Sony Sings Off-Key

By Peter Kafka | 2004/12/13 | 470 words, 0 images

The company that brought us the Walkman should be giving the iPod a run for its money. What happened?

Perhaps you've caught a glimpse of Sony's new digital music player, a sleek silver gizmo brandished in TV spots by pop star Macy Gray, part of a new ad blitz. But if you're interested in buying one, don't bother looking for it at Best Buy, the nation's biggest electronics retailer.

Best Buy executives won't comment on their decision to not sell Sony's long-delayed response to Apple's iPod. A good bet, though, is that--like critics and consumers--they've deemed the player a dud.

The $350 Sony NW-HD1, released in August, is "the digital audio player we all love to hate," snarks tech blog engadget.com. In September Sony accounted for less than 1% of hard-drive music player sales, according to research firm NPD Group. It pegs Apple's share at 92%, with the next three biggest competitors accounting for 6%.

The company that brought us the Walkman and Discman should have owned the latest flavor of portable audio or, at the very least, be giving Steve Jobs pause. Instead Sony has hurt itself by insisting on using its own proprietary standards, no matter what the market demands. It didn't work in the early 1980s when Sony pushed Betamax tape over the more common VHS standard. It failed again in the 1990s when its minidisc players never took hold in the U.S.

The Sony NW-HD1 only plays music encoded in a Sony-specific format, when almost all digital music is already encoded in either Apple's or Microsoft's software or, most commonly, in generic MP3 files. You can't load MP3s into it, so filling it up with music entails reformatting your collection in a lengthy, grinding process or buying from Sony's online store, which draws as many raspberries as its player. Sony also insisted on developing its own digital rights management software, at an estimated cost of more than $200 million.

Sony claims that Apple uses proprietary standards, too, but the iPod had a three-year head start. And, software issues aside, Sony's player compares favorably to the iPod. It's smaller and boasts a better battery life. Sony says future music players will at least play unencoded MP3s.

"Sony is great at building consumer electronics. Where they've tried to be a software company, they've not done well," says Richard Wolpert, chief strategy officer at RealNetworks, which sells music downloads through its online store, but not in Sony's format.

"We're only in the first inning of a nine-inning ball game," Sony spokesman Rick Clancy offers. "Our aim is to regain our market leadership in all segments of the personal entertainment business well before the game is over."

Additional reporting by Benjamin Fulford.

Copyright © 2004 Forbes.com