Sony forms ‘Connect Company’ to challenge Apple’s market-dominating iPod+iTunes

“Shamed but not yet defeated, Sony Corp. says it can no longer sit back and watch as Apple Computer Inc. gives it an ignominious beating in the markets for portable digital audio players and online music download services,” The Asahi Shimbun reports. “To that end, Sony has established Connect Company, a division exclusively tasked with developing products and services to rival Apple and its immensely popular iPod players and iTunes Music Store service. For Sony, which virtually created the market for portable audio players with the Walkman, the new division represents an attempt to regain lost ground to latecomer Apple.”

“‘It’s a business that we should have carved out ahead of our rivals,’ a Sony executive said in reference to the iPod’s success, echoing a view shared by the company’s leaders,” The Asahi Shimbun reports. “Connect Company was established on Nov. 1 and brings together Sony experts from Japan and the United States. The division will enter into operations early next year and will eventually employ 300 to 400 workers. Engineers will work on new portable audio players equipped with hard disk drives like the iPod or with computer memory chips. The first product is expected to hit shelves by the end of next year. Connect Company will also operate music download services similar to iTunes that will be personal computer- and cellphone-compatible. In the future, the division is expected to offer video and game distribution services.”

Full article here.

MacDailyNews Take: While Sony is a major global force, they have shown little to prove that they even grasp the concept of the portable digital audio player and online music download service market, better known to the world as “iPod+iTunes.” To be planning to introduce their first product by the end of next year stretches the concept of “too late to market” to its outer limits. Competition is good. It will spur Apple forward. It just doesn’t seem that Sony will be the company pushing Apple in this market. “Much talk and little action” seems to be Sony’s response to Apple’s total market domination. Imagine if Apple and Sony joined forces, with Sony making iTunes Music Store-compatible players and Mac OS X licensed Power PC-based hardware. Now, that would be something of real interest.


  1. I cannot believe they think the PSP will sell enough units and have comparable functionality (convergence) to kill the iPod..

    Man they are insane..

    I think they just want a 10% share of the digital music player market.. they know they can’t win now.. I mean.. one problem with convergence.. besides offering a crappy compromise-laced device.. is that you have multiple competitors..

    So Sony is gonna take on Apple and Nintendo in their respective monopolies?


  2. I agree wholeheartedly with MDN’s take: competition is good, and will keep Apple from getting complacent. That being said, I don’t think much of Sony’s chances. The passing of Akio Morita has left a void that I doubt will ever be filled, and Sony seems to be bumbling around in much the same way that Apple did during the Interregnum (my own pet phrase for the period during which Emperor Jobs was absent).

    Succession should be cause for major concern at Apple as well: after Steve what? With the runaway success of the iPod+iTunes combo, I hope for their sake they can avoid the fate that seems to be overtaking Sony.

  3. MDN: your take on things sounds more like propaganda by the day. The market is far from saturated and there is still plenty of time for the leader to change. Your arrogance is starting to be anoying.

    Clearly Sony is the one company that CAN offer a very viable alternative to the iTms + iPod combo. Do not forget that Apple has forced the competition to assemble round the competing M$ DRM, efectively giving the oposition a format to rally around.

  4. I agree with Benn. This move by sony is the first move by any company that has even a slim chance of becoming equal to, if not superior to the iPod.

    Even misguided as they were before this suprisingly clear-headed move(3 years from now, this may very well be seen as the day sony came back from the stagnation that has plagued it since sony/BMG started calling the shots) sony electronics engineers managed to make a product that is physically stunning NWHD-1(think thats the name) and is (sorry to say it in this forum) far superior to the iPod on form factor and battery life, but was saddled to a single format, and a lackluster interface.

    Going ahead, with a new division, not following the idiotic/self-destructive direction by the sony record label, sony will be able to make a product that will be better in enough ways to draw customers with long-held sony brand loyalty back into the fold, as well as advertise the crap out of it. (hopefully the 5th gen. will be more than evolutionary, otherwise sony may take 15-25% of the american market, and 30-40% o the asian market back by 2007)

    I repeat, that this is the first even close to competent move that has been made by anyone other than apple ( before the release of the iPod, apple did the same thing in devoting hundreds of employees to the project, later permanently creating that separate division that had already existed in all but name since probably early 2000) and frankly it worries me a little bit, given the chance, sony engineers can come up with some crazy good stuff.

  5. What sony needs to do…

    1. Give up on the Walkman brandname. They currently have like 5 product families that use the name. Its too diluted and brings back memories of cassette players. They need to innovate and come up with something new.

    2. Stop using obscure product names. NW-MS90D anyone? iPod works because its name is simple.

    3. Kill the ATRAC3 audio format. Its dead, it stinks, and no one wants it.

    4. Simplify the user input… the button layout on their players is crazy confusing.

  6. The company that co-developed the CD and brought the world the Walkman is also the company that developed BOTH the VHS and BetaMax systems, They nade a huge blunder and sold the “m” system which as VHS took the market away. They were also beaten by Toshiba on the DVD spec and have poured tons of money into the miniDisc format.
    The fact is that the Sony of today is not the company Morita made, that brought the world the pocket transistor radio, the “tummy” TV, Trinitron & Trinicon technology, etc. They may make a market, but will not likely dominate the already well-defined digimusic space. It’s going to be either AAC/FairPlay or WMA/Janus- there is no room in the market for a third option unless something truly amazing happens.
    Open your eyes people. Apple has been targeted by the likes of Dell, Microsoft, Sony, Virgin, RealNetworks, the former Roxio (Napster II), Cocoa-Cola, Wal-Mart and has kicked the sh*t out of them all. Only HP/Compaq seems to have figured it out.
    As of this week you can get iTunes Pre-Paid cards at Kroger (the nation’s largest grocery chain), Target (the nation’s second largest general merchandiser), Walgreens (the nation’s largest drug store), Radio Shack ( the nation’s most widely located electronics retailer), BestBuy, Circuit City, Comp USA and The Apple Store. Why? They know where the market is moving and want to make money. It’s really tragic that Sony is still acting out of it’s wounded pride rather than forming an alliance with Apple.

    Before the summer is out, Wal-Mart will quietly let their online music store fade away and the iTunes pre-paid cards will show up. When Wally World exits a market you KNOW you are dominant. You will be able to buy iPods at Wal-Mart just in time for back-to school in the fall of ’05. Wal-Mart’s loyalty is to whatever makes money.

    Sorry Sony- the starting gun sounded and you had your headphones on…

  7. Sony could get a jump on cell phones with integrated music players, considering their alliance with Ericcson and the popularity of their excellent products (T630, etc.)

    It would be monumental were Sony to drop ATRAC for WMP audio, but I doubt they want to play into Redmond’s hand – which is why Apple still has a chance if it can play these two behemoths off each other scrambling for second place to iTunes/iPod dominance.

  8. Sony lost the Walkman market a long long time ago. It is also irrelevant. Comparing the iPod/iTMS system with the walkman is like comparing the complexity of a computer OS with a manual typewriter.

    If the new division was “established on Nov. 1” and won’t even “enter into operations (until) early next year” sounds like their products will have all the imagination of a bureaucratic comity.

  9. I can’t understand why the Company that came out with the WalkMan, Trinitron, Cli� the Vaio
    would now name something like NWHD-1 !!! DUDE this is supposed to be the iPod Killer right?!!
    Yet most ppl can’t even pronounce this product !!! FOR REAL!! …
    I was at Bloomingdale’s the other day and they had this next to the iPod and this couple would ask
    for it like: excuse me can i see the Sony player thing.. no the other one… the SONY iPod… Yeah that one !!!

    What was the Sony marketing team smoking!!! If you really think about it for a minute…
    what could have possibly driving you to name a product something as offensive as NWHD-1 vs iPod or
    at least the Zeen or even the ugly Dell DJ… altho ugly but you can at least call it something…

    That said, as if not mentioned enough by all the previous posts the Competition is missing yet another
    point aside from not understanding the iPod+itunes SIMPLICITY… they also don’t understand that since
    the intro of he iMac which was even more explosive than the iPod Today!!! think not ? just think of it this way:

    Beige Classic Macs…Beige Quadra…Beige PCs… More Beige Copy Cats… Beige PowerMacs… Beige Performa…
    Beige G3… thennn … iMAC in COLOR!!!… then iMAC in 5 COLORS!!! … and George Former Grill in COLORS too!!!…
    then EVERYTHING you can possibly think of for HOME, OFFICE, Kitchen even CARS… all IN Candy COLORS !!!
    and it lasted for 5 YEARS… Now this my friends is revolutionary… not the colors of course but the impact it had that
    changed the norm of the time… then came the iPOD as an obvious evolution to the iMac marketing strategy…

    there is a simple formula for SONY to follow:

    1- Reinvent your self and go back to your roots as Apple did with the iMac on Steve’s come back.

    2- Everyone loves to say make it simple… but for anything simple there must be an enormous effort of simplification that
    requires a philosophical and poetic design approach which translates into something more friendly than NWHD-1 or
    Network Walkman Hard Drive 1 … sorry Sony it’s tooooo dry cut to compete a fashionable Commercial friendly iPod.

    ok Enough said…

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