The Transistor Salesman

In the late summer of 1953, Akio Morita walked through the lobby of a New York hotel with a suitcase, a thin command of English, and a letter of introduction to the licensing department of Western Electric. He had crossed from Tokyo via Honolulu and San Francisco on a journey of some forty hours. He was thirty-two. By now Tokyo Tsushin Kogyo had outgrown the third-floor wreck in Nihonbashi where he and Ibuka had founded it seven years earlier, but only just. It made tape recorders that schoolteachers liked and a pocket-sized voltmeter that nobody outside Japan had heard of. Its capital was modest. Its name was unpronounceable to Americans. Ibuka had sent Morita on this trip with one task: come back with a license to make transistors.

The license was being offered, almost casually, by the firm that owned Bell Telephone Laboratories. For $25,000, any company in the world could buy a packet of patents covering the point-contact and junction transistor and a stack of internal Bell Labs documents thick enough to sit on. Morita had the cash, or rather, his board in Tokyo had grudgingly approved the foreign exchange request after Japan’s Ministry of International Trade and Industry, MITI, refused for months to release the dollars. American firms had been queuing up for the license since the previous spring. So had a few European ones. As Morita walked into Western Electric’s offices, he was nobody important. That, in retrospect, would matter.

The Bell System had spent the better part of a year debating what to do with the transistor. AT&T’s lawyers worried that holding the invention too tightly would trigger a renewed antitrust suit; the company was already under federal scrutiny for its monopoly over American telephony. The decision, after a symposium for licensees in April 1952, was to license broadly and price the ticket low enough to be almost a courtesy. Bell’s own engineers, briefing the licensees, were candid about what the device was good for. Telephone repeaters. Radio relays. Hearing aids. Eventually, perhaps, military electronics. Consumer radios were not on the list. Frequency response was poor in early units. Yields were terrible. The cost per transistor, even at scale, was many times the cost of a vacuum tube, and the vacuum tube worked.

Morita signed a provisional agreement on his 1953 visit. The full contract, delayed by MITI officials who could not understand why a small Tokyo electronics firm needed to spend a fortune on American patents for a device they had never seen, was concluded in 1954. By then, Ibuka had dispatched a younger colleague, Kazuo Iwama, to do something more important than signing documents. Iwama was to go to the United States and learn how to actually build the things.

Iwama spent most of 1954 inside Western Electric’s transistor plants, taking notes. His employer would later call the bundle of letters he sent home the Iwama Reports. They ran to four folders. He sketched the crystal-pulling rigs by hand, line by line, after Western Electric refused to release the schematics. He described the doping procedures in fragmentary English. He marked which steps the American engineers performed with care and which they appeared to be guessing at. The reports flew back to Tokyo on Pan Am, where a small team read them, replicated what they could, and wrote back with questions. The exchange was iterative, almost conversational. By the time Iwama returned to Japan in early 1955, his colleagues had built their own working point-contact transistors. They had also figured out, mostly by accident and partly through the doping experiments forced on them by Iwama’s letters, how to make the high-frequency junction transistor that radios actually needed. Bell Labs had told them it could not be done with the materials they had. They did it anyway.

It was easy, looking back, to read Sony’s transistor ascent as a tale of cunning Japanese imitation. The cliché had a long life. It also missed the substance of what happened. Tokyo Tsushin Kogyo did not copy a Bell Labs transistor. It copied a Bell Labs research program and then ran the program faster, with cheaper labor, in a country where electronics companies were small enough to take consumer-product bets an American giant like RCA would not. The two things that matter in any technology transfer are the patents and the tacit knowledge, and tacit knowledge does not move on paper. Iwama moved it himself, in his head and his sketchbooks.

While Iwama was in New Jersey, the Americans were already losing interest in the transistor radio. Texas Instruments had shopped a prototype around the major US set-makers in the spring of 1954 and been turned down by every one. RCA passed. Philco passed. Emerson passed. The reasons were sensible. A vacuum-tube radio was a known business with known margins. Transistors at 1954 prices yielded a portable that was tinny, expensive, and ate batteries. There was no obvious customer for it. TI, undeterred, partnered with a small Indianapolis firm called Industrial Development Engineering Associates, which sold under the brand name Regency. The Regency TR-1 went on sale on November 1, 1954, in a brushed-aluminum case that fit in the palm of a hand and cost $49.95, more than a week’s wages for the average American worker. It moved about 150,000 units. Consumer Reports panned the audio quality. Critics called it a novelty. By 1956, Regency had largely walked away from the transistor radio business. The American consumer-electronics establishment had glanced at the technology, decided the math did not work, and moved on.

That was the opening Sony walked through.

In August 1955, Tokyo Tsushin Kogyo released the TR-55, a leather-cased five-transistor portable that was Japan’s first commercial transistor radio. The transistors were Sony’s own, designed in-house off the Bell patents and the Iwama process notes. They were also barely good enough. Early production yields hovered in the low single digits, and engineers culled the bins by ear, using surviving units to assemble radios while throwing the rest away. The TR-55 sold modestly in Japan. It carried a brand name Morita and Ibuka had registered for export use, derived from the Latin sonus and the American slang sonny. The back plate read TOKYO TSUSHIN KOGYO. The dial face read SONY.

Morita was in the United States again that fall, this time with a sample TR-55 in his luggage and a list of possible American distributors. The pitch was unromantic. Japan made cheap things. The TR-55 was a $30 portable from a country whose products Americans associated with paper parasols and tin toys. Morita went to Bloomingdale’s. He went to Macy’s. He went to small chain stores and large ones. The buyers were polite. None bought. Then someone at the Bulova Watch Company, whose purchasing agent saw Morita in his New York office, made an offer that ought to have ended the story.

Bulova would take 100,000 units. The order, by Morita’s later telling in his autobiography Made in Japan, was worth more than the entire capitalization of Tokyo Tsushin Kogyo. There was one condition. The radios would not carry the Sony name. They would carry the Bulova name. To the Bulova buyer, this was simple commerce: the watch firm had a brand, the Japanese had a factory, and the radios would be sold in American department stores under a label Americans trusted. To Morita, it was the question that defined the next half-century of his company. He cabled Tokyo. The board cabled back: take the order. He cabled again, asking permission to refuse. The board, alarmed, instructed him to accept. He refused anyway.

The exchange between Morita and the Bulova representative is not preserved in a transcript, and the figure of 100,000 units, while Morita’s own, has been put closer to 10,000 in some retellings. The number is less interesting than the principle. Morita told the buyer, in substance, that his company would not be a private-label supplier to American brands. Fifty years from now, he said, the Sony name would be as famous as Bulova’s. Bulova passed. Morita went home to a board that, by his own account, questioned his sanity.

The story, when Morita repeated it for the rest of his life, was a parable about brand discipline. It was also, more practically, a turning point in how Japanese industry would relate to the American consumer market. The default model in 1955 was original-equipment manufacture: Japanese factories, American badges, slim margins, no recognition. That was how Japan’s textile and bicycle industries had clawed their way back from the war. Tokyo Tsushin Kogyo was choosing the harder path, which required not only making a good radio but selling Americans on a Japanese name.

The vehicle for that sale arrived in the spring of 1957. The TR-63 was smaller than the TR-55 by enough to matter. It measured roughly four and a half inches by two and three-quarter inches by one and a quarter inches thick, ran on a flat nine-volt battery that Sony’s engineers had designed in cooperation with battery makers, and used six transistors instead of five. The case came in red, green, yellow, and black, the colors aimed at younger buyers. The price was $39.95. Sony marketed it under a coined English word, pocketable, which entered enough American conversations that some dictionaries would later list it. The phrase was technically inaccurate. The TR-63, by a small but real margin, did not fit in a standard American shirt pocket.

What followed has become one of the durable anecdotes of the consumer-electronics industry. Morita, the story goes, ordered Sony’s American sales force to be issued shirts with custom-tailored breast pockets. The pockets were a fraction of an inch larger than the standard. When a salesman walked into a department-store buyer’s office and pulled the radio from his shirt, it slid in and out as advertised. The salesman did not mention the shirt. The buyer did not measure his own. The story has been repeated enough times to become folkloric, including in versions where the larger pocket was on a jacket rather than a shirt, but the verifiable element is the shirt. Sony’s New York representatives, in the months after the TR-63 launched, wore shirts cut for the radio.

The radio itself was good enough that the trick worked. The TR-63 sold in serious quantities. Sony placed it through Adolph Gross, a New York importer whose firm Agrod handled the early shipments before subcontracting to Delmonico International later that fall. The first orders moved out through Long Island warehouses. By the end of 1957, Sony had shipped tens of thousands of units; by the mid-1960s, the TR-63 and its successors had sold into the seven-figure range worldwide. American teenagers walked around with Japanese radios pressed to their ears. They mostly did not know the radios were Japanese. The Sony name was small, the colored cases were unmistakably modern, and the whole package felt like the future.

It was in this moment that Tokyo Tsushin Kogyo did the thing it had been preparing for. In January 1958, the company changed its corporate name to Sony Corporation. The decision was not abstract. The dial-face brand had outrun the back-plate name; American customers and American distributors had no idea what Tokyo Tsushin Kogyo was, and they did not need to know. Morita and Ibuka, who had argued internally about the change for years, finally made it. The Latin-derived name sat on annual reports and trademark filings, and the company that had been a radio repair shop in a bombed Tokyo department store in 1945 became, on paper, an international electronics firm.

Morita was pulled along with it. In 1960, Sony Corporation of America was incorporated in New York. In 1962, Sony opened a showroom on Fifth Avenue across from the St. Regis, and unfurled what was reported in the Japanese press to have been the first Japanese flag flown in midtown Manhattan since the war. In 1963, Morita did something that none of his fellow Japanese industrialists had done. He moved his wife and three children into an apartment on Fifth Avenue across from the Metropolitan Museum of Art, intending to stay for two years. He attended American board meetings, took American executives to dinner, sent his children to American schools, and decided, against the advice of every Japanese diplomat and businessman who heard of it, to learn how Americans actually thought. The Japanese press treated his departure as eccentric. His own colleagues thought it was reckless. Ibuka, back in Tokyo, ran the engineering side and let Morita run the showroom.

The two men were a partnership of complementary opposites. Ibuka was the engineer; back in 1952 he had been the one to first hear about Bell Labs’ transistor program and decide that Tokyo Tsushin Kogyo had to have it. Morita was the salesman, the diplomat, the brand-builder. Ibuka’s son would later describe their bond, in a remark to a London journalist, as something closer to love than friendship. They wrote to each other in Japanese while Morita lived in New York. Ibuka picked the next product. Morita decided how the world would meet it.

By the time Morita’s New York posting ended, the trick the TR-63 had pulled was visible on a national scale. Japan had not invented the transistor. It had not invented the transistor radio. The Americans had done both. What Japan had done was take a technology the American consumer-electronics industry had glanced at and dismissed as marginal, and build a consumer-product business around it large enough that the Americans would never quite catch up in that segment. It was a pattern with a future. The same template would repeat with hi-fi components, with portable cassette players, with color televisions, with VCRs. Each time, an American firm with the patents and the original engineering would decide that the consumer-segment math did not work, and a Japanese firm would find a price point and a use case the Americans had missed. By the time the Americans returned to fight, the Japanese had a manufacturing-cost advantage and a brand.

The deeper transfer, though, was not of patents. It was of confidence. In 1953, when Morita first walked into Western Electric, the phrase Made in Japan still meant cheap and shoddy. By 1958, when Sony took its name from a transistor radio, it meant precision and miniaturization. By 1963, when the Morita family moved to Fifth Avenue, it meant a company name that American teenagers said back to their parents at Christmas. The transistor itself was an American invention, born in a New Jersey lab and carried to Tokyo by men with notebooks. What Sony had done with it was something the inventors had not. They had put it in the pocket of a teenager, in a country on the other side of the Pacific, and made the teenager know the name of the firm in Tokyo that built it.

Across the rest of the decade, other Japanese firms watched and followed. Hitachi licensed transistor patents on similar terms; so did NEC and Toshiba and a half-dozen smaller firms. The Bell System’s $25,000 ticket would, by the early 1960s, have admitted a generation of Japanese electronics companies into a global consumer market that the United States had built and was, distractedly, beginning to lose. Sony was first, but it was not alone, and the country behind it had decided that the American technology of the transistor was a thing to be absorbed, refined, and shipped back across the Pacific in colored plastic cases.

In Tokyo, on the desks of MITI bureaucrats who had once tried to block Morita’s foreign-exchange request for $25,000, the export figures for Japanese radios began to climb in a way that suggested something larger had begun. The Americans, when they noticed at all, treated it as a curiosity of the trade balance. The pocket radio, they assumed, was a phase. The next decade would teach them otherwise.