Analyst: Sony Connect will make it ‘hard for Apple to maintain its market share’

When it comes to portable digital music players and online music services, “how Sony got outflanked is as much about Sony’s inflexibility as Apple’s initiative. With its ownership of premier music labels and its foundation in electronics, Sony had all the tools to create its own version of iPod long before Apple’s product came to market in 2001. But Sony has long wrestled with how to build devices that let consumers download and copy music without undermining sales in the music labels or agreements with its artists,” writes Ken Belson for The New York Times.

“A lot is riding on the Connect online store, which will be released in a few weeks. If it catches on with consumers, it will help validate the company’s longheld goal of integrating its electronics, music and movie businesses–and give it a shot at re-establishing its leadership in the latest generation of portable music… Sony’s brand name, vast retail network and expertise in electronics are notable advantages, which Samit said made it possible for Sony to offer a more affordable and more convenient alternative to Apple’s music system,” Belson writes.

“Like Apple’s iTunes online music store, Connect will have 500,000 songs that can be downloaded for 99 cents each. But while iTunes songs can be played only on iPods, Sony already sells a variety of devices, including minidisc and compact disc players, which can play songs bought on Connect’s Web site. Sony’s new Hi-MD disc player, for instance, will hold up to 45 hours of music on one disc, which will retail for about $7,” Belson writes. “One of Sony’s flash memory players will store up to 22 hours of music and have batteries that last about 100 hours. ‘We’re not about one-size-fits-all,’ said Samit [general manager of Sony Connect], sitting in his Manhattan office with Louis Armstrong playing in the background. ‘You can’t believe it’s about just one brick that people will carry,’ he said, referring to the iPod.”

Belson writes, “Steve Jobs, Apple’s chief executive, said the minidisc player, which uses discs that can be recorded on, much like a cassette player, would not catch on in the United States the way it had overseas. ‘We have a very healthy respect for Sony,’ Jobs said in a telephone interview. ‘But Sony believes very strongly in the minidisc, and we don’t. It might work in Japan but not here.’ Apple’s most expensive iPod, by contrast, uses a hard drive that can store up to 10,000 songs.”

“‘Sony is coming out with their own format, but we don’t need another standard,’ said Joe Wilcox, an analyst at Jupiter Research. ‘The market for protected digital downloads is in the early stages of a format war. It’s a recipe for consumer confusion.’ Still, Wilcox and other analysts said that Sony had a loyal following that could help it seize a share of the digital music market quickly. ‘Look at the resources at their disposal,’ said Douglas Krone, the chief executive of Dynamism.com, a Web site that sells high-end electronics. ‘They own all the intellectual property and they have the retail channel. It will be hard for Apple to maintain its market share,'” Belson writes.

Full article here.

Related MacDailyNews articles:
Sony to launch European Connect Music Store in June – March 17, 2004
No Big Mac for Apple; McDonald’s to give away over 100 million Sony Connect songs – March 22, 2004
Potential McDonald’s, Sony music download giveaway just plain stupid – March 24, 2004

41 Comments

  1. will sony’s format run on WMP? if not, it doesn’t stand a chance….. cos it most probably won’t run on itunes…. sony would have been a bigger threat if they fully supported the Microsoft juggernaut…. or if they had microsoft’s full support….

  2. I live in Japan and Mini discs while a good idea are not as good as the ipod. Sony’s products here always have some sort of protection built in – for example : region codes, copy-protection and their own stupid verison of the MP3 (Ataic ??). Mini discs sell well here but in the 8 years that Ive lived in Japan – Every week, I see more and more people buying MP3 players.

  3. Nah, it’ll just run Atrac 3 and run itself into the ground. Sony is good at a lot of things, but it doesn’t play nice and burns itself with stupid ideas like the memory stick.

  4. Well, that’s not gonna happen (referring to Sony’s belief they’ll take over the electronic Music marketplace). In fact, I’ll be FINALLY joining the iPod masses in a few weeks when I get my Tax Refund. I’m getting a 15Gig. W00t!

  5. Part of the beauty of the iTMS/iPod is being able to purchase a few new tracks and seconds later have your iPod updated. I can’t imagine taking the time to think about what songs I wanted to burn to a minidisc. I simply rate the new songs I purchase and instantly my smartplaylists for genre and ratings are update. I’m on the go in minutes. Jobs is correct that minidiscs will not take off in the US.

  6. I’m looking forward to this actually, as I assume they will use ATRAC3. Anything to make it harder on MS the better. I don’t think this will affect apple much at all.

  7. sony’s corporate culture is not the same as it was in the 80’s when they came out with the walkman and took the industry by storm. now they are bigger and not as mobile. apple is small enough of a company to adapt quickly and make adjustments to stay competitive. at least i hope so. they also have huge brand presence in japan – more so than here in the US and that will help. god save Apple!

  8. The iPod is not anywhere CLOSE to being a “brick” and that just confirms for me that Samit clearly hasn’t ever had one in his hands, even though he’s just a few blocks away from the Apple Store if his office is in Manhattan. Now, if he’d been referring to the Dull DJ, then I’d have been more apt to believe him – OH, wait – that must be another brick in his wall…

  9. Does this “anal-yst” know Sony lost the war on Beta, Mini-disc, super 8.etc,etc,? Sony does not have any track record of winning any standard wars!!! Dah!!!! Some low standard “journalists” don’t have to do any research anymore, they just BS!!!!!

  10. you are all focused on the wrong thing…here is where Sony has a competitive advantage:
    They own the rights to the music! The could sell songs for 69 cents and make the same amount if mot more than Apple is making with their store. If they have a reasonably good player in a reasonable good price range they will be able to leverage that will less expensive music and win the format war.
    Apple needs to partner with Sony or they will lose in the long term.

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