delanceyplace.com 10/5/12 - sony's walkman vs. apple's ipod

In today's excerpt - before the introduction of Apple's iPod, Sony dominated the portable music market with the Walkman. They could have preempted the iPod, but Sony's "content" divisions -- Sony Music and Sony Pictures -- viewed that type of digital product as dangerous since it facilitated piracy, and so they moved too slowly. Then the iPod was introduced and took the market by storm. At first, the iPod was simply hardware and the accompanying software to manage digital music, and did not have the accompanying online music store. Apple's ads around this time were actually a play on this piracy -- "Rip. Mix. Burn." Sony should have responded quickly -- but this time their efforts were thwarted by their own internal conflicts:

"In early 2003, Howard Stringer, head of U.S. operations for Japanese electronics giant Sony, was plotting to respond to Apple's amazing success with the iPod, a recently introduced small portable music player. Sony did not want to let Apple take over the market. It was, after all, a market Sony should own. It had invented the idea of carrying music around on people's heads with the iconoclastic Walkman, which was introduced in 1979 and had sold nearly 200 million units by the time the iPod became the new kid on the block.' ...

"By 2003 Sony was a formidable company. With annual sales of $62 billion, it was ten times as large as Apple, which had $6.2 billion in sales. And Sony was much better placed than Apple to launch portable music players and an online music store. Sony had the Walkman division (and so could develop its own hard-disk music player), the VAIO personal computer line (and so it knew computers), Sony Music (and so it knew a thing or two about music"), and Sony Electronics (and so it had a range of devices and batteries). Ironically, it supplied the batteries for the iPod. Sony was also well known for sleek design. From the vantage point of his Manhattan office, Stringer could see that he had all the pieces to mount a counterattack against the iPod. Philip Wiser, chief technology officer of Sony U.S., told him, "We can do this in nine months. We got the product, hardware, software.'? By this time, Apple had offered the iPod device and the iTunes software only for computers, and not the online music store. There was still time to catch up.

"Stringer and Wiser set it all in motion. They aptly named the venture Connect, reflecting the vision of linking the various pieces of Sony to connect portable music players with an online music store. ... [and they] were busy connecting the parts of the company. Or at least trying to. The problem was that a critical piece was missing from Stringer's plan: a culture of collaboration among Sony's various divisions. 'Sony has long thrived on a hyper-competitive culture, where engineers were encouraged to outdo each other, not work together,' observed Wall Street Journal reporter Phred Dvorak. In the past, Sony's competitive culture had worked wonderfully, allowing entrepreneurial groups to work largely by themselves to develop hit products like the Walkman and the PlayStation video game player. But Connect was not a stand-alone product. It required collaboration among five Sony divisions: the personal computer group based in Tokyo; the portable audio team responsible for the Walkman; another team responsible for flash memory players; Sony Music in the United States; and Sony Music in Japan. It was a new ball game, and Sony's organization was not up to it.

"For starters, each division had its own idea about what to do. The PC and the Walkman groups introduced their own competing music players, and three other groups -- Sony Music in Japan, Sony Music in the United States, and Sony Electronics in the United States -- had their own music portals or download services. Stringer, who had no authority over Japanese operations, complained, to no avail, that the Connect software being developed in Japan was hard to use. Whereas the U.S. team wanted a hard disk for the music player (as in the iPod), the Japanese team went with the arcane MiniDisc. And whereas the U.S. group pushed for using the MP3 format -- the de facto U.S. standard -- the Japanese PC division chose a proprietary standard called ATRAC. Complained Stringer, 'It's impossible to communicate with everybody when you have that many silos.'

"It was a mess.

"When Connect finally debuted in May 2004, the mess turned into a market disaster. The influential Walt Mossberg of the Wall Street Journal panned the product in a review: 'The Walkman's biggest weakness is its lousy user interface, which is dense and confusing. The SonicStage 2 software and the Connect music store are also badly designed. This is because, for all its historic brilliance in designing hardware, Sony stinks at software ... Until Sony fixes the multitude of sins in this product, steer clear of it.' "

author: Morton T. Hansen
title: Collaboration: How Leaders Avoid the Traps, Create Unity, and Reap Big Results
publisher: Harvard Business Review Press
date: Copyright 2009 by Morton T. Hansen
pages: 5-6, 8-9
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