TOKYO—When Ichiro Takagi took over
audio Business seven years ago, he found the staff took pride in being the global No. 1 in headphones, in terms of units sold. But he was appalled at how many were $10 headphones sold for minimal profit at grocery stores.
“What’s the point of that? Where’s our brand image?” Mr. Takagi recalls telling employees.
Fast forward to this fall and the international electronics show in Berlin, where Mr. Takagi was showing off the latest version of his flagship product, a $350 pair of noise-canceling wireless headphones.
The premium-price headphone market has been largely dominated by Bose, the industry pioneer popular with frequent fliers, and Beats, the fashion-savvy brand acquired by
for $3 billion in 2014. All share the challenge of wooing listeners who already get free earbuds with their smartphones.
Sony said in May it has 11% of the headphone market in terms of revenue, the third-largest slice. It didn’t name the top two companies.
The audio Business—where Sony has been a player since the 1950s—is a prime example of how it got back to profitability in recent years, even in a traditional hardware Business that once looked like a lost cause. For the year that ended in March, sales for the audio unit rose for the first time in 20 years after having fallen some 80% from the peak.
The global headphone market has expanded, thanks in part to services like Spotify.
More important for Chief Executive Kenichiro Yoshida, the home-electronics division, including audio and televisions (another former money loser), posted operating profit of nearly $800 million for the year, helping Sony achieve record overall profit. Mr. Yoshida is hoping roughly to match that record in the current fiscal year: Quarterly earnings coming Tuesday will give a progress report.
The rise of Spotify Technology SA and other music services has been good for headphone makers, increasing the time consumers spend listening on the go. Strea