COMMENT: Creative and Sony are slugging it out for second spot in the massive wake of Apple’s iPod. They’re scaling a metaphorical Everest in an MP3 blizzard and only one of them can make it.
The battle for control of the portable music market is intense. On one hand we have Apple’s iPod which revolutionised the music industry seemingly over night. On the other hand we have the likes of the Creative Zen Vision: M, with which Creative Technology is desperately trying to emulate Apple’s success. Then there is the fallen king: the Sony Walkman. So who will get the number two slot behind Apple’s massive lead?
Whoever it is, both Sony and Creative face a big problem in that 75 percent of portable music buyers have sided with Apple and purchased an iPod for both music and video. While Creative has tried hard to crack the MP3 market, it is struggling and during the past 18 months has made big losses which will, over time, impact its research and development capabilities. For Sony, this represents a big chance and, if seized, could leave Creative and others looking a lot like portable entertainment has-beens.
And they all look to Apple. Even Creative’s Vision: M portable player desperately tries to emulate the look and feel of the iPod. As Creative plays catch up to Apple, major hi-fi manufacturers such as Jamo, Harmon Kardon, Denon and Bose are delivering a new generation of iPod accessories that make the iPod an absolute must-have because of its ease of use, design and functionality.
The risk for consumers is that if one buys a Creative portable music or video product they will not have access to a new generation of portable music accessories being designed around the Apple 17-pin connector, which allows the iPod to be connected with an iPod accessory made by a third-party manufacturer.
The Vision: M has all the bells and whistles that a portable media player should – the most notable feature being video playback file support which easily handles MPEG, DivX, XviD, WMV9, and Motion-JPEG, but at the end of the day it will not sell well up against the iPod.
Why? Firstly, Creative Technology tips money into retail price-off advertising in catalogues or into PR so that people like me give it free publicity in the form of product reviews. But it doesn’t spend money on high profile brand marketing, which is critical in the portable music market. In fact, it doesn’t have a clue how to build a brand. The mentality of this company centres around channel incentives. The problem is that everyone is walking into stores and asking for an iPod because it’s a status symbol dripping with kudos. Apple knows this and puts the money behind it to ensure everyone else does, too.
Another company feeling the Apple blowtorch is Sony, the one-time king of the portable music market. Sony knows a lot about brand advertising but its problem is the product doesn’t stack up. Unlike Creative, which prefers to copy the iPod, Sony is attempting to do something a little different.
Today, although iPod is still kicking the stuffing out of Walkman, Sony’s offering is finally putting up a decent fight. In January, Apple had 45 percent of the Japanese market for digital music players, versus 15 percent for Sony. That’s a modest improvement for the Japanese company, from the 53/11 percent split a month before the new Walkman hit store shelves.
Sony is hoping the new machine will help the company find its groove. This year Sony plans to introduce several new Walkman into the market though exec’s decline to give any details of the Australian launch dates. The three models, with disk drives ranging from six to 20 gigabytes, would broaden Sony’s line up. For Sony, this is no routine makeover. In September, Sir Howard Stringer, Sony’s new chief, declared the player one of the company’s main “Weapons against commoditisation”.
However, like the new Creative Zen Vision: M, the new Walkman has some serious disadvantages. About the size of a deck of cards, Walkman is bigger than the iPod, but it offers just 20 GB of storage space (enough for about 5000 songs) compared with the Apple machine’s 30 GB.
With the latest iPods offering video, the music-only Walkman has more catching up to do. “Video is now standard because Apple includes it,” says iSuppli analyst, Chris Crotty. “You have to match Apple, at least, to compete.” The iPod’s elegant click-wheel, simple software, and countless adapters to plug into a car or home stereo have helped give Apple an edge, too.
In 2005, Apple shipped more than 32 million iPods worldwide, seven times Sony’s forecast for the Walkman. Facing numbers like that, even a distant second might well be considered a victory for Sony. For Creative, it’s back to the drawing board and more losses.