Casio Computer Co., Ltd. History

Company Perspectives:

'Starting out initially as a computer manufacturer, CASIO Computer Co., Ltd. has developed calculators, digital watches, electronic musical instruments, liquid crystal televisions, and other products that serve to put information into the hands of people everywhere. Today it is becoming much easier to exchange multimedia data, including images and sound, which will usher in an era where more people around the world start to share more common values. This has generated demand for world-standard data processing devices that are easy to use. At CASIO, the emphasis has always been on the individual consumer, which is why we are working towards our goal of `personal multimedia' through such products as pagers, PHS telephones, and other communication products, as well as our LCD digital camera and other image data products. We firmly believe that our products must make the lives of people more enjoyable and comfortable. They must be easy to operate, versatile, and affordable, while offering the highest level of quality possible. To accomplish all of this, we make research and development of totally new products a central theme of our business philosophy. We also place a great deal of emphasis on system equipment, software, electronic devices, and other fundamental areas in our quest to produce products that make the dreams of people everywhere come true.'--Kazuo Kashio, president Key Dates:

Key Dates:

1946:

Kashio family founds Kashio Manufacturing in Tokyo.

1957:

Company introduces the first purely electric small calculator; incorporates as CASIO Computer Co., Ltd.

1965:

Casio introduces the first desktop electronic calculator with a memory.

1972:

Casio Mini, the first calculator for the mass market, debuts.

1974:

Company enters the digital watch field with the launch of the Casiotron.

1980:

With introduction of the Casiotone 201, Casio begins producing electronic musical instruments.

Late 1980s:Company begins moving much of its manufacturing outside of Japan.

1991:

Casio acquires a stake in Asahi Corporation.

1995:

Casio's PHS telephone begins commercial service in Japan; company introduces the first mass-market digital camera.

1996:

The Cassiopeia handheld PC featuring Windows CE debuts.

1999:

Company posts the first full-year loss in its history.

Company History:

CASIO Computer Co., Ltd. (Casio) manufactures desktop electronic calculators, digital and analog timepieces, pocket and office computers, digital diaries, electronic musical instruments, audiovisual products, computers, LCD televisions, digital cameras, and other consumer and industrial electronic products. The company also manufactures telecommunications products, including pagers, mobile phones, and wireless telephone handsets. In 1969 Casio was among the first Japanese manufacturers to fully automate an assembly plant, and this sort of innovation has allowed the firm to remain cost-competitive with other larger electronic manufacturers. Much of Casio's success has been based not only on its technological and assembly innovations but also on its aggressive marketing and sales strategies. As a result of its assertive marketing, the company sells its diverse products in more than 140 countries.

Early History

The company was founded in Tokyo in 1946 by the Kashio family under the name Kashio Manufacturing. Four Kashio brothers--Toshio, Kazuo, Tadao, and Yukio--and their father envisioned a business that was to be managed under a 'spirit of creation'; ever since, the company philosophy has remained that of 'creativity and contribution.' Three of the Kashio brothers still own about 10 percent of all outstanding Casio stock, and the Kashio family has retained effective financial control of the company. The Kashio brothers remain active in the management and operation of the company as well: Toshio Kashio serves as chairman, and Kazuo Kashio is president.

The company was incorporated in 1957 as Casio Computer Co., Ltd. The name Casio is an anglicized version of Kashio, demonstrating that early on the company was acutely aware of the economic significance of international marketing. The Kashios believed that in the post-World War II environment a Westernized name would render the company's consumer and business products more marketable, both domestically and internationally. The incorporation occurred around the same time as Toshio Kashio's invention of the first purely electric&mdash opposed to electromechanical--small calculator. The company capitalized on this invention and became the only Japanese manufacturer to specialize in electric calculators. After the introduction of semiconductors in the mid-1960s, electromechanical technology was replaced with electronic technology, and in 1965 Casio introduced the world's first desktop electronic calculator with a memory. Over the succeeding decades, Casio consistently sought to expand its product line while relying upon calculators as its primary base of operations.

Prior to 1965 electromechanical calculators were large and expensive. Electromechanical calculators were literally desktop size, ranged in price from $400 to $1,000, and could complete only four functions&mdashdition, subtraction, division, and multiplication. These earlier devices, limited in function and speed, were also prone to mechanical failure. The development of semiconductor and integrated-circuit technologies during the 1960s began to reduce the size and cost of electronic calculators dramatically and simultaneously enhanced their reliability. Electronic calculators were also easier to read, despite their smaller size, because of technical breakthroughs in light-emitting diodes (LED) and liquid crystal displays (LCD), and these new technologies required significantly less power to operate. Casio helped to develop LED and LCD technologies, and by the 1980s these technologies played an increasingly important role in the development of Casio's digital-timepiece and LCD-television markets.

In 1964 the first transistorized, programmable, desktop calculators were introduced, and Japanese manufacturers, including Casio, began to assemble electronic calculators. The entire output from all Japanese electronic manufacturers in 1965 was only about 5,000 units. In 1969 Casio's Kofu factory became the first Japanese plant to mass produce electronic calculators. Very few of these early Japanese electronic calculators were destined for the U.S. market. In 1965 the United States imported just 69 electronic calculators from Japan, and in 1966 Japanese calculators accounted for less than 1 percent of the U.S. market. Casio did not begin to market its own products in the United States until 1970.

In the 1970s Japanese electronic products, particularly consumer electronics, began to capture a larger share of the expanding U.S. market. By the mid-1970s Japanese electronic manufacturers came to dominate the U.S. electronic-calculator market. Japanese companies competed fiercely for market share, and eventually only Sharp and Casio were left. Casio aimed for the bottom of the market, selling small, low-cost calculators with a variety of novel functions. The Casio Mini, which debuted in 1972, was in fact the world's first calculator aimed at the mass market.

The calculator division grew steadily, manufacturing standard electronic calculators, high-performance scientific calculators, pocket computers, and digital diary systems. Electronic notepads and digital diaries greatly expanded Casio's markets, particularly its domestic sales. The electronic-timepiece division also prospered, making a variety of digital and analog watches, many with built-in memory and storage features. The company had entered the digital watch sector in 1974 with the introduction of the Casiotron, which displayed the year, month, date, hour, minute, and second.

By the 1980s Japan had become the world's leading electronics exporter while the United States was the largest consumer of electronic products. As U.S. firms concentrated on military, industrial, and commercial products, Japanese firms instead emphasized consumer products.

Expanding Product Lines in the 1980s

After years of market expansion during the 1970s and 1980s, however, Casio found that market demand in timepieces became stagnant. As a result of market saturation, Casio introduced a number of new timepieces to maintain market demand during the late 1980s, including such products as watches that measured altitude, depth, and barometric pressure; phone-dialing watches; and watches that could record caloric consumption or serve as a pedometer.

Casio moved into a new product area in 1980 with the launch of the Casiotone 201, an electronic keyboard. It was marketed to amateur players who could not afford to buy or were not willing to shell out the money required to buy a traditional piano. In addition to keyboards, the electronic musical instrument division was eventually involved in manufacturing such products as digital synthesizers, guitar synthesizers, digital horns, and other sound generators. One of the Kashio brothers, Toshio, was responsible for the company's move into electronic instruments. He had been interested in mass-marketing musical instruments for a while, but manufacturing costs were too steep. New chip technology that was developed in the late 1970s, however, made cheaper electronic instruments possible.

U.S. sales of electronic keyboards began to take off in the mid-1980s. In 1983 the total number sold in the United States numbered less than 300,000. By 1987, American consumers bought close to five million. Most of these were low-end instruments, retailing for less than $300. By the end of the decade, Casio had captured roughly 55 percent of the electronic instrument market. Its pianos were principally low-cost products, but they provided lots of effects. With digital sampling and memory, keyboards could store dozens of sounds, songs, and patterns. Musical products suffered from potential market saturation, however, and the company lavished millions on advertising in order to keep its products fresh in consumers' minds. After an initial surge in sales, the company began to market enhanced or new lines of products to maintain market demand. During the late 1980s Casio began working to expand its musical markets by appealing to professional musicians and by developing sound products for use in live performances.

Other new products introduced during the 1980s included pocket-sized LCD televisions (1983), a Japanese-language word processor (1985), and portable TV/VCR combination units (1987). In 1988 Casio introduced a new automated data-processing product line. An integrated business system designed to be used without costly programming, Casio referred to the product as an Active Data Processing System (ADPS). It included a processing unit which Casio hoped would create a universal business data format and a data management system. Casio launched full-scale marketing of this new computer in early 1991 and strengthened its sales network.

Since research and development plays a crucial role in the long-term viability of electronic manufacturers, Casio has consistently devoted about 4 percent of its annual sales revenues to research and development. Among the innovations pursued by Casio was COF (chip-on-film) technology, a method of mounting information on a computer chip that allows increased functional capabilities in lighter and thinner settings. The company adapted COF technology for use in electronic calculators, digital diaries, and printers. The company also began to incorporate this technology into smaller and lighter watches, LCD televisions, computers, and memory cards. In 1990 the company set up a subsidiary, Casio Electronic Devices, to promote the sale of its chip-on-film and LCD components.

Continued Innovation in the 1990s and into the 21st Century

Casio attempted to expand its markets not only through technical enhancements and new product lines, but it also moved aggressively to increase the scope of its operations by expanding internationally. The company began to move some of its manufacturing facilities outside of Japan, to combat the expense of the strong Japanese yen. Casio first opened plants in nearby Taiwan and Hong Kong. Then in 1990, the company opened plants in California and in Mexico. Both Casio Manufacturing Corporation in San Diego and Casio Electromex in Tijuana were devoted to producing electronic musical instruments.

In 1991 Casio acquired an interest in the Asahi Corporation, a manufacturer of electronic appliances, calculators, and telephone answering machines, and began to diversify into new and promising product areas. It developed a 'personal digital assistant' (PDA) with the Tandy Corporation, a small computer that could interface with traditional personal computers, as well as recognize handwriting and send e-mail. Casio's digital diaries became extremely popular with children in the mid-1990s. These handheld devices combined traditional datebook function--calendar, alarm clock, phone directory, memo pad--with functions of immense appeal to school-age consumers, including fortune-telling, secret passwords, a matchmaking adviser, and the 'virtual pet.' When the user pressed the 'pet' button, a puppy would appear on the screen and do tricks. Casio's diaries were such a hit that production had to expand 20 percent in 1994 to keep up with demand. Later models had built-in infrared beam technology that allowed users to send messages to friends' diaries.

Sales of the diaries helped Casio increase its revenues in Japan in 1994, but the strong yen continued to cut into the profitability of the company's exports. Casio increased the amount of its manufacturing that was done overseas in order to combat this trend. While only 30 percent of Casio's production was overseas in 1993, two years later 80 percent of the company's products were made in foreign plants. By 1996 Casio had plants in Singapore, Malaysia, Thailand, and Korea, in addition to its Hong Kong, Taiwan, and North American plants.

Casio began to expand into mainland China as well. In 1993, the company set up two joint ventures in China to manufacture pagers and other electronic devices, and in 1995 two more manufacturing and marketing joint ventures were established in China. Casio Electronics Co. in Zhongshan made electronic diaries and scientific calculators, and another company in Zhuhai produced electronic keyboards. This gave Casio another lower-cost Asian base for manufacturing and also gave the company a foothold in the Chinese consumer market, which was expected to grow markedly. Casio also began marketing pagers in India, under a joint agreement with Mitsui and the Indian company Bharti Telecom, beginning in 1995.

Casio found a promising new market in the mid-1990s as a result of deregulation of telecommunications in Japan. Pagers had not been allowed for sale directly to consumers until March 1995. This changed as part of a liberalization of Japan's telecommunications industry, and Casio experienced record growth in its pager sales. In what seemed a typical move for Casio, which had enjoyed great success with kids' electronics in other areas, the company introduced a pager aimed at schoolchildren. Its 'Bell-Me' pager translated telephone signals into text messages coupled with various happy or sad faces. Casio also developed a small mobile telephone it called the 'personal handy-phone system' (PHS), which began commercial service in July 1995. This was similar to the digital mobile phones already in use in the United States. The PHS was tailored to the Japanese urban environment. It required an antenna within 100 to 300 meters, but it functioned ideally in Japan's densely populated cities.

Other telecommunications devices Casio marketed in the mid-1990s included the videophone. Previous videophones had been unsuitable for general consumers because of high cost and poor quality. Only large businesses with complex digital networks in place had been able to use videophones with success. Casio began marketing a home-use videophone in 1995 that was reasonably priced and worked well on regular analog telephone circuits. Consumers did not have to change their phone lines in order to use the new phones.

Casio also introduced a low-cost digital camera in 1995. Like the videophone, the digital camera had been used in the corporate world but was previously not convenient for the general public. Casio introduced a moderately priced, pocket-sized model that could be used by consumers with a personal computer. Although the quality of the pictures was not nearly the equal of standard film-based photographs, the Casio camera offered its users an instant view of the picture just taken via an LCD screen on the back of the camera. An unwanted shot could be immediately deleted. Priced around $500, Casio's digital camera was an instant hit, and by mid-1997 the company was churning out more than 80,000 units per month. Even with the quick entrance of numerous competitors, Casio still held 47 percent of the Japanese market at that time.

Another hot product for Casio in the mid-1990s was its G-Shock line of shock-resistant watches. First introduced in 1983, the watches became a craze in the mid-1990s both in Japan and in other developed countries, particularly among younger people. By early 1998, some 500 different models had been introduced and more than 19 million units had been sold.

Casio teamed up with Microsoft Corporation to develop the Cassiopeia handheld PC, which was launched in North America in November 1996. The device featured an operating system called Windows CE, a scaled-down version of Microsoft's Windows. In June 1998 the Cassiopeia E-10 was introduced into North America. This was a palm-sized model, again running on Windows CE, and featuring pen-based operations and a variety of software applications, including personal calendars and contact databases. The Cassiopeia and other handhelds using Windows CE proved to be no match for the sleeker, more lightweight, and simpler-to-use personal digital assistants introduced by Palm Inc., which held almost 80 percent of the handheld market in the late 1990s. Various Windows CE handhelds as a group garnered only a 10 percent share.

Meanwhile, Casio continued to develop high-tech wristwatches and increasingly emphasized wireless capabilities in new products. The PC Cross watch debuted in June 1998, featuring the ability to transmit data to and from PCs using infrared technology. One year later, Casio introduced the world's first wristwatch with a built-in global positioning system (GPS) function, a product aimed particularly at hikers wanting to know their exact location at all times. Unfortunately, a sharp decline in sales for the once-hot G-Shock series of watches helped contribute to the company's dismal results for the fiscal year ending in March 1999. Casio posted the first loss in its entire history, a net loss of ¥8.53 billion ($70.5 million) on net sales of ¥451.14 billion ($3.73 billion). Other factors in the decline included a falloff in sales of pagers and PHS handsets due to the rapid growth of cellular telephone services and a sharp rise in the value of the yen, which made Japanese exports more expensive in the United States, leading to sales declines there. Casio initiated restructuring efforts and inventory write-downs during that fiscal year, taking charges of ¥14.64 billion ($121 million).

Casio returned to the black in fiscal 2000, posting net income of ¥6.17 billion ($58.2 million) on revenues of ¥410.34 billion ($3.87 billion). Among the initiatives taken that year were the formation of a number of alliances in the areas of mobile and wireless technologies. Continuing its collaboration with Microsoft, Casio unveiled the Cassiopeia EM-500, which featured Microsoft's retooled operating system, dubbed Pocket PC, as well as software for the wireless streaming of video. In December 1999 Casio entered into an alliance with a unit of Siemens AG of Germany for the development of a next-generation Pocket PC that would include multimedia, wireless Internet, and mobile telephone capabilities. Casio next agreed to jointly develop what it called a 'mobile e-mail terminal' with Vodafone AirTouch Plc of the United Kingdom. New products released by Casio around the turn of the millennium included the Wrist Audio Player, a wristwatch that could also play MP3 audio files downloaded from the Internet; and the Wrist Camera, a wristwatch that doubled as a digital camera, taking postage-stamp-sized black-and-white pictures, which could be transferred to a PC via an infrared adapter. During fiscal 2000, Casio also entered the highly competitive market for digital cellular handsets, attempting to differentiate its model by touting its water and shock resistance.

Throughout the 1990s and into the 21st century, Casio had shown its strength in translating new technology into desirable consumer items. Casio's genius was for making high-tech electronics into small, light, cheap, and intriguing gadgets. It had done this with calculators, watches, keyboards, digital diaries, digital cameras, and handheld computers. The company believed it was positioned for long-term growth using this strategy coupled with an emphasis on mobile and wireless technologies.

Principal Subsidiaries: DOMESTIC: Yamagata Casio Co., Ltd.; Casio Micronics Co., Ltd. (93.2%); Aichi Casio Co., Ltd.; Casio Electronic Manufacturing Co., Ltd.; Kochi Casio Co., Ltd.; Kofu Casio Co., Ltd.; Casio Techno Co., Ltd.; Casio Information Systems Co., Ltd. (99.4%); The Casio Lease Co., Ltd.; Casio Electronic Devices Co., Ltd.; Asahi Corporation (89.4%). EUROPE: Casio Electronics Co., Ltd. (U.K.); Casio Computer Co., GmbH Deutschland (Germany; 60%). ASIA: Casio Computer (Hong Kong) Ltd.; Casio Korea Co., Ltd.; Casio Taiwan Ltd.; Casio (Malaysia) Sdn. Bhd.; Casio Asia Pte., Ltd. (Singapore); Casio India Co., Ltd. (91%); Casio Electronics (Zhuhai) Co., Ltd. (China; 66%); Casio Electronics (Zhondshan) Co., Ltd. (China; 70%); Casio Electronics (Shenzhen) Co., Ltd. (China); Casio Electronics (Guangzhou) Co., Ltd. (China; 53%); Asahi Electronics (Singapore) Pte., Ltd.; Asahi Electronics (Thailand) Co., Ltd.; Asahi Industries (Malaysia) Sdn. Bhd. NORTH AMERICA: Casio Holdings, Inc. (U.S.A.); Casio, Inc. (U.S.A.; 80%); Casio Soft, Inc. (U.S.A.; 72.8%); Casio Canada Ltd.; Casio Manufacturing Corporation (U.S.A.); Casio Electromex S.A. de C.V. (Mexico).

Principal Competitors: Hitachi, Ltd.; Fujitsu Limited; Mitsubishi Electric Corporation; NEC Corporation; Matsushita Electric Corporation; Mitsubishi Electric Corporation; Sharp Corporation; Sony Corporation; The Swatch Group Ltd.; Citizen Watch Co., Ltd.; Seiko Corporation; Timex Corporation; Apple Computer, Inc.; Compaq Computer Corporation; Dell Computer Corporation; Hewlett-Packard Company; Koninklijke Philips Electronics N.V.; Canon Inc.; Eastman Kodak Company; Fuji Photo Film Co., Ltd.; Minolta Co., Ltd.; Nikon Corporation; Olympus Optical Co., Ltd.; Palm, Inc.; Motorola, Inc.; Oki Electric Industry Company Limited; Ricoh Company, Ltd.; SANYO Electric Co., Ltd.; Yamaha Corporation.

Further Reading:

• Alpert, Bill, 'Hand-to-Hand Combat,' Barron's, November 13, 2000, pp. V8, V10.
• 'Casio: A Halt in Its Fast Growth Prompts a Move into New Fields,' Business Week, July 27, 1981, pp. 50+.
• Cignarella, Patricia, 'Casio's Quest to Become the Pied Piper,' Adweek's Marketing Week, January 16, 1989, p. 24.
• Cottrell, Robert, 'Casio Spearheads Printer Revolution,' Financial Times, October 11, 1984, p. 26.
• 'Digital Snap,' Economist, August 30, 1997, pp. 49-50.
• Holyoke, Larry, William Spindle, and Neil Gross, 'Doing the Unthinkable,' Business Week, January 10, 1994, pp. 52-53.
• Tanikawa, Miki, 'The Clock Is Ticking at Casio,' Business Week, April 20, 1998, p. 25.

Source: International Directory of Company Histories, Vol. 40. St. James Press, 2001.

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