Money Matters - Simplified

Sony to revive failed online store

Unlike iTunes, Sony online service will not just sell products but also enable users to tap into social networking. Users will be able to upload their videos and photos and other digital content to their personal online accounts

New York, November 21 -- In yet another attempt to challenge Apple’s iTunes store, Sony is gearing up to launch its online store selling music, movies, books and other downloadable content for its various electronics products.

Sony had earlier forayed into online media store with Sony Connect in 2005. The service sold songs in a proprietary format that were played only on Sony devices.

But the company had to shut shop within three years of its launch, thus admitting defeat at the hands of Apple's iTunes.

Sony’s online store to be different from iTunes
Despite its initial failure to connect with consumers through its online media store, Sony is all set to make a comeback, this time more aggressively.

Though the company has yet not divulged details about when the service will be launched, and what the store will look like, one thing is clear: the basic attempt is to link its products to vast library of digital content.

"That's the kind of combination that I think is not seen anywhere else,” Kazuo Hirai, Sony executive vice president for networked products and services told Associated Press. "That I think is where our core competence lies, and that's a differentiator for Sony."

Unlike iTunes, Sony online service will not just sell products but also enable users to tap into social networking. Users will be able to upload their videos and photos and other digital content to their personal online accounts.

Online strategy to counter hardware losses
Apart from competing with Apple on the music front, Sony is also focusing to narrow down losses from its hardware business. Since the current economic downturn has crimped consumer spending, Sony’s TV and video game business has been hard hit.

Mired in recession, the company is expected to register losses for the upcoming quarter, its second straight loss. Overall, Sony has predicted an operating loss of $674 million for this fiscal year, ending March 2010.

Despite the string of losses, Sony is hopeful of reversing its fortunes with its upcoming online services.

To further strengthen its chances of a comeback, Sony is cutting costs, reducing inventory, and closing factories.

The company also has new management team in place, consisting of younger generation of managers, who share chairman and chief executive officer Sony Howard Stringer’s conviction that software development will restore profitability at a time when margins from the hardware business are increasingly declining.