How Sony lost the plot
EVER since Sony lost the battle between its Walkman music player and Apple’s iPod, it has been trying to strike back. Last week, it paid $900m to take full control of Sony-BMG, its music joint venture with Bertelsmann.
Sir Howard Stringer, Sony’s CE, wants to make it as easy as possible to download or stream music and films to its electronics devices, from Bravia televisions to PlayStation 3 consoles. Stringer, still smarting at how Apple integrated hardware, software and its iTunes music store far better than Sony, has another target in mind. He wants 90% of Sony’s hardware devices to be networked, and even to be connected wirelessly, within two years.
In one small corner of Sony’s empire, however, it has just made the same mistake all over again. It has squandered an early lead in a new field because another company was better not just at inventing an electronic device but also at linking it to a wireless network and making it easy for consumers to use.
The Sony product is the Reader, a portable device for reading electronic books, which it launched two years ago. This time Sony’s competitor is Amazon, which has swept past Sony with the Kindle, a rival e-book reader that is showing every sign of becoming the iPod of this nascent market.
Stringer was not in charge of Sony during the Walkman debacle and partly owes his appointment three years ago to the recognition that new leadership was needed to pull the divided company together.
But the e-book battle occurred on his watch, after he identified the Reader as a product that Sony should throw its weight behind. So the ascendancy of the Kindle is — or ought to be — an embarrassment.
The fact that the Kindle is smoothly connected in this way is deliberate. Amazon is very good at finding ways to make it easy to purchase things, from its 1-Click online buying system to Amazon Prime, under which US customers pay $79 a year for free delivery of their orders.
Jeff Bezos, Amazon’s geeky CE, says it tries to minimise “cognitive overhead” for people who want to buy something, which I believe means ensuring that they do not need to think too hard.
Anyway, it works. To the surprise of sceptics about e-book readers, the Kindle is a hit. Amazon has not released figures but TechCrunch, the technology website, reported a week ago that it has sold 240000 units, putting it on track to match iPod first year sales of 360000 in 2001.
Meanwhile, Kindle sales make up 12% of the total for book titles available both in digital and physical form on Amazon.
The signs are that the Reader will go wireless too. Steve Haber, head of the business, says that Sony is “open” to that idea. Sony has also tried to get one up on the Kindle by allowing owners to obtain books from other online stores and libraries.
The danger for Sony is that it is too late. Amazon has grabbed the market-leading position and established a stronger brand, which is what happened with the iPod and the Walkman. Sony never recovered, despite trying repeatedly to match Apple.
Stringer should worry that Sony has been pushed aside in another market. Sony talks about making devices networked and easy to use; Amazon did so.
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