Together, Philips and Sony set a standard in digital music recording that shaped consumer audio technology and made it into almost every living room in the west. It’s an inspiring story of how it pays to join forces with one of your fiercest competitors in order to make a paradigm shift happen. And connected to it is a cautionary tale of what can happen if you don’t.
Innovating for the masses
Ask a bunch of people born shortly after the end of World War 2 what the very one purchase was that really turned their life around, and you’d probably get a whole different variety of answers. Was it the car they now could afford? The fridge that suddenly everybody had? The telephone? The television? Or maybe the turntable that turned all of their house parties into a shindig?
The past seventy years has seen all kinds of technology becoming readily available for millions of people. The result of a successful cocktail of growing prosperity and companies serving that ever-expanding market with a continuous stream of innovative and affordable products.
One of them was the home video recording system. Up to ten different companies tried to conquer the market with their own specific video system. Halfway through the 1980s it turned out that consumers had chosen the VHS-system as their format of choice. Philips, which had its own system, was left with just a tiny slice of the cake they initially thought they would get the biggest piece of.
So when audio engineers were developing a revolutionary new music recording system, Philips was determined not to make the same mistake again: this time, all of the cake was to be for them. Even though it meant baking it together with a competing cook.
Halfway the 1970s, optical reading of recorded audio by use of laser was on the brink of becoming commercially interesting. Philips was on the forefront of developing this technology, which was meant to replace vinyl as the main medium for audio recording. Knowing that several Japanese companies were also pursuing this technology, Philips sent a delegation to Japan in 1979 to find partners that would be interested in developing standardization for their so-called ‘compact disc’ system.
Several companies were shown the prototypes, but eventually it was Sony’s chairman Akio Morita himself who personally decided his company wanted to develop Philips’ technology further. Over the course of two years, in six meetings in Tokyo and in Philips’ headquarters in Eindhoven technicians from both companies worked together to perfect the technology. And it was not just the physical aspects of the cd system: both parties worked together in editing the digital code as well. Ultimately this resulted in a system that was robust and had the desired hi-fi quality Philips and Sony were looking for.
Although the engineering was undertaken with much thoroughness and consideration, on other levels the collaborating teams took the liberty to make decisions at random. For instance, the maximum length of a compact disc was determined by its ability to accommodate Akio Morita’s favourite rendition of Beethoven’s 9th Symphony: 74 minutes. In a similar fashion, the central hole in a cd was as small as the Dutch dime one of the engineers accidentally found in his pocket when the team was discussing this aspect.
A success story
In 1982, Sony and Philips ultimately launched the CD-system that over the course of the 1980s became the primary medium for the music industry. The power of the two companies combining their efforts did indeed lead to standardization, which in turn led to an acceleration of digitalization in the music industry.
Philips and Sony consider the CD-system one of the biggest success stories for both companies. And despite its flaws – some people consider old-fashioned analogue vinyl technologically superior to the digital compact disc system – the CD managed to hold on to this leading position for decades, even when the MP3 code format slowly started revolutionizing music distribution in the 1990s. The rise of online audio streaming services in the recent decade however did render the cd obsolete.
Philips and Sony both have since shifted away from consumer audio, with Sony widening its scope more and more towards other consumer-oriented products and towards content production, and Philips heavily focusing on developing medical technology instead.