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Thursday, July 14, 2005
Sony Urges to Compete iPod in Japan


Sony has a new lineup of digital music players that are slicing into the popularity of Apple Computer's iPod device in Japan.

Apple is still squashing Sony in Europe and North America, where the iPod has achieved a big selling point is the availability of iTunes, an easy-to-use music downloading service that has not yet been launched in Japan.

While Apple remains the top seller of hard drive players in Japan, there has been a decisive momentum swing in the Japanese market, with Sony securing the top position for memory-type players in both May and June, knocking Apple and its iPod shuffle device into second place.

Translating that success overseas will not be easy, but boosting sales in Japan is an important first step for Sony as it tries to reclaim the lead in the portable audio market it helped pioneer with the Walkman cassette player 26 years ago.

Launched worldwide in March and April, Sony's new lineup of music players includes several models equipped with flash memory chips able to store 256, 512 megabytes or 1 gigabyte of data, and two players with hard disk drives.

Of those, Sony's gains in the Japanese market have come primarily from one line of flash memory players that have won over consumers with a long-lasting battery -- it can play up to 50 hours on one charge -- and a stylish design.

Sony's players also feature a display to view what music is playing, while the iPod shuffle does not.

"Design is one of the main factors consumers now look at when buying a portable audio player. They have become like accessories, so having something that looks good is a must," said Shinichi Iwata, who oversees marketing of the Walkman in Japan.

However Sony's players are more expensive than the shuffle.

Sony has not issued official sales forecasts for the new flash memory players, but Iwata said demand in Japan had so far been double what the company initially expected.

Sales of the hard drive units have been less impressive, but that is not surprising as Sony's only players on the market are 20 and 30 gigabyte (GB) models, leaving it without a product to go head-to-head with Apple's hot-selling iPod mini device.

The Apple mini comes in a 4 GB or 6 GB model, holding 1,000 or 1,500 songs -- just about right for many consumers who don't feel the need to carry around their entire CD collection. Sony players, for example, can store more than 10,000 songs.

Sony has made its new Walkmans compatible with the MP3 format, meaning consumers can now download and play back more common MP3 files. Some previous models had been compatible only with Sony's proprietary Atrac format, which hindered sales.

Despite the improvements, analysts say Sony's new Walkmans have not sold as well in Europe and North America and several hurdles remain to its success in those markets.

One is Apple's entrenched position. According to industry data, Apple holds 60 to 70 percent of the U.S. digital music player market and is also very strong in Europe.

Several low-cost Asian makers are also fighting for a piece of the market, which researcher In-Stat predicts will nearly quadruple to 104 million units a year by 2009.

Among the top players are Singapore's Creative Technology Ltd., South Korea's Reigncom Ltd's iRiver, and Rio, owned by D&M Holdings Inc.

Another challenge for Sony will be developing more appealing jukebox software and a download service that consumers perceive to be just as easy to navigate as iTunes. Sony has not had much success so far with its "Connect" online music store.

The job of coming up with a cohesive strategy to overtake Apple will fall on the Connect Company, a unit established by Sony late last year to bring together disparate software and hardware operations into one entity with common goals.

Sony's problems in the portable audio market have been widely blamed on infighting between music and hardware divisions over antipiracy issues and a general lack of focus. Both the PC and Walkman units put out their own hard drive players last year.


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