Why Sony did not invent the iPod?

A superb post by John Kay of FT.

Come to think of it, Sony looked most likely to invent the i-pod. It had created “Walkman” which was like a predecessor to I-pod. Sony was also a leader in many of the technologies:

The company created the Walkman, the analogue predecessor to the iPod. For a generation, Sony was the world’s most successful consumer electronics company. It developed a vision of integration of devices and content long before Apple dreamt of going into the music business. The route Sony followed was acquisition. In 1987, Sony bought CBS records. Two years later the company purchased Columbia Pictures.

Sony had seen the future. And it worked, but not for them. Apple went on to dominate the new markets, transforming itself from a computer company into both a leading consumer electronics company and a major retailer. Sony didn’t even come close. (In his biography of Steve Jobs, Walter Isaacson recounts a discussion with the Apple founder on this issue.)

So why not Sony? It was simply afraid to venture fully into new technologies. Saw it as a threat to existing technologies:

The explanation can be found in Clayton Christiansen’s analysis of the innovator’s dilemma. Established companies in an industry are naturally resistant to disruptive innovation, which threatens their existing capabilities and cannibalises their existing products. A collection of all the businesses which might be transformed by disruptive innovation might at first sight appear to be a means of assembling the capabilities needed to manage change. In practice, it is a means of gathering together everyone who has an incentive to resist change.

The executives of music companies, film studios and book publishers did not rush to embrace the opportunities offered by new channels of distribution. They saw these technological developments as threats to well established business models in which they had large personal and corporate investments. And they were right to think this. So convergence was accomplished by groups such as Apple and Amazon, which had no similar vested interests to oppose change. These companies succeeded precisely because they were outsiders.

The Clayton Christiansen  book is here.

This leads to holding back econ growth:

Economic growth is held back by industries where established interests are so powerful that disruptive innovation can be staved off for ever. Financial services is probably one. And education another. I think often of the contrast between the power of information technology to transform the process of learning, and the little progress that has been made towards actually doing so.

Superb. Similar stories were there for Xerox which refused to diversify into digital cameras etc.  Microsoft did not look at internet for a while, Nokia on touchscreen phone etc..The list goes on..



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