Sony unveils music service, mulls 'iPod killer'
May 04, 2004 7:37:00 PM ET
LOS ANGELES, May 4 (Reuters) - Sony Corp. , which pioneered the market for portable music with its Walkman player 25 years ago, on Tuesday became the latest entrant into the increasingly crowded online music market.
The new service, Sony Connect, a unit of Sony Corp.'s Sony Corp of America, offers consumers more than 500,000 tracks at 99 cents a single and $9.95 per album.
Like competing services, including Apple Computer Inc.'s (AAPL) popular iTunes, Sony Connect lets customers buy songs and download them to portable music players. Users can also listen to songs that have been copied or "ripped" from CDs.
Some analysts questioned whether Sony's service is too late given the entrenched competition and the huge success Apple has had with its popular line of iPod music players.
But Sony Connect said it could still prosper if more customers turn to legitimate services and away from the remaining song-swap sites the record industry blames for a three-year slump in sales.
"Billions are still stolen, while only millions are sold. We're not trying to lure customers (away from other services), but to expand the market," said Jay Samit, general manager for Sony Connect.
A second Sony executive said the company had also not ruled out launching its own line of hard-drive based music player -- a device some observers have already dubbed an "iPod killer."
Sony's disc-based Walkman devices start at about $60, far below the iPod line, which starts at about $250.
Todd Schrader, vice president of marketing for portable audio products at Sony, said the company was "aggressively looking into a hard-drive device."
IPOD AN 'EXPENSIVE DEVICE'
But, he, added, that the "IPod is an expensive device. No matter what your level of income or technology preference, there is a device that will work with Connect."
Sony hopes to sell 7 million of its Walkman-branded digital music players in the United States by year-end, he said.
Apple remains the dominant force in digital music, having sold more than 3 million iPods, claiming nearly 50 percent of the digital music player market, while its iTunes store claims 70 percent of all songs bought online.
"Sony is a very strong brand and it's likely to be a real contender in the market, but what will determine their success is whether they unveil a device to compete with iPod," said Phil Leigh, an analyst with Inside Digital Media.
Josh Bernoff, analyst with Forrester Research, said he believed Sony had waited too long to enter the market, particularly as Apple faces a renewed push by Microsoft Corp. (MSFT) in the digital music sector.
Microsoft this week updated its digital-rights-management software for music and movies, saying it would work with more online services and devices, enabling them to connect to home PCs to play digital content over TVs and stereos.
Analysts said this could pose a problem for both Apple and Sony, whose services are tied to their own hardware.
"While Sony's is an extremely well-designed service, it's likely to be successful mostly with people who own Sony devices. It's too late and incompatible to compete effectively," said Josh Bernoff, analyst with Forrester Research.
"Obviously, the download market is taking off, but the preponderance of the services launching now are based on Microsoft Windows media and Sony's service works only with its devices," he said.
