Why Does Sony Make Stupid Formats?

It seems like every time you turn around Sony is pimping some new format that is meant to change our life, or perhaps just Sony’s bottom line. Yet Sony, more than any other company I know of, seems to be consistantly hell-bent on creating a new format for every device they create. At the same time the failure rate of these formats is extremely high and very well known. When I hear Betamax, MiniDisc, and UMD almost by default my eyes glaze over and I think what might have been. I sypmathize with Sony because they create some really awesome technology, but the more I look at Sony, the more I see a company who doesn’t even understand its own success.

So why does Sony make so many formats? I think it’s a two-fold reason: Profit and nerdiness. It’s very easy to see why a proprietary format in any technology is appealing. Patents = profit. If Sony owns the patents to the technology that powers our lives it means they can make a whole lot more money on each device sold. For example, JVC owned the patent rights to some vital VHS and DVD technology. Therefore on every VHS or DVD disc or player JVC makes some money. Even a dollar per VHS or DVD sold is hundreds of millions of dollars. Sony sees that money and they want in on the action. However, Betamax flopped but, they are at it again with Blu-ray. Simple right?

What about nerdiness? Sony products are supposed to be sexy right? How are they nerdy? I dare say that Sony products are some of the nerdiest products out there because they aren’t really designed with the consumer in mind anymore. They are designed either purely for profit - think Sony’s abysmal attempts at Walkman mp3 players, or are designed purely with the needs/wants of the people in the R&D lab at heart - think MiniDisc.

See, when a nerd designs a piece of hardware or software, most of the time it’s to fill a personal need or desire. For example, Linux has probably a half dozen different AIM clients, browsers, file managers, and word processors. The biggest reason there are so many different overlapping pieces of software is simply that nerds tend to want to make their own versions of the same thing, only better and cooler. Instead of building hot-rods, linux nerds build software.

Sony seems like a company filled with hardware nerds. They do some really cool things with hardware. The PSOne and slim PS2 are really awesome from a hardware standpoint. But, in a company filled with hardware nerds, the mantra is “why use someone else’s technology when we can build our own?(only better)”. Thus, Sony spends a lot of money on robot dogs that nobody wants to buy and hardware/software formats that aren’t needed at all.

Why isn’t this strategy working for Sony? I think the big reason is that Sony’s strategy doesn’t put much focus on the consumer. Sometimes I honestly think that Sony makes products expecting that they will sell by default because they have the Sony sticker on them. In many cases I think some products do, but the “Sony effect” can’t last for long. See, Sony’s bread and butter is consumer electronics hardware(not music and movies) and consumer electronics industry has two things going on right now: cheap hardware and a greater need for software. Because of Wal-Mart companies are willing and able to sell high volumes of cosumer electronics at prices much lower than Sony is willing to sell at. For example, Sony is still trying to sell standard definition televisions at higher prices at Best Buy than I can buy a HDTV for at Wal-Mart.

Yet, even with the price issue, Sony could still be hugely successful if not for their achilles heel: software. Sony is not a software company. Sony is a hardware company. As more and more consumer devices gain functionality, the need for quality software becomes quickly apparent. For example, the copy protection that Sony puts on their own CD’s to protect them from piracy also protects them from being played on Sony Walkman mp3 players. Yet, how is Sony to compete with Apple when they can’t even play their OWN MUSIC on their own mp3 players? Are consumers going to buy music from the Sony Online music store? Absolutely not. If someone buys a CD, then they don’t want to buy it again digitally. That is just plain dumb. At the same time if someone buys music from iTunes, do they want to repurchase it for their Sony mp3 player? Nope.

The same could be said for the iPod, but there is one big difference between the iPod and Sony Walkman mp3 payers. The iPod was built as an mp3 player first and an aac player second. Originally Apple didn’t have a digital music store. Thus, the iPod was built around the notion that people should want to buy the device because it allowed them to put all of their music on there using a great piece of software called iTunes. The iTunes music store was completely secondary to the idea that most people still buy CD’s and copy them on to the iPod(using iTunes). Thus, Apple made iTunes a very nice application for organizing music and ripping CD’s. It worked. Sony’s SonicStage didn’t.

So, in short Sony makes stupid formats because they are profitable and they help keep Sony nerds happy. For the forseeable future Sony will still have a huge failure rate in these formats because they aren’t pro-consumer, they are pro-Sony. The fact of the matter is that Sony writes crappy software and and attaches it to great hardware. As Apple and Microsoft - two extremely strong software companies start moving into consumer electronics Sony is going to need to learn how to write great software in a hurry. Otherwise, without great software and industry standard formats Sony products are going to be footnotes in gadget history. Already the Walkman has been replaced by iPod. Will the Playstation be replaced by the Xbox? Will Blu-ray fall on its face? Only time will tell, but if Sony doesn’t figure out how to use established formats and great software consumers will go elsewhere. In fact, I think many already have.

This entry was posted on Sunday, April 2nd, 2006 at 9:38 pm and is filed under Apple, Microsoft, Sony, iPod, iTunes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.