Casio Computer Co., Ltd. Business Information, Profile, and History

Company Perspectives:

Casio's strategy is to popularize multimedia with innovative products that capitalize on new opportunities, that expand creativity for their users, and that can be used now--with existing infrastructure and new media--for reasonable prices. With unique functions and product concepts, we are expanding our product lineup for various lifestyles and consumer groups. We are also helping businesses increase creativity and productivity with advanced data and communications equipment. Our experience and exclusive technologies allow us to create personalized devices that are light, compact, and energy efficient.

History of Casio Computer Co., Ltd.

Casio Computer Co., Ltd. manufactures desktop electronic calculators, digital and analog timepieces, digital notebooks and diaries, electronic musical instruments, audiovisual products, computers, and other consumer and industrial electronic products. Casio has developed a number of electronic products for consumers and businesses based on digital technology and the use of integrated circuits, such as digital cameras. The company also manufactures telecommunications products, including pagers and mobile phones. 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

Casio Computer Company was founded in Tokyo in 1946 by the Kashio family. Four Kashio brothers--Toshio, Kazuo, Tadao, and Yukio--and their father founded a company that was to be managed under a "spirit of creation"; the company philosophy remains "creativity and contribution." The Kashio brothers still own about ten percent of all outstanding Casio stock, and the Kashio family retains effective financial control of the company. Other major holders of Casio stock are Japanese financial companies, none of which owns more than 4.29 percent. 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 name Casio is an anglicized version of Kashio, demonstrating that from the beginning 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.

Casio was incorporated in 1957, following 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. Casio has 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, due to 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 one 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 ever-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 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.

By the 1980s Japan had become the world's leading electronics exporter while the United States was the largest consumer of electronic products. While U.S. firms concentrated on military, industrial, and commercial products, Japanese firms 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; phonedialing watches; and watches that could record caloric consumption or serve as a pedometer.

The electronic-musical-instrument division manufactured such products as electronic keyboards and 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. However, new chip technology that was developed in the late 1970s made cheaper electronic instruments possible. Casio engineers began to develop electronic pianos at this time. They were marketed to amateur players who couldn't or wouldn't afford a traditional piano. Casio introduced electronic keyboards into the U.S. market in 1980.

U.S. sales began to take off in the mid-1980s. In 1983, the total number of electronic keyboards 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.

The electronic-office-equipment division manufactured such products as LCD televisions, TV/VCR combination units, office computers, electronic cash registers, point-of-sale scanning systems, and other audiovisual products. Casio hoped to build on its LCD technology to further expand its product lines and to ensure future growth and development.

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 planned full-scale marketing of this new computer in early 1991 and strengthened its sales network. Casio hoped to use ADPS to strengthen and expand its role in business markets.

Since research and development plays a crucial role in the long-term viability of electronic manufacturers, Casio consistently devoted about four percent of its annual sales revenues to research and development. Among the more promising 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.

The 1990s

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 hand-held devices combined traditional datebook functions--calendar, alarm clock, phone directory, memo pad--with functions of immense appeal to school-age consumers, including fortunetelling, secret passwords, a match-making 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 in the coming years. 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 school children. 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 video phone. Previous video phones 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 video phones with success. Casio began marketing a home-use video phone 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, and Casio hoped the new technology would become commonplace in the near future. Casio also introduced a low-cost digital camera in 1995. Like the video phone, 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.

Throughout the 1990s, 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 and digital diaries. The company believed it was positioned for long-term growth using this strategy in the evolving telecommunications industry and in multimedia advancements to come.

Principal Subsidiaries: Aichi Casio Co., Ltd.; Yamagata Casio Company; Casio Polymer Tec Co., Ltd.; Casio Electronic Manufacturing Co., Ltd. (71%); Casio Micronics Co., Ltd.; Casio Systems Co., Ltd.; Kofu Casio Co., Ltd.; Kochi Casio Co., Ltd.; The Casio Lease Company; Casio Electronic Devices Company, Ltd.; Asahi Corporation (65%); Casio Computer Company GmbH (Germany; 60%); Casio Computer Ltd. (Hong Kong); Casio Electronics Company, Ltd. (U.K.); Casio (Malaysia) Sdn. Bhd.; Casio Korea Company, Ltd.; Casio Taiwan Ltd.; Casio Asia Pte. Ltd. (Singapore); Asahi Electronics (Singapore) Pte., Ltd. (62.5%); Asahi Electronics (Thailand) Co., Ltd. (59%); Asahi Industries (Malaysia) Sdn. Bhd. (80%); Casio Inc. (USA; 60%); Casio Canada, Ltd.; Casio PhoneMate Inc. (USA); Casio Manufacturing Corporation (U.S.A.); Casio Electromex S.A. de C.V. (Mexico).