Inside Views: Yamaha
Having recently celebrated their first 100 years in the music industry, we thought it opportune to discover what Yamaha have planned for the next century. Paul Gilby investigates.
With Yamaha celebrating their Centenary in 1987, it seemed opportune to discover more about their corporate plans for the future. Paul Gilby spoke with Mr Iijima, Yamaha's European Director of Marketing & Public Relations, who revealed plans that will affect the way the music industry and instruments themselves develop in the next twenty years.
Yamaha are the biggest musical instrument manufacturer in the world. Their total worldwide sales last year, from the music divisions alone, were 210,614 million Yen - roughly 1,053 million pounds. The company as a whole, inclusive of its other well-known product lines such as furniture and household goods, audio and sporting goods, grossed 368,094 million Yen (1,840 million pounds). If you weren't already aware of it, those figures tell you that the company is BIG. However, what is more interesting is that Yamaha only made an operating profit of 9,177 million Yen (46 million pounds) - a small profit indeed for such a huge organisation.
If you look into the reason why this is so, you will discover that it is part of the very fabric of their corporate philosophy. Yamaha is a leisure company whose guiding principle is "To enable people to lead more joyful and fruitful lives," and thereby contribute to society as a whole. This sort of philosophy is typical of many Japanese companies.
Yamaha developed from the Nippon Gakki Co. which was founded in 1887 by Torakusu Yamaha and began life as reed organ manufacturers. During the second world war the company was drafted into the Japanese war effort to build aircraft components and the expertise gained from metal work and machine tool handling was put to use after the war when Yamaha diversified into motor bike manufacturing in 1955.
In 1954 the Yamaha Music School system was inaugurated, and in 1959 they developed an electronic organ (to be known as the Electone) and held the first Electone festival in 1964. As the music school grew, it became necessary in 1966 to establish a separate division which became the non-profit making Yamaha Music Foundation. To date, some 3½ million students worldwide have attended the music schools.
During 1968 Yamaha started producing stereos and entered the audio field, then in 1970 the first World Popular Song Festival was held in Tokyo (this is similar to the Eurovision Song Contest but is open to world entries - the 1987 UK entrants included Erasure).
Recognising the importance of emerging semiconductor technology, Yamaha opened their own Integrated Circuit plant in 1971. This was also the year that the Yamaha-Kemble group was set up in the UK. By 1983 the Clavinova, DX7 digital synthesizer and their own MSX-type computer, the CX5, had emerged. In 1984 they started to market their own custom-built LSI chips and developed their own industrial production line robots. 1986 saw the opening of the Yamaha Music Pulse store, 1987 the London Research & Development Centre and the establishment of the Yamaha Corporation of Europe head office in London.
What you realise when you talk to people at Yamaha in Japan, and see how they have developed over the years, is that they occupy a very special position within the world music market - a sort of 'father figure' or guardian. Some people are frightened of their power, others think they interfere too much in market development. Whatever your view, one thing is certain: Yamaha are committed to seeing that the music business grows. Perhaps not in the direction others might feel it should develop, but it will grow and many new and existing companies will benefit from that continued expansion. If their own growth continues, ultimately Yamaha have the potential of becoming one of the biggest companies in the world as personal leisure is destined to become the world's major pursuit.
Yamaha's concern for market expansion is only too obvious when you look at the resources and effort put into their music education schools; an investment for the future if ever there was one. Their ideas are usually simple. For example, their general approach to increasing a particular instrument's sales figures has not always been through capturing a bigger share of the market.
No, they have tackled the problem a different way and concentrated on expanding the market itself, thereby automatically increasing their share. This is not a selfish pursuit, but one which not only satisfies their own company desires but also helps the whole music industry capture a bigger share of people's expendable income and focus their leisure time on music rather than other interests.
Hopefully, this information has given you sufficient insight into the company and its ideals and will be of some help in understanding the implications of the points raised in the following interview, which took place in December 1987 in London, after returning from a trip to the Yamaha world headquarters in Japan to celebrate their Centenary.
In 1986 Mr Iijima was drafted in from another Yamaha division to become involved in the Yamaha European Centenary project and later the 'global' project. This has involved him in consultation with Yamaha employees in Japan, UK and USA. The project's aim was to consider the next 100 years of the Yamaha Corporation's activities in the musical instrument merchandising field. Based on this investigation, Yamaha decided to set up four regional headquarters in Japan, UK, USA and Asia/Oceania as part of a global plan. The purpose of these headquarters is to operate as a facilitator and cost centre for the general musical instrument divisions with the task of planning mid-to-long range market strategy. And, as Yamaha say, "to enable the company to take its place as a good corporate citizen." The European HQ in Hammersmith, London, is responsible for overseeing ail European countries as well as the Middle East and Africa.
I began the interview by asking Mr Iijima how the European centre was going to monitor the market and plan its strategies?
"There are two main functions of this centre - pan-European marketing and product development. The product area includes representatives from our four different product divisions: Piano, Light Music, Electronic Keyboards and Brass/Educational [Light Music is the division which covers all hi-tech instruments].
These four representatives are in constant contact with their relevant division's design and engineering teams in Hamamatsu, Japan. We have done this to establish a means of fast communication from the local market place back to Japan. This is important, because we can listen to musician's ideas and get up-to-date information and comments from the customers in the actual local markets. This aspect relates to the role of the London R & D Centre, which is run essentially for the LM Division and covers keyboards, recording, guitars, drums etc. In addition to this, there are two other centres in Europe - the piano R & D centres in Paris and London. So far, the only product to have received any great input from these centres is our MIDI grand piano."
Yamaha value sponsorship of events very highly and their dedication to promoting music as a leisure activity is second to none. Support comes in a variety of forms. Many readers will know of the Yamaha laboratory at IRCAM in the Pompidou Centre, Paris. Here, a project which has involved Dave Bristow and John Chowning in the continued development of the FM synthesizer system has been running for some years. Additionally, the centre attracts many international composers who use the facilities and instruments Yamaha provide.
In the past, Yamaha have sponsored a number of musical events in Britain and it has become evident by their recent support of the Electric Symphony Orchestra concerts that sponsorship is on the increase. Was this part of their new marketing strategy?
"Yes, it is, and hopefully we will support pan-European concert tours and music festivals in the future."
"We have recently established two new software divisions in Japan... one is for developing our ten-year plan."
Will you be following a similar line of support in London as Yamaha give to the IRCAM centre in Paris. For example, I have heard that a new national electronic music studio may be established on London's South Bank and that Yamaha may have some input?
"Yes, there are plans for such a centre and I have already participated in a brainstorming session with the South Bank committee, together with representatives from the BBC and other music fields. At present, I am not sure what is happening with this project but we have decided that we will try and support the idea in some way.
"We have also been approached by the Dublin City Centre Project. They are trying to establish a culture and arts centre and this is being funded by Dublin City and the Irish government. The main objective of establishing this centre is to target it at amateur musicians and the general public and make it possible for them to enjoy access to modern instruments in the form of electronic keyboards and synthesizers. These instruments would be made available through classes, instrument clinics and seminars."
As part of the new Yamaha corporate approach, local production facilities are planned in a number of countries around the world with the intention of "internationalising labour". This is for a number of reasons, including tailoring products to specific local markets, to solve "the trade imbalance between Japan and the EEC", and to be closer to the market. At present there are some seven plants outside of Japan.
Is the establishment of the London Yamaha office linked with finding European production facilities?
"Yes, that is one of our longterm aims and is related to our desire to find manufacturing and sourcing capability. A recent example was our acquisition of the Premier percussion company. We have also been working closely with UK audio manufacturers Leech, who manufacture pro-audio loudspeakers for Yamaha on an OEM agreement basis. These are the first two cases, both in the UK by chance. We have also worked with Kemble in the piano field, but production is quite small and now with the establishment of our new HQ in London, we will be looking at a broader range of products. We have already established a piano project to study production possibilities around the world, and to look at the best means of production."
Shortly after this interview took place, Yamaha gained national news coverage in Britain with the announcement of production increases and the creation of sixty new jobs at the Milton Keynes Kemble factory. They have also just bought Sequential in America.
As readers are no doubt aware, there has been an enormous increase in the number of software music packages over the past two years. Software seems to be muscling its way into every aspect of modern music production, for both the amateur and professional alike. One of the reasons for the great acceleration in software development has been due to the emergence of two strong computers, namely the Apple Macintosh and the Atari ST. Only two or three years ago, software companies had to deal with a plethora of different computers. The choice was not easy in a market that was led by the computer and not the software. You could buy a Commodore 64, Acorn BBC B, Apple II, Yamaha CX5, Sinclair Spectrum, and many more. It was those people interested in computers as general tools who first bought a machine and then went looking for a music program to run on it. Today, the situation is reversed. It is the desire to create music with a software package that comes first, then the appropriate computer is bought that will run that software. In other words, the market is now led by the software application.
When Yamaha introduced their own dedicated music computer, the CX5, it was based on the new MSX machines which were being manufactured by a number of different Japanese firms and heralded as the new home computer 'standard' that would sweep the world. The CX5 was originally designed for use by the Yamaha Music Foundation schools in Japan. Later, the same division designed the FB01 expander which was launched onto the market a few months before the TX81Z. The buying public were confused, there seemed no logic in having two similar products. The truth is that two different divisions within Yamaha were getting on with their own product development and so the two appeared on the market at the same time. In Japan, their applications were distinct: one for CX5 users in music education; the other for keyboard synthesizer users. In Britain these users were often the same people.
Yamaha learned a great deal from that situation and although the CX5 is still popular in the Japanese market, the demise of the MSX format around the world has been very rapid. It became obvious to Yamaha that software applications could not be 'globalised' and that a new plan was required, as Mr Iijima explains.
"We have recently established two separate software divisions in Japan. The first one, called the INSOFT Laboratory, started about six months ago and is responsible for developing our ten year plan. Apart from the present products, this division is free to consider what sort of equipment, products, instruments or non-instruments might be developed for ten years time and includes looking at the interfacing of musicians and computer software. This is their task.
"The other group is called the ONSOFT Division. Their role is to provide software to work with the present Yamaha products, including writing the operating system software for our synthesizers, samplers, signal processors etc. They will also work closely with the Music Foundation on application software development.
"As part of their task, the INSOFT Laboratory will be examining local markets across the world and we hope to establish a number of subsidiary companies in Europe and America. However, initially INSOFT is looking at working with American experts in designing and developing both software and hardware products for music. This would be on a contract basis at first. They will also be communicating with people in the academic fields, such as Stanford University, MIT etc, where there are some interesting developments taking place."
Do you see a similar situation arising in the UK?
"Yes, we have already approached Cardiff University and we hope to contact others in the future. We have looked at Cardiff because it is very special in having its electronic music studio in the Physics Department, not in the Music Department."
You have spoken about the establishment of INSOFT and its ten year plan. Is there a desire to capture a significant portion of the software market, or does Yamaha consider the market too small?
"We estimate the music population of Europe to be 25 million... we would like to double that number."
"In line with the continuing study by INSOFT, we may perhaps look at a means of expanding the market in the area of the expected link between hardware and software [meaning editing programs]. They have just appointed the project feasibility team and we hope that within the year they will have found a partner in America and be ready to move forward."
It is well-known within the music business that Yamaha's approach to marketing is to sell larger numbers of products at a smaller than usual profit margin. Could you explain this approach?
"That policy came about some time ago and was founded on a requirement to manufacture high quality pianos. The piano business has always been a key base within the company, however, the market itself had been shrinking over the years but we were confident that if we could expand the piano market itself, piano music and the interest in it could be revived [in 1987 Yamaha sold 179,224 pianos]. This strategy included placing a strong accent on the Yamaha music schools to strengthen the fundamental music education on all keyboards including pianos. After four or five years there was a sudden change in the Japanese Yen value against the Dollar. Piano manufacturing became very costly in Japan and we had to look at maintaining a competitive price at the same time as expanding the market. The new philosophy was to invest in the future and continue to develop the piano education programme to show how important the piano was as the base instrument of music.
"We have now implemented this policy across all product divisions, because we believe the rewards lie in an expanded market. This idea is our key mission at the European headquarters. We hope to enlarge the music population of Europe and we are at present working on a three year plan. It is very difficult to assess how many people are musically trained or are musically experienced. However, we estimate the music population of Europe to be 25 million. In the coming five years we would like to double that number.
"I have some interesting data from a recent McKinsey/Gallup survey that Yamaha commissioned. These figures are from a population sample taken in the UK, France and Germany.
"In the 6 to 10 age group: 22% enjoy some instrument, of which some 18% still enjoy playing but are not taking lessons. 4% are taking regular lessons. 11 to 15 age group: 31% enjoy playing, 17% play without lessons and 14% take lessons. 16 to 20 age group: 30% enjoy playing and 22% are taking lessons. 21 to 30 age group: 18% enjoy playing. 31 to 40 age group: only 9% enjoy playing. 41 and over age group: only 8% play an instrument. At present there are 50,000 Yamaha music school students in Europe and we would like to double this number in three years.
"The expansion programme represents a huge task and part of the plan is to organise the Band Explosion final in Europe instead of Japan, so that the musicians of Europe can become involved in a major contest and see what music is doing for young people".
[In November 1987, Yamaha held the first of its world Band Explosion contests in Tokyo. Britain was represented by a band called The Quest, who had won the UK final held at last year's British Music Fair. Similar contests to this were held all around the world and attracted some 6,500 entries, of which 22 won a place in the final.]
In Japan, Yamaha own fourteen musical equipment retail stores and it is said that the reason for this is to show that a market does exist and that it is a worthy business. Although the stores are full of Yamaha equipment, the one that I visited recently in Tokyo also stocked a number of products from Roland, Akai and others. The next question was obvious: did Mr Iijima see the same approach coming to Europe?
"The retail situation in Europe is quite different from that of Japan. It has taken Yamaha almost twenty-five years to build up trading links with the European shops. Fortunately, some of the key dealers in the UK, France, Germany, Spain etc, are now very familiar with the Yamaha marketing technique. As one of our longterm considerations, we see the conservation of the retail network and its development as extremely important. This would include such ideas as 'showcase' stores, product presentations and to develop mass merchandising channels like Dixons.
"Retailing is one of the longterm issues for the European HQ to look at and we shall be re-studying the situation to find out what is right and wrong before developing a new approach. Whatever we do has to be the best solution for the whole music industry. If we are to avoid a repeat of the home computer market rise and fall in the UK, the retail business people should study together with the people or companies who supply the goods, what the requirements are for ten years time and find ways in which they can ensure their continued profits and expansion."
How do you see the market expanding, is it in the home recording area, multi-keyboards, or synthesizers?
"Actually, the digital musical instrument field has expanded very rapidly over the past five years, but we must maintain the same efforts to develop the new customers and new segments by software or music promotion activities to make people understand how interesting and enjoyable music can be. We must also develop the semi-serious amateur musicians through some musical presentation activity such as the Band Explosion contest, Electone organ festivals, Clavinova music contest or composition contests, etc.
"The home recording market, including signal processing, only accounts for about 10% of sales at the moment and, naturally, we wish to increase this over the next few years. Other products which we are looking at are items such as composing machines, automatic accompanist machines and guitar synthesizers. As for expanding fields, generally speaking, we can classify into four areas the way in which people's enjoyment of music develops: 1. Hearing; 2. Singing; 3. Playing music; and 4. Composing music. These areas have a close relationship with each other and it is in the transition from one area to the next where people often drop out. In order to sell more instruments we need to expand number 3, the music playing group. Eventually, after some time, these people want to hear the music that they are playing and this is the point at which we can expand the sales of recording equipment. How easy it is for them to record could determine whether their interest remains.
"One of the instruments we have introduced is the Player Piano. This is an upright acoustic piano with a built-in sequencer which allows you to record your own performances. This instrument is aimed at the music education/home entertainment market, where the studying of piano can be enhanced by having an instant playback of the last performance."
It is clear from Mr Iijima's comments that Yamaha intend to remain a major force in popularising music throughout the world in the coming decades. Fifteen years ago the Yamaha name meant little to the rock musician. Ten years ago their guitars and drums started to gain great respect from players. Five years ago they entered the electronic musical instrument market and produced the world's best-selling synthesizer, the DX7, and sold 150,000 of them. In 1987 they launched the WX7 wind synthesizer and opened up a whole new area of expression for musicians. For the future, they promise more instruments and new technologies.
Coming soon are digital multitrack recorders in the form of a portastudio-type machine using the new DAT format; a range of audio mixers with digital control and built-in effects, much like the DMP7 but cheaper; and complete music synthesis production centres. Whatever happens, one thing is certain: the Yamaha name will play an increasing role in all of our lives.
Feature by Paul Gilby
mu:zines is the result of thousands of hours of effort, and will require many thousands more going forward to reach our goals of getting all this content online.
If you value this resource, you can support this project - it really helps!