Philips Invented the Cassette Tape — Sony Built the Walkman — Woody Magazine

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Philips Invented the Cassette Tape — Sony Built the Walkman

IFA opens in Berlin tomorrow. This story began on the same show floor 63 years ago.

Company Story · Sept. 3, 2026 (Thu.)

In Three Lines

Philips showed the first cassette tape at the Berlin radio show in 1963. Sony didn't invent the format. It invented the thing you carried it around in.
Philips wanted a royalty from Sony and backed down: 25 yen, then 6, then nothing. Given away for free, the format was the world standard within four years.
This isn't a story about Philips losing. The company that won the format and the company that made the money on it were simply not the same one. On its next format, the CD, Philips made sure they were.

IFA opens in Berlin tomorrow. It is Europe's biggest consumer electronics show, running since 1924, and it drew 220,000 visitors from 140 countries last year. Samsung and LG save product launches for it.

Sixty-three years ago, on the same fairgrounds, a Dutch company showed a tape smaller than a pack of cigarettes and a pocket-sized recorder to play it. Philips had built them at a factory in Hasselt, Belgium. The development chief there, Lou Ottens, had carved a block of wood to fit his jacket pocket and told his engineers to design around it. Ottens later remembered the visitors from Japan who crowded the booth, taking photographs and filling notebooks. He remembered them because of what happened next. Within a year, Japanese copies were everywhere, each in a slightly different size, none of them compatible with the others.

The inventor gets paid, surely

Say "cassette" and most of us picture Sony. The Walkman did that. A lot of people assume Sony invented the cassette too, and that is a reasonable guess. But Philips invented it, and Philips never collected a cent in royalties on the format.

That was not the plan. Philips did the arithmetic anyone would do: we hold the patent, so every company that builds a machine pays us. Fair enough. The arithmetic fell apart in Tokyo. Before Tokyo, though, it cracked in Germany.

The partner who walked out

Philips had been developing a new tape format together with Grundig, the German electronics maker. Two Philips teams were working in parallel: one in Vienna on a single-spool cartridge, one in Hasselt on the two-spool cassette. Management chose Hasselt and told Grundig late. As Ottens told it, Max Grundig, the company's founder, canceled the partnership on the spot and ordered his engineers to finish a rival format as fast as they could.

At IFA 1965, Grundig showed it: DC-International, a cassette slightly larger than the Philips one, with Telefunken building machines and BASF and Agfa supplying tape. A format war had started. But it would not be decided in Germany. The companies that would build the most machines were in Japan, and both European sides knew it.

Tokyo: 25 yen, 6 yen, zero

Grundig had approached Sony at the opening of IFA 1963, offering a seat in a format backed by three German firms. Philips sent its own delegation: Wisse Dekker, who ran the Far East division, and Ottens. In Tokyo they met Norio Ohga, a trained opera singer whom Sony's founders had recruited after he wrote to complain about their tape recorders. He would later run the company. Ohga picked the Philips cassette for one reason. It was smaller.

The trouble came at the contract stage, and Sony's own corporate history preserves the numbers. Philips asked for 25 yen on every machine sold by a Japanese licensee. Ohga refused. A few days later Philips came down to 6 yen, a rate it said other companies had already accepted. Sony's operations manager recommended taking the deal. Ohga refused again: unless Philips dropped the royalty entirely, Sony would go with Grundig. Philips dropped it. It did not give Sony an exclusive, either. In 1965 it opened the format to any manufacturer that agreed to stick to the specification.

Fifty years later, Ottens told the story with one extra detail. Ohga, he said, had mentioned that Grundig had called a week earlier and offered its entire system for free. Ottens came to believe that was a bluff on Ohga's part and revenge on Grundig's. Bluff or not, it worked. Philips could not defend 6 yen at the risk of handing Japan to Grundig.

Cut a road through the neighborhood and charge no toll, and the road will carry your name. The shops along it will belong to someone else.

A four-year war

A free format spreads fast. By September 1967, the Philips company newsletter counted 70 firms worldwide building recorders to the specification and 1,200 prerecorded music cassettes from 70 labels. That same year Grundig quietly dropped DC-International, and at IFA 1967 it showed a machine of its own that played Philips cassettes. Two former partners who had gone to war in 1965 were back on one format, on the same show floor, two years later.

What Philips won was the name on the road. From then on, a cassette that played in any machine anywhere in the world was Philips's size, the tape width Philips had chosen, Philips's speed. Philips had cut the road and named it. The road just did not have a tollbooth.

And the money

In 1979 Sony released the Walkman: playback only, no speaker, a pair of headphones. Listening to a cassette while walking down the street started there. Ottens said the same thing about it for the rest of his life. It was the ideal application for the cassette, he told a Dutch newspaper, and it still hurt that Philips didn't have one.

How much Philips made from the cassette, the company has never really said. It sold machines and blank tape and was the main owner of the record label PolyGram, so it can't have lost money. Two things are certain. The royalty was zero, and the best-selling product ever built for the format was Sony's. The biggest shop on the road did not belong to the people who paved it.

What Philips learned

On the next format, Philips changed the order of operations. In March 1979 it showed Sony a prototype digital audio disc it had been developing. Sony's point man was, once again, Ohga. By August the two companies had a joint task force, and the following year they published a specification that listed which patents belonged to Philips and which to Sony. Every company that built a CD player paid both of them. At the CD's 25th anniversary in 2007, a Philips executive said those royalties had carried the company through its worst stretches.

Winning a format war and making money from the format turned out to be two different jobs. Philips traded the second to get the first. Sixteen years later the same company sat down with the same partner and took both. Somewhere in tomorrow's IFA announcements there is probably a company giving away a standard for free. Whether it is paving a road or giving away the shops along it, you only find out a few years later.

Sources

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