When most people hear the name Hitachi, the first things that come to mind are refrigerators, washing machines, and air conditioners. "Hitachi home appliances" had been a fixture in Japanese households since the postwar era of rapid economic growth — so deeply embedded in daily life that it had become something close to cultural heritage. That is why the 2021 announcement that Hitachi would sell its home appliance business to Nojima sent shockwaves through the public. The moment the news broke, reactions split sharply in two. Some mourned what they saw as the weakening of a great company. Others called it a smart move. So which was it, really?The Starting Point: The Kawamura–Nakanishi ReformsTo understand what happened, you need to know just how dire Hitachi's situation was around 2009. For the fiscal year ending March 2009, Hitachi posted a net loss of 787.3 billion yen (approximately 7.9 billion dollars at the time) — the largest final loss ever recorded by a Japanese manufacturer. Despite sales of 10 trillion yen (roughly 100 billion dollars), the company was hemorrhaging money. The Lehman shock had gutted demand, TV and semiconductor divisions were in freefall, and the consolidated equity ratio collapsed from 20.6% to 11.2%. The company's very survival was in question.The turnaround came through the forceful leadership of Takashi Kawamura and the late Hiroaki Nakanishi. Kawamura, notably, was an executive who had moved to a subsidiary and was called back to lead the mothership precisely because of the crisis — an extraordinary circumstance in itself. Their first moves were blunt and bold: a 349.2 billion yen (approximately 3.5 billion dollars) capital raise that diluted existing shareholders by 13%, and the sale of the HDD business for 4.8 billion dollars (about 440 billion yen), which pushed the equity ratio back up to 18.8%. They also pulled Hitachi out of television manufacturing after 55 years — a decision that drew strong objections from within the company, but that signaled, unmistakably, that a new era had begun.Toshiaki Higashihara, who became president in 2014, carried this momentum even further. His career path within Hitachi was unconventional — he spent much of it in quality assurance, a department closer to the shop floor than to the executive suite. That experience gave him an unusually clear-eyed view of the company's structural problems and, crucially, the credibility to push through change.The Lumada GambleAt the heart of Higashihara's reforms is a concept called Lumada. In simple terms, Lumada is the collective name for the digital solutions Hitachi offers to help other companies solve their problems. Powered by AI and big data analytics, it covers everything from manufacturing and logistics to energy, finance, and healthcare — a platform designed to help clients improve efficiency and create new value.The growth trajectory of Lumada speaks for itself. By fiscal 2023, Lumada-related revenue accounted for 27% of Hitachi's total sales, with an Adjusted EBITA margin of 15% — a notably high figure by manufacturing industry standards. Under the new medium-term plan, "Inspire 2027," the target is to push Lumada's revenue share to 50% of total sales, with an Adjusted EBITA margin of 18%. If Lumada one day generates half of Hitachi's entire revenue, the company will have completed its transformation into a full-fledged digital infrastructure company, with almost no trace of its former identity as a home appliance manufacturer.The thinking behind Lumada, interestingly, traces back to Higashihara's own engineering work. He was involved in developing ATOS — the Tokyo-area train operations management system for JR East — a distributed architecture designed so that if one station went down, the rest of the network kept running. He applied that same philosophy to corporate management: each regional operation functions autonomously, while Lumada serves as the common backbone that ties everything together. It is a rare example of an infrastructure engineer's mindset becoming a company's governing philosophy.From 22 Listed Subsidiaries to ZeroTo execute the Lumada strategy, Higashihara undertook a sweeping reorganization of the Hitachi group. In fiscal 2006, the group had 22 listed subsidiaries. By fiscal 2022, that number had reached zero. The pace and scope of this restructuring is extraordinary, but the logic behind it was consistent.Divested were the manufacturing-oriented companies — Hitachi Chemical, Hitachi Construction Machinery, and Hitachi Metals, among others. None of these were failing businesses; they had real technical strengths and revenue. But they did not fit the direction Hitachi was heading. Hitachi High-Tech, on the other hand, was taken fully private — its semiconductor equipment and measurement instruments were seen as essential infrastructure for Lumada's data collection and analysis capabilities.The criterion was simple: does it contribute to Lumada? That single question reshaped one of Japan's largest corporate groups from the ground up. Two separate acquisitions in the trillion-yen range were also completed during this period, reinforcing Hitachi's capabilities in digital and infrastructure domains. The results show up in the backlog: by fiscal 2023, the GEM sector alone had 10.2 trillion yen (approximately 102 billion dollars) in outstanding orders. This is not borrowing from the future — it is evidence that Hitachi's shift to long-term contract-based business is already well underway.Was the Home Appliance Sale Surrender or Strategy?Seen in this context, the sale of the home appliance business was not a sudden event. It was an inevitable conclusion.Home appliances are a classic thin-margin, high-volume business. In global markets, Hitachi had to compete against South Korean giants Samsung and LG, and increasingly against Chinese manufacturers with even lower cost structures. Superior quality alone could not overcome price differences of that magnitude. For Hitachi, appliances were not a losing business — but they were a business that consumed resources that could be generating far higher returns elsewhere. Think of it like a pharmaceutical company divesting low-margin drugs to fund higher-potential therapies. You are not abandoning medicine. You are optimizing your portfolio.The stock market's response validated the logic. Hitachi's share price, which had languished in the low 1,000-yen range during the crisis years, climbed steadily as reforms progressed. By 2024, Hitachi's market capitalization had reached approximately 7.8 trillion yen (around 52 billion dollars). The company also delivered three consecutive years of record profits. These numbers make a compelling argument that letting go of home appliances was the right call.For Nojima, the deal made equally good sense. A consumer electronics retailer that now owns the brand it sells can consolidate procurement, control its product lineup, and gain pricing flexibility it never had before. Both sides got something they needed.The Back Story Nobody Writes AboutHere is where it gets interesting — the parts of this story that rarely appear in the business press.One underappreciated factor in the sale is what might be called the burden of the brand. Hitachi's appliance brand had maintained a premium image for decades. That reputation was a double-edged sword: it made it nearly impossible to compete on price without damaging the brand, while holding the line on premium positioning kept sales from growing. This tension was structural — it arose from the fact that the same name was being used for both consumer products and large-scale infrastructure projects. For corporate clients deciding whether to trust Hitachi with power grid management, seeing the brand on a bargain-bin refrigerator sends a confusing signal.There is also the cultural incompatibility problem. Home appliances are a BtoC business — one built around mass marketing, consumer sentiment, seasonal campaigns, and rapid product cycles. Lumada is BtoB — built around long-term relationships, consultative sales, multi-year contracts, and enterprise decision-making. These two cultures operate on different timescales, with different performance metrics and different definitions of success. Running both inside the same organization creates constant friction, and experience suggests that one culture tends to colonize the other over time, to the detriment of both.There is also the entrenched-interests problem. Legacy businesses generate legacy constituencies — people whose careers are tied to those businesses, and who resist change accordingly. For a leadership team trying to push through a radical transformation, maintaining a large home appliance division meant managing a permanent source of internal resistance. Separating it out was not just a financial decision. It was an organizational one.And then there is the story that almost no one has reported. Behind closed doors, one of the most contentious issues in the Nojima negotiations was the question of brand licensing — specifically, who would control the right to use the "Hitachi" name on future consumer products. What Nojima acquired was not merely a manufacturing operation. It included a license to continue selling products under the Hitachi brand. This was a genuinely uncomfortable arrangement for Hitachi's leadership. Handing over control of how your name appears on products in millions of homes, while having no say in quality decisions or marketing, is not a small concession. Reports suggest the debate inside Hitachi was significant. In the end, the license was granted for two reasons: to avoid consumer confusion from a sudden disappearance of the Hitachi appliance brand, and to honor the company's obligation to continue after-sales service for existing customers. In other words, the sale was a business decision — but the brand license was an act of responsibility toward long-standing customers.The downside risks, however, should not be dismissed. For ordinary consumers, Hitachi home appliances were, for most people, the only point of contact with the Hitachi brand. As those products gradually disappear from Japanese homes, the Hitachi name will become less and less visible to the general public. For a company that depends on public trust as part of its social license to operate, reduced name recognition could have consequences — for recruitment, for public perception, and for the political and regulatory relationships that infrastructure companies depend on.What Hitachi's Choices Tell the Rest of Corporate JapanHitachi's transformation holds lessons for every Japanese company still clinging to the old model of doing everything at once. The "total manufacturer" strategy worked brilliantly during the high-growth decades of the postwar era. In a world defined by global competition and digital disruption, it has become a liability.The new medium-term plan, Inspire 2027, targets annual revenue growth of 7–9%, an Adjusted EBITA margin of 13–15%, and a return on invested capital (ROIC) of 12–13%. None of these numbers would have been thinkable during the 2009 crisis. That they are now credible targets is entirely attributable to the discipline of focus — the willingness to give up businesses that were good, in order to get better at the ones that matter most.What Higashihara was trying to express with the phrase "autonomous decentralized global management" is not just an organizational theory. It is a philosophy: define your strengths clearly, and build a system that delivers those strengths at consistent quality, everywhere in the world. The fact that this philosophy was derived from a train operations system is quintessentially Hitachi — practical, engineering-minded, and grounded in real-world experience.Calling Hitachi's sale of its home appliance business "the defeat of Japanese manufacturing" would be a serious misreading of events. It was, instead, the choice of a company willing to change — willing to accept real pain in the short term in exchange for real strength in the long term. Whether that choice ultimately proves correct will depend on how far Lumada can extend its reach across the world. Hitachi has let go of the appliances. Now it has to become the company it has promised to be.In the 1990s, a Hitachi refrigerator wore its brand logo with quiet pride in kitchens across Japan. As that logo fades from daily life, there is a sense of an era ending. But somewhere inside the software managing an electrical grid, or the platform coordinating a city's transit system, the same name is still at work — invisible, essential, and very much alive. A company's presence is not measured only by what people can see.ReferencesToshiaki Higashihara, Hitachi no Kabe [The Hitachi Wall] (2023) Nikkei Shimbun, coverage of Hitachi's move to zero listed subsidiaries Hitachi, Ltd., FY2024 Consolidated Financial Results Summary (announced April 2025) Hitachi, Ltd., Medium-Term Management Plan "Inspire 2027" (announced April 2025) RIETI (Research Institute of Economy, Trade and Industry), research papers on global management and autonomous decentralized organizations Hitachi, Ltd., Integrated Report, FY2022 Nojima Corporation, press release on acquisition of Hitachi Global Life Solutions (2021) Nikkei Cross Tech, "Hitachi FY2024 April–September Earnings" (October 2024)