Sony's a highly successful consumer electronics brand, but it has famously miscalculated the market numerous times. I never went to business school but I would bet that Beta would be a great case study for MBA-types. The MiniDisc likewise never lived up to the hype. Sony's foray into MP3 players has also been a failure.
Today, Sony introduced a line of MP3 Walkman devices aimed squarely at Apple's iPod Shuffle. According to a Sony corporate spokesman, these new devices "speak to the way people really use portable audio players." I'm not trying to be a jerk here, but what would Sony know about how people use portable, digital audio players? -- they have a paltry 6% of the market. Sony might be on the right track if its products undercut Apple's on price.
But unlike its other products, Apple's flash-memory MP3 player is the market leader on cost. A 512 MB player runs $99, while the 1 GB Shuffle is $149. In contrast, Sony's players start at $90 for a 256 MB version and range up to $200 for an 1 GB player. I'm a proud Shuffle owner, the device supplements my 40 GB click-wheel iPod, and I think I represent one part of the Shuffle's target market -- tech geeks that want a small, lightweight MP3 player for the gym, active sports, etc. The second natural market for the Shuffle is the opposite end of the spectrum, late adopters who want only to dip their toes into the MP3 pool -- they want to see what all the fuss is about without spending a lot of dough, or maybe they aren't into investing heavily in technology at all.
Both of these groups are price sensitive. To a tech geek like me $100 for a Shuffle beats the tar out of $250 for a mini (yes, I'm intentionally using the "old" price, because that's what minis cost when I bought my Shuffle), because I didn't need to pay for the complexity and features that I already had in my 40 GB model. To a late adopter, price is also key. They're already suspicious of the need for the technology, so a $149 investment (1 GB Shuffle) is more appealing than a $200 investment (1 GB Sony). I think on price alone, Sony has misjudged the target markets for these types of devices.
And the discussion above totally ignores the iPod's secret weapon, the iTMS. For people that already have an iPod, it's a no brainer, they already use and (typically) love the iTMS. Late adopters may not care about this as much, but if they do their homework, they'll probably find that the iTMS is easier to use and more prolific than any other online music store.