More than any other company, Sony appeared to be well positioned to meld consumer electronics with personal computers. The emerging convergence of PCs with television, high-quality audio, and other home entertainment devices--all Sony strengths--was expected to catapult the company into market-leader status, even in the hypercompetitive PC market.
Instead, PC stalwarts Packard Bell, Compaq, and IBM (IBM), as well as Japanese rival and consumer PC upstart Toshiba have dominated sales. In addition, market analysts don't believe Sony will be making an impact anytime soon.
"Sony is still figuring out the PC industry," says Matt Sargent, an analyst with Computer Intelligence.
According to a recent Computer Intelligence survey of PC superstores, Sony barely registered a blip. It had only 1.4 percent share as of February in this retail market, which includes the consumer electronics, computer, and office superstores.
Compaq, meanwhile, had 28.8 percent market share in PC superstores. Packard Bell had a 25.7 percent share, and IBM has consistently held between 13 and 15 percent. Toshiba's market share got as high as 10 percent in December of last year, though it has faded a bit recent months.
One thing Sony has failed to do is distinguish itself from the consumer PC pack, a strategy that, ironically, it has been very adept at executing in the consumer electronics market. "Sony has taken a more conservative approach [in the PC market]," says Richard Zwetchkenbaum, an analyst with IDC Research.
Another reason for Sony's slow start is its inexperience in the computer business. "The PC industry moves quicker than consumer electronics and it moves across multiple dimensions. There's microprocessors, motherboards, graphics, and communications technology--there's a lot of things to track," Zwetchkenbaum added.
"They're used to owning more of the property, and [in the consumer electronics world] they don't have to manage so many of the technology trends. There's a lot of procurement, partnering, and inventory control in this industry. It's a fast-moving target."
Sony believes it is taking a long-term view. "We wanted market share to be the result of what we had done, not as our primary objective," said Tac Sugiyama, director of marketing for Sony Information Technology of America.
"We want to make sure we don't force customers to take unnecessary features or risk just for our ego. That's the reason why we're not putting out some crazy features or functions just for differentiation," he added.
Not only does a new entrant have to figure out where to get parts, but it also has to determine who will distribute the products. Sargent and Zwetchkenbaum agree that it takes time to build the distribution model and understand how to price products appropriately for the specific outlets.
Toshiba, a dark horse of sorts in this race, has fared better than Sony. Toshiba not only made a splash of its own but also has enjoyed brisk sales of its Infinia computers until February, when sales fell somewhat. The Infinia has distinguishing features such as a built-in TV, a radio that can be controlled through a push-button panel, and an LCD screen that monitors the status of activities such as voice mail.
Compaq has continued to be a strong player by bombarding the market with a battery of competitive models, ranging from a $999 box to a "luggable" desktop unit with a liquid crystal display screen and high-end, full-featured game machines. Packard Bell, the low-price leader, has maintained market share, as has IBM.
But analysts have not written off Sony just yet. "They are not in it as much to sell PCs as much as audiovisual equipment and monitors...I don't see them truly getting into the market until the PC-TVs become a bigger segment," Sargent said.
"Sony is more tuned in to convergence than anyone else," Zwetchkenbaum noted. "They were a little shy the first time out and didn't want to be seen as different. I don't think they set their sights too high, but it's really only the top of the first inning in the convergence game. It's a long season that will go over a number of years, and that's an advantage Sony has. Plus, they have great brand-name recognition."
Moreover, Zwetchkenbaum expects Sony to become more active in the standards-setting process, a lesson he says it learned from Compaq. Microsoft, Intel, and Compaq have been at the forefront of defining the next generation of computers according to their vision of what a "PC Theater" will encompass.
The companies are working to combine home entertainment and PC products by establishing "plug-and-play" standards that let audio or video devices and PC-based devices work together. Sony remains well positioned to drive products into this market.