3 Events Which Ended Toshiba's Century-old Legacy

Did you know that without Toshiba, we will not have DVDs or USB drives?
Tanaka Hisashige is often credited as one of the primary founders of modern-day Toshiba.
Did you know that without Toshiba, we will not have DVDs or USB drives?

In the 1800s, the son of a tortoise-shell craftsman, by the name of Tanaka Hisashige, began developing telegraphic equipment, and he went on to found Tanaka Engineering Works

As the company went on, it was inherited by Tanaka's adopted son who started manufacturing defense equipment for the Imperial Navy.

Old Toshiba transistor radios newspaper ad

But the company started bleeding, post liberalization as new competitors came in and later when the company defaulted on the bank loans, it got rebranded to Shibaura Engineering Works. In 1910, it created an alliance with General Electric, in exchange for technology, giving about a quarter of the shares of Shibaura. Its relationship with General Electric continued post-war as well as with its subsidiary Tokyo Electric. The present-day Toshiba was founded in 1939 as part of the merger between two Japanese companies, Tokyo Electric Company and Shibaura Engineering Works.

Through strategic alliances, acquisitions, and joint ventures, Toshiba expanded its global footprint; and invested heavily in R&D, resulting in groundbreaking products like the first Japanese radar, the TAC digital computer, and USB devices.

Through strategic alliances, acquisitions, and joint ventures, Toshiba expanded its global footprint. In the post-World War II era, Toshiba expanded rapidly, on the back of government-backed cheap loans, subsidies, and limits on competition.

The company’s peak achievement came in 1985 when it unveiled the T1100, its first mass-market laptop. It was the world’s first “IBM-compatible” one, meaning it contained the same or similar components and software to the popular IBM desktop PCs of the day, which had been on the scene since 1981. Toshiba became one of the world’s top laptop manufacturers in the 1990s and 2000s while maintaining its lead in USB tech.

The company was responsible for approximately 25 % of computer sales in the US.

Toshiba's first PC

Market Dominance:

By the late 20th century, Toshiba had become a key player in the global market, particularly noted for its laptops, televisions, and other consumer electronics.

They made every From batteries to locomotives, Military Vehicles and Nuc power plants. In the fiscal year 2000, the company reported revenue of approximately $40 Billion.

The company's contribution to USB flash memory technology solidified its position as a leading innovator in the semiconductor industry. Despite high revenues, profits were often volatile due to the cyclical nature of the electronics industry and intense global competition.

3 Major Challenges in the last 2 decades

In the last 20 years, three major events caught the leadership of this Japanese tech giant, completely off-guard and made Toshiba from a tech pioneer to an irrelevant tech player.

  1. Starting in the early 2000s, thanks to the internet, more consumers wanted a computer than ever before and this created a gap. Lower-end contract manufacturers from Taiwan, like Acer and Asus, capitalized on this and brought early signs of trouble for Toshiba.
  2. In 2015, an investigation spurred by a whistleblower revealed that the company had overstated operating profits by as much as $1.2 Billion over the years of the PC business’s challenging decline.
  3. In 2006 the company paid $5.4 billion to buy Westinghouse, the US-based builder of nuclear power facilities, with absolutely no experience in the field. This acquisition intended to spearhead Toshiba's growth in the nuclear sector backfired, especially after the Fukushima Daiichi nuclear disaster in 2011, leading to massive losses, of approx. $6 Billion, stated in 2016.

To salvage its financial situation, the company underwent a major restructuring, focusing on more profitable divisions while scaling down or exiting less profitable ones. Toshiba became the classic proof of the global notion about Japan, that it will remain “stuck in the middle” between US indigenous innovation and cheap Asian manufacturing until companies reform their culture and create products more suited to a digital economy, rather than heavily relying on its physical products.

Toshiba's famous GTM framework

3 Things That We Can Learn from Toshiba

  1. Innovation and Technological Leadership : Toshiba consistently invested in research and development. This commitment led to groundbreaking innovations, particularly in electronics and computer technology.
  2. Expanding Product diversification: Toshiba successfully expanded its product range across various sectors, including consumer electronics, medical equipment etc. to mitigate early market risks.
  3. International Market Localisation: By setting up manufacturing and R&D facilities abroad, particularly in key markets like the United States and Europe, Toshiba was able to expand its brand reach and tap into new consumer bases.

Toshiba is a case of how quickly a company of its calibre can lose its foothold on the market due to bad business decisions and poor luck. Toshiba was delisted last Wednesday after 74 years on the Tokyo exchange, following 2 decades of struggle and scandals that brought down one of Japan's biggest brands and ushered in a buyout (by Japanese Industrial Partners and an uncertain future.

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