moment. And that's kind of like
Speaker 1: sample rates. The more frequently you sample, the more accurate
Speaker 1: the copy is to the original, you know, performance. When
Speaker 1: you put a CD into a player, the player uses
Speaker 1: a laser to read the c D. This is not
Speaker 1: as powerful a laser as the one that was used
Speaker 1: to write to the c D in the first place.
Speaker 1: And you need a laser because you have to focus
Speaker 1: a very fine beam of light to pick up these
Speaker 1: pits and lands on the c D. A sensor registers
Speaker 1: the zeros and ones, and the Dakota takes the information
Speaker 1: and turns it into something meaningful that can be sent to,
Speaker 1: you know, amplifiers and speakers. So CDs are very different
Speaker 1: from stuff like magnetic tape. They also are not affected
Speaker 1: by magnets, whereas you can wipe out recording on tape
Speaker 1: if you bring that tape too close to a really
Speaker 1: powerful magnet. However, because CDs rely on light, it means
Speaker 1: that if you get any scratches or dirt or smudges
Speaker 1: on the reflective side of a c D, it causes
Speaker 1: problems because the laser won't be able to effectively read
Speaker 1: those pits and lands on that side of the disk.
Speaker 1: There's a lot more I could go into, such as
Speaker 1: how rewrite herble CDs work, but we're gonna leave off
Speaker 1: of this for now and carry on with our history.
Speaker 1: CD players were really expensive when they first debuted. In fact,
Speaker 1: I didn't get my first CD player until maybe the
Speaker 1: early nineteen nineties, and even then it was a little
Speaker 1: portable CD player unit. But eventually the CD would overtake
Speaker 1: and largely replace other formats like cassette tapes and vinyl records,
Speaker 1: and it all would launch endless arguments among audio files
Speaker 1: about whether a digital recording can ever match the fidelity
Speaker 1: of an analog recording, and I'll just back away from
Speaker 1: that particular hornets nest. By the mid nineteen eighties, international
Speaker 1: trade agreements were putting the squeeze on Japan. Yamashida agreed
Speaker 1: to resign his position as president, becoming an executive advisor,
Speaker 1: and the new president of the company was a man
Speaker 1: who had played a fundamental part in the most recent
Speaker 1: three year strategic planning phase. His name was Akio Tony.
Speaker 1: Tani defined four areas that the company would focus on
Speaker 1: semiconductors the next generation and audio visual electronics, automated manufacturing equipment,
Speaker 1: and communications equipment like cell phones and stuff. He also
Speaker 1: expanded the sales department and he specialized them, and in
Speaker 1: seven he introduced a concept to the company called human Electronics,
Speaker 1: which I thought at first met they were going to
Speaker 1: make cyborgs, and I got really excited, but no. What
Speaker 1: he meant by that was a product design process that
Speaker 1: would pay more attention to what people needed and wanted
Speaker 1: and less on being flashy or throwing in features just
Speaker 1: to have them included in the product. In seven, the
Speaker 1: company established its first manufacturing facility in China. The new
Speaker 1: facility would make CRT s or cathode ray tubes. These
Speaker 1: were used in television's at the time, though it wouldn't
Speaker 1: be much longer before the industry would kind of move
Speaker 1: away from CRT television's toward other options like l C
Speaker 1: D s and plasma TVs. Also in night seven, Tani
Speaker 1: announced that the Matt Sushida Electrical Industrial Company and the
Speaker 1: Matt Sushida Electric Trading Company, which technically were two separate entities,
Speaker 1: would consolidate in a merger. And this was all part
Speaker 1: of the strategy to step up the international sales in
Speaker 1: the company, and part of this was to try and
Speaker 1: overcome increasingly challenging obstacles that came with intense trade disagreements
Speaker 1: between Japan and other nations. Japanese companies, as a general rule,
Speaker 1: we're finding it challenging to export goods, and so they
Speaker 1: began to establish branches in other countries where they could
Speaker 1: have manufacturing facilities and sales teams there who worked on
Speaker 1: a more local level that would get around some of
Speaker 1: those pesky trade obstacles. All right, we're gonna blast through
Speaker 1: the rest of the history of this company very very shortly,
Speaker 1: but first let's take another quick break. On April nine,
Speaker 1: Kona Suke Matsushida, the founder of Matsushida slash Panasonic, passed
Speaker 1: away at the age of ninety four. Even after his
Speaker 1: retirement in the nineteen seventies, he had continued to play
Speaker 1: an important role in directing the course of the company
Speaker 1: he had founded. He had a rather lauded reputation in
Speaker 1: the company and in Japan. Though we can't nor the
Speaker 1: fact that his company also got involved in some fairly
Speaker 1: questionable activities involving price fixing and unfair competitive practices. Still,
Speaker 1: he legitimately established a global company from extremely humble beginnings,
Speaker 1: so you can't ignore that in nineteen nine, matts Ashida
Speaker 1: slash Panasonic made what in retrospect you could call a
Speaker 1: bone headed mistake. The company, eager to keep up with
Speaker 1: their major competitor, Sony sort of the Darth Vader, to
Speaker 1: panasonicx Luke Skywalker decided to get into the content business
Speaker 1: the entertainment industry. Sony had acquired Columbia Pictures Entertainment in
Speaker 1: nine and fun fact, that company had previously been owned
Speaker 1: by Coca Cola. Because companies are weird. The movie business
Speaker 1: is super weird, and there was this crazy idea of
Speaker 1: synergy that really made more sense and concept than an execution.
Speaker 1: But to keep up with Sony, Panasonic went and acquired
Speaker 1: a different entertainment company, m c A. M c A
Speaker 1: and I mean the company, not the Beastie Boy started
Speaker 1: out as the Music Corporation of America that had been
Speaker 1: founded in nineteen twenty four. Over the years, uh it
Speaker 1: changed a great deal. When it first started, it was
Speaker 1: a talent agency, but by it had become a fully
Speaker 1: fledged entertainment company complete with movie and music and television studios.
Speaker 1: In fact, it was the owner of Universal Studios. The
Speaker 1: deal amounted to somewhere between six point six and seven
Speaker 1: point five billion dollars. It all depends on which source
Speaker 1: you're looking at. The love affair between Matsushida and Hollywood
Speaker 1: didn't last very long. In fact, you could cynically joke
Speaker 1: that it was on par for Hollywood marriages in general.
Speaker 1: Mattsshida would sell off eighty percent of its steak in
Speaker 1: m c A just five years years after the acquisition.
Speaker 1: And here's another crazy thing. Seagram was the buyer. Yeah, Seagram,
Speaker 1: the whiskey company. Seagram would turn around in two thousand
Speaker 1: and sell off its stake to Vivendi, and then Vivendi
Speaker 1: would ultimately purchase the remaining interest in m c A
Speaker 1: that was still held by Matt Sushida in two thousand six.
Speaker 1: So ultimately two thousand six is when Matt Sushida completely
Speaker 1: got out of the entertainment industry business. Now, the time
Speaker 1: that Matt Sushida owned m c A was turbulent. There
Speaker 1: were stories of executive level disputes, and the company struggled
Speaker 1: with low profits. The movie business was far more volatile
Speaker 1: than the electronics company had anticipated, and it certainly was
Speaker 1: more volatile than they cared for, and it was a
Speaker 1: really a bad fit from the start. It pointed to
Speaker 1: the danger of diversifying your business without real strategy behind
Speaker 1: the diversification. It's it's one thing to make sure you're
Speaker 1: not completely dependent upon one business, but it's another to
Speaker 1: just grab any business that happens to be nearby, and
Speaker 1: ultimately Mattsoshida paid for this. Upon selling their steak, the
Speaker 1: company brought in five five billion yen, but it had
Speaker 1: purchased m c A for eight hundred fifty billion yen,
Speaker 1: and the value of m c A actually went up
Speaker 1: during its tenure as part of Matt Sushida if you
Speaker 1: look at it from a dollar value, but the value
Speaker 1: of the yen changed dramatically in that same span of time,
Speaker 1: so overall it became a loss, but back to very quickly.
Speaker 1: That's also when Panasonic released the panic Com Pro note
Speaker 1: This was the first notebook computer Panasonic ever released. If
Speaker 1: you look at a picture of the thing, it's really
Speaker 1: chunky looking. It's one of those big laptops that you
Speaker 1: probably wouldn't actually want to have on your lap. Panasonic
Speaker 1: also introduced a cellular phone called the mo of a
Speaker 1: P the following year, and a rewriteable optical disc recorder
Speaker 1: that this was more of an industrial thing, not a
Speaker 1: home electronics thing. That also came out in ninety three.
Speaker 1: After many decades of partnership Matt Sushida and Phillips, the
Speaker 1: Dutch electronics company called it quits. Panasonic purchased the stake
Speaker 1: that Phillips owned in Mattsshida Electronics Corporation, which was again
Speaker 1: about thirty five percent of the ownership of the company,
Speaker 1: and they did it for a hundred eighty five billion yen.
Speaker 1: The two companies did agree to a cross patent licensing deal,
Speaker 1: so it's not like there were hard feelings. Also, this
Speaker 1: gets into how Panasonic is more nebulous than as a
Speaker 1: single entity. It's really a lot of different companies that
Speaker 1: are all related to one another, some having ownership and
Speaker 1: other companies in the group. But the more I looked
Speaker 1: into it so I could try and explain it, though
Speaker 1: more I was convinced that I'm just not had out
Speaker 1: for that level of madness. It's why I really like
Speaker 1: describing technology. Technology either works or it doesn't work. There's
Speaker 1: not a lot of ambiguity there. Corporate structures and governance
Speaker 1: though that stuff, I mean, you might as well call
Speaker 1: it magic to me. Anyway. Japan was going through an
Speaker 1: economic recession in ninety three and Panasonic was hurting. President
Speaker 1: Audio Tani facing pressure with Panasonic's poor performance, particularly from
Speaker 1: Chairman Masaharu Matsushida, who is still in charge of that point,
Speaker 1: This is by the way uh Konoski's son in law,
Speaker 1: so Tani would resign his position and his replacement was
Speaker 1: Yoichi Morishita. And Morishida, unlike his predecessors, was not someone
Speaker 1: that had studied under Konosuke. He he was not a
Speaker 1: candidate that had been groomed by the founder. He would
Speaker 1: go through the process of trying to shed some of
Speaker 1: the bloat that the Matsushida Company had accumulated, including selling
Speaker 1: off that stake in m C a in. During his tenure,
Speaker 1: the company also got into the business of digital television
Speaker 1: sets and DVD players, navigation systems, plasma TVs, which would
Speaker 1: kind of come back to haunt them, and more. The
Speaker 1: Panasonic brand became more popular in the US, though the
Speaker 1: company had not yet launched a defining technology the way
Speaker 1: Sony had done was say the Walkman. A lot of
Speaker 1: Morishida's work was in course corrections and attempts to return
Speaker 1: to profitability. In Japan, it was still a struggle. In
Speaker 1: nineteen nine, for example, the company's operating profit fell eighteen percent,
Speaker 1: which is not good. We get another big change in
Speaker 1: leadership in two thousand, Chairman Masaharu Matsushida retired that essentially
Speaker 1: ended the Matsoshida domination of the company. Yoichi Motorshita would
Speaker 1: become the new chairman of the company, and there was
Speaker 1: talk originally of Konosuke's grandson, Masayuki Matsushita takeing over the
Speaker 1: position of president, but the board of directors had concerns
Speaker 1: that perhaps Masayuki lacked the leadership qualities that they wanted,
Speaker 1: and that maybe it was a better idea to move
Speaker 1: away from the Matsushida dynasty, so instead they chose the
Speaker 1: former CEO of Matsushida Electric Corporation of America, Kunio Nakamota.
Speaker 1: Nakamotora had a huge challenge. At this point, Matsushida slash
Speaker 1: Panasonic had become truly gargantuan in Japan alone. The company
Speaker 1: had one hundred forty divisions, and like a lot of
Speaker 1: bigger companies grown haphazardly, there was a lot of redundancy.
Speaker 1: There was a lot of bureaucracy. It was becoming increasingly difficult,
Speaker 1: if not impossible, to operate the company in a nimble way,
Speaker 1: so he needed to simplify things quite a bit. He
Speaker 1: also made some controversial decisions within the company. For example,
Speaker 1: he pulled design decisions away from engineering teams and he
Speaker 1: gave them to marketing teams. And the idea was that
Speaker 1: engineers were reluctant to jump onto new things or apt
Speaker 1: to current trends. They were more comfortable doing things the
Speaker 1: way they had done them, whereas the marketing team knew
Speaker 1: what customers were looking for. And I feel a little
Speaker 1: conflicted about this because I've seen what can happen when
Speaker 1: marketing teams have a lot of say and things that
Speaker 1: does not always go well. But at the time, Matsushida
Speaker 1: was really starting to lag behind other electronics companies, so
Speaker 1: it was probably a needed change there. Under Nakamura, more
Speaker 1: younger executives and more women executives got opportunities. Nakamura said
Speaker 1: that he wanted to reward performance and hard work over
Speaker 1: stuff like seniority or title. At the same time, he
Speaker 1: made some pretty drastic cuts to the company. He oversaw
Speaker 1: the closing of thirty factories in Japan, which was nearly
Speaker 1: a quarter of all the company's production facilities there. He
Speaker 1: oversaw layoffs, some thirteen thousand layoffs, and he sold off
Speaker 1: a lot of company assets that he saw as being
Speaker 1: kind of unnecessary and di acting and this was all
Speaker 1: within his first year as president. The electronics market was
Speaker 1: not doing so hot at the time, and even with
Speaker 1: all those changes, Nakamura was kind of swimming against a
Speaker 1: very strong current. He pushed the company to get into
Speaker 1: more service industries kind of offset the declining demand for
Speaker 1: physical products. But by two thousand two, the company had
Speaker 1: posted its first actual loss, not just a fall in profits,
Speaker 1: but I mean an actual loss, Like the company lost money,
Speaker 1: and it was a doozy. It's not a little bit
Speaker 1: of money. It was three point four billion dollars. Nakamura, however,
Speaker 1: just kept making changes. He spun off five group companies
Speaker 1: to become full subsidiaries. Panasonic would retain ownership of the companies,
Speaker 1: but they would be able to operate much more independently.
Speaker 1: By two thousand three, the extensive changes were starting to
Speaker 1: show results, with Panasonic gaming the lead as the largest
Speaker 1: consumer electronics company. Profits went from having a total loss
Speaker 1: into thousand two to a seven hundred seventeen million dollar
Speaker 1: profit in two thousand three. Several divisions became leaders in
Speaker 1: the market, including Panasonic Thin Plasma Television's Boy. That was
Speaker 1: a great victory for the time, but they would come
Speaker 1: back to bite them. In two thousand six, we get
Speaker 1: another change. Nakamura would become the chairman of the company,
Speaker 1: you know, once again moving from president to chairman, and
Speaker 1: Fumio Altsuba, former managing director, would become the new president
Speaker 1: of the company. That same year, Matsushida planned to spin
Speaker 1: off JVC. They sold it to Kinwood Corporation. That would
Speaker 1: take about two years for it to complete, and the
Speaker 1: company once again came under scrutiny along with several other
Speaker 1: electronics companies, and not just in Japan, there were other
Speaker 1: ones as well. But the charge was that a large
Speaker 1: number of these companies, Panasonic included, we're part of a
Speaker 1: cartel that was controlling the price of liquid crystal displays
Speaker 1: or l c d s. So not that different from
Speaker 1: previous charges that have been leveled against Panasonic back in
Speaker 1: the nineteen sixties. The European Union would find Panasonic guilty
Speaker 1: of this and along with five other firms, the companies
Speaker 1: were ordered to pay a very large fine. The total
Speaker 1: fine was around one point nine billion dollars, but Panasonics
Speaker 1: share was a relatively small one fifty seven and a
Speaker 1: half million euros. And in two thousand eight we finally
Speaker 1: get to the moment where Matt Sushida officially changed its
Speaker 1: name to Panasonic, and the company was no longer under
Speaker 1: the direction of the Mattsshida family for the most part,
Speaker 1: and the Panasonic brand was far better known in the
Speaker 1: United States than Matt Sushida was, so it made sense.
Speaker 1: In two thousand nine, Panasonic acquired Sanyo Electric Company, turning
Speaker 1: it into a subsidiary. And if you've been listening to
Speaker 1: this series from the beginning, you might remember that Sanio
Speaker 1: was actually founded by Konosuke Matsushida's brother in law, uh
Speaker 1: He had worked for the Matsushida company, but then left
Speaker 1: the company after the US government began to get involved
Speaker 1: after World War Two. For decades, Sano had actually competed
Speaker 1: in some of the same markets as Panasonic, but now
Speaker 1: the two companies were coming together. While Panasonic built upon
Speaker 1: its name recognition, it also was making big cuts. In
Speaker 1: two thousand eleven, the company announced it would cut around
Speaker 1: forty thousand jobs in an effort to eliminate redundancy, improve efficiency,
Speaker 1: and to deal with some massive losses that were once
Speaker 1: again mounting. In two thousand twelve, Otsubo stepped up to
Speaker 1: the position of chairman and Nakamura would become an executive advisor,
Speaker 1: and the new president of the company was Katsuhira Suga,
Speaker 1: and he actually remains the president of the company today,
Speaker 1: although Otsuba would not be chairman for very long in
Speaker 1: he was replaced by Shusaku Naga, and Shusaku is still
Speaker 1: and to this day. Panasonic has had to deal with
Speaker 1: more than a few instances of allegations that the company
Speaker 1: has been engaged in price fixing, collusion, and corruption over
Speaker 1: the last few years. The avionics division has been under
Speaker 1: scrutiny for that, the Automotive Systems Corporation with under scrutiny
Speaker 1: for that, and the company has had a few cases
Speaker 1: pop up that point to it attempting to fix the
Speaker 1: game in one way or another. Whether or not that
Speaker 1: was the knowledge of the top levels of the company
Speaker 1: is another matter, but certainly divisions of the company have
Speaker 1: come under suspicion a few times in the past few years.
Speaker 1: In addition, the story that tends to go with each
Speaker 1: incoming president is how that president is charged with saving
Speaker 1: Pana Sonic. It's interesting to hear how each president comes
Speaker 1: in and they're supposed to try and save the company
Speaker 1: that's not a great narrative. You would prefer to build
Speaker 1: on success rather than have to be known as someone
Speaker 1: who's correcting the course of a compan the one of
Speaker 1: Suga's priorities was getting Panasonic out of producing plasma televisions.
Speaker 1: That was an example of him saving the company because
Speaker 1: consumers had already moved on they were more interested in
Speaker 1: l C D t vs, l E ED t vs.
Speaker 1: But Panasonic had invested billions of dollars in producing plasma sets,
Speaker 1: so this was not an easy decision. But it was
Speaker 1: clear that trying to sell plasma sets in the world
Speaker 1: that just wasn't interested in them was ultimately a losing proposition,
Speaker 1: and Suga really did have a tough job ahead of him.
Speaker 1: The year before he became president, Panasonic had posted a
Speaker 1: monumental loss of nine point eight billion dollars. Now, to
Speaker 1: be fair, Panasonic wasn't the only Japanese electronics company to
Speaker 1: post massive losses around that time. Others were doing the same,
Speaker 1: like Sony, and that has led to a conversation about
Speaker 1: whether or not Japanese companies in general are too reliant
Speaker 1: upon tradition and they're not capable of responding more quickly
Speaker 1: to a changing market. But honestly, that's a discussion that
Speaker 1: would require more investigation in a few future episode. Maybe
Speaker 1: the thing to remember now is that Panasonic is a
Speaker 1: truly huge company with lots of divisions, only a few
Speaker 1: of which are related to consumer electronics. So people like
Speaker 1: me who associate Panasonic with that we're only seeing a
Speaker 1: small slice of the overall company. All of this grew
Speaker 1: out of the work of a humble electrician who made
Speaker 1: light sockets out of a little office that was in
Speaker 1: a dirt floor building back in That to me is
Speaker 1: truly phenomenal, and that wraps up the Panasonic story so far.
Speaker 1: There are a lot of elements I didn't go into
Speaker 1: deep detail about. Obviously, if I had, we would have
Speaker 1: been stretching onto like seven or eight episodes. But I'll
Speaker 1: probably have future episodes that look into stuff that relate
Speaker 1: back to these, whether they're directly about Panasonic or Panasonic
Speaker 1: plays a part in the story that remains to be seen.
Speaker 1: But in the meantime, if you guys have suggestions for
Speaker 1: future topics I should cover in tech stuff, whether it's
Speaker 1: a technology, a trend in tech company, a person, whatever
Speaker 1: it may be, if it's related to tech let me know.
Speaker 1: Reach out on Twitter. The handle is tech stuff hs
Speaker 1: W and I'll talk to you again really soon. Text
Speaker 1: Stuff is an I Heart Radio production. For more podcasts
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