The iPod vs. Walkman comparison has been discussed so many times, but it really is worth repeating because it is such a stark comparison. It’s a perfect example of Clayton Christensen’s “Innovator’s Dilemma,” as well. Randall Stross of the New York Times has a good overview of the situation vis-a-vis Sony’s new CEO.
Sony Connect, the late-arriving, woefully designed answer to the iTunes Music Store, still lamely insists on using Sony’s proprietary compression standard. Apple got away with holding to its own standard only because it got everything else right, and was early to boot. Sony Connect must lag somewhere around 300 million song sales behind Apple, but pretends otherwise.
Arguably, Walkman product managers are even more blind to market reality than those at Connect. Today, they are selling the 20-gigabyte Network Walkman for $50 more than the comparable iPod, even though it cannot use any music sold on Apple’s site or on those of the many competitors that use Microsoft’s widely licensed compression standard.
A company thrives when it has all that it needs to make a compelling product and is undistracted by fractiousness among divisions that resent being told to make decisions based upon family obligations, not market considerations. Mr. Jobs appreciates the advantages of keeping content separate from distribution. At Pixar, he’s in the digital movie business, which uses many skill sets that are used over at Apple, too. Yet he has elected to let the two live happy separate existences, without falling for the synergy myth.
I’ve long since stopped even looking at Sony products for my own purchases. There was no reason to do so until the top management changed, but now that it has, I’m doubtful that it will make a difference at the product level, especially considering Stringer is from the media side of the business. Does anyone see Stringer taking a different path with respect to DRM than what the company has done to date? Consider me skeptical.
My fear is that Howard Stringer won’t rock the boat in Japan as much as I believe he needs to. He is not of that personality, and even if he has an office in Tokyo, he’s made it clear that he will stay in NYC. This is not the profile of a person required to turn around a sinking ship.
I wonder what’s worse for a large Japanese company – a Japanese CEO who no one within the company cared about (Idei) or a non-Japanese CEO who isn’t going to be hands-on (Stringer.) The problem with Sony is in Japan. If Stringer isn’t based in Japan, there’s less of a chance that he can drive the necessary changes.
The future for Sony is still unclear.
How the iPod Ran Circles Around the Walkman [nytimes.com]
I agree that Sony is years behind Apple and may never catch up, but to endorse mp3 is to endorse a file format that has, in their minds, contributed to the drop in music sales at Sony Music and other labels. To them, it would be like supporting the insurgency. Too many billions of dollars/yen in recording contracts are at risk. Which way would you want to fail? Jump into the mp3 business and surrender all control of distribution to filesharers, or support an inferior format that fails to captivate the market?
But another way of phrasing your question could be, “Do you want to cling to antiquated business models long after they become unprofitable, or do you want to pioneer new revenue streams?” Or, “Do you want to continue to let your entertainment division drive your electronics division into the ground?”
Synergy? The business group executives don’t even know what that means. They never bought into the myth, because they can’t even understand what the benefits could actually be. People give too much credit to “Sony” for doing something, like making a failed strategy. Guess what? There is actually no strategy at all — the things that happen are not coordinated in any way, and to try and make sense of any of it is fruitless.
When Sony actually has a strategy and can execute on it, even poorly, that will be a step in the right direction.