Last July, while most people were taking summer vacation, Sony Corp of America made a little noticed, but crucial announcement. Jay Samit, a longtime music industry executive, was appointed general manager of Sony Connect, a new subsidiary that will sell songs online and allow consumers to play them on their Sony gadgets.
His appointment was largely overlooked outside the company, but inside, the move was immediately understood as a way to unite the sometimes conflicting electronics division and content division.
That internal battle was seen by many as the reason Sony, the inventor of the Walkman and the biggest player in the portable audio market, was being trounced by Apple Computer and its hit, the iPod music player, in the emerging digital segment. Something had to be done.
How Sony was outflanked is as much about Sony's inflexibility as about 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.
Samit, 43, came from the EMI Group with experience untangling technological and legal knots. He had had a long career selling traditional content in new formats. And he was an outsider, and considered better able to bridge the gap between Sony's engineers in Tokyo and its music team in the US.
"The only reason we didn't do this earlier is the guys didn't talk to each other," Samit said of Sony's new digital music venture.
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 long-held 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.
Like Apple's iTunes online music store, Connect will have 500,000 songs that can be downloaded for US$0.99 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 US$7.
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, sitting in his New York 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.
Steven 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 US 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 will compete strongly on price. The most expensive iPod costs US$499, while Sony's devices capable of using Connect -- including network Walkmen and players that use memory sticks -- will sell for US$60 to US$300.
And Sony is planning to market broadly, starting this summer with promotions with McDonald's -- buy a Big Mac and get a free downloadable song -- and United Airlines, which will let fliers exchange mileage points for songs.
Apple will remain a formidable rival. The company's new mini version of the iPod and longer battery life for its products make its brand as sought after as ever.
To extend its reach, Apple has licensed iPod technology to Hewlett-Packard and made the iTunes site to available to AOL and its 25 million subscribers. It wisely made iTunes compatible with Windows operating systems.
Apple, though, is not the only rival Sony faces. Dell and other manufacturers have come out with digital music players. What's more, songs downloaded from Dell's MusicMatch Web site can be copied onto a much wider variety of devices.
"We don't like to lock people and force them to use this or that service," said Mark Vena, director for the digital home marketing team at Dell.
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