Sony Minidisc: Failed Innovation?

Sony MiniDisc: Failed Innovation?

A case study of the conception, production and distribution of the MiniDisc

David Reid

Technological change and advancement is driven by invention and innovation, and it is important to discern between these two very different terms. �The former refers to new concepts or products that derive from individual’s ideas or from scientific research. The latter, on the other hand, represents the commercialization of the invention itself’ (Scocco, 2006). There are countless numbers of occasions where good inventions fail to penetrate the marketplace. The Sinclair C5 (Marks, 1990), British Rail’s APT (Potter, 1989) and Sony’s very own nightmare, Betamax (Cusumano et al. 1992), are all examples of inventions that for one reason or another, failed to make the step up to innovation. �A fundamental requirement of a focus on technological change is the ability to identify product development opportunities and to translate these into successful products. It is also important that the product development process is effectively and efficiently organized and managed.’ (Maffin et al. 1997 p.53). If there is no market for the product, i.e. the invention tries to solve a non-existent problem, or if the development process is mismanaged and inefficient then it is likely that the product will be a flop.

The aim of this project is to analyse whether Sony’s MiniDisc (MD) format has breached the gap between invention and innovation. The strength of relevant appropriability regimes, emergence of a dominant design, the firm’s innovative capability, market dynamics, industry context and the status of complementary assets all factor into the outcome of the innovation process (Teece 1986). Only by looking at these factors in the case of the MD can a judgement be made its validity as an innovation.

In 1979, Sony launched the cassette Walkman, an innovation which defined a new product category, set industry standards and in an instant became the dominant design (Murmann and Frenken, 2006) for personal audio devices worldwide. Sony enjoyed a large market share for several years after the introduction of the Walkman, even though the Compact Disc format was introduced in 1982. Sony cleverly marketed the cassette Walkman as complimentary good rather than a substitute for CDs. The ability to listen to Walkmans on the move, their sturdiness and the recording ability, which gave birth to the mix-tape, were all qualities which made the Walkman a resounding success. By 1990 over 50 million Walkmans from a range of 200 models had been sold by Sony. However in 1991, for the first time, CDs outsold cassette tapes and it was patently obvious that the days of tape-based personal audio device were numbered (du Gay et al. 1997).

This fact had not escaped the minds at the Sony corporation and since the early to mid 80s they had been working on the task to find alternatives to the read only CD. The Audio Development Group (ADG) had made some very interesting discoveries by 1986 including Digital Audio Tape and a prototype recordable CD device. The president of Sony, Norio Ohga, saw a demonstration of the new recordable CD technology in 1989 and was hugely impressed by it (Harryson, 1998). To combat the decline of cassette tape technology, Ohga gave the ADG the following task, �developing a recording and playback device that uses a disc smaller than the CD to replace the audio compact cassette.’ (Sony Corporation). The deadline for the ADG team to have the product ready for launch into the market was November 1992, ambitious even for Sony.

In 1982 Sony had collaborated with Philips to introduce the Compact Disc as a long term replacement for vinyl long play albums. As is apparent by the soaring sales and huge popularity of CD albums, this partnership was very fruitful and understandably both companies were eager to undertake another alliance. However, when discussions between the two firms initiated, there was evidently a conflict of ideas. Sony wanted to introduce the new smaller disc which used their magneto-optical technology (MO) whereas Philips was pushing for a tape based format (Harryson). They reasoned that the prevalence of analogue tapes would prevent a totally new form of technology getting a foothold in the market. Philips was under the belief that the consumer, rooted in cassette tape technology simply would not accept anything that was not backwards compatible. Sony, on the other hand, was insistent that due to the increased sales of CDs, consumers were more likely to opt for disc-based technology and its intrinsic advantages over tapes. To back up this philosophy they pointed out how quickly consumers had abandoned long play vinyls in favour of CDs (Trachtenberg, 1994 p.B6). Essentially, Philips saw the need for evolution of the existing medium and Sony saw the need for revolution to an entirely new medium (Economist, 1992).

Thus, Sony found itself in another format war, albeit with lower stakes than VHS vs. Betamax (Cusumano). Philips went ahead and developed the Digital Compact Cassette (DCC) which had the feature they thought to be their trump card, backwards compatibility. I could play analogue and digital cassettes in addition to being able to record onto digital cassettes from both analogue and digital sources. The format used magnetic tape and the sound quality was virtually indistinguishable from CDs (Goudsmit, 2003).

Sony’s MiniDisc system shirked magnetic tape for the magneto-optical system and the individual re-recordable discs were approximately a quarter of the size of CDs. Like the DCC, recordings could be made from both analogue and digital sources but unlike its rival medium there was no backwards compatibility and the recording quality was deemed to be �near-CD quality’ (Sony Corporation). Other significant differences between the two formats included the recording length, 90 minutes for DCC, 74 minutes for MD, and the ability to access random tracks and edit recordings which were both features unique to the MD.

By 1990 the race, not only to try and beat Philips to launch but also to try and meet Ohga’s original deadline of November 1992, was well and truly on. This was when Sony’s innovative structure and core competencies in technology, research & development and integrated networks really came to the fore (Harryson). Sony’s innovation strategy for the MD was the internalisation

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