Is Sony in the Groove?

Sony's (NYSE:SNE) tweaking its musical strategy, with reports galore that the electronics giant will now support the playback of MP3 files on many of its digital music players. It appears that Sony -- once musically mighty through the Walkman -- has recognized that to be a contender, it's got to give the people what they want.

Many recent versions of Sony's digital music products favored the company's proprietary format, Atrac, for playing tunes. Although some Sony players did support MP3 files, users needed special software and had to go through the trouble of converting the files to the Sony format, which also resulted in lower-quality sound.

Sony and many other electronics companies have had their eye on knocking Apple (NASDAQ:AAPL) off the pedestal it has reached with its iPod and iTunes products. Apple faces challenges not only from Sony but also from RealNetworks (NASDAQ:RNWK) and Roxio's (NASDAQ:ROXI) Napster. Even PC maker Dell (NASDAQ:DELL) has challenged it, going so far as to offer a bounty for relinquishing iPods, and Microsoft's (NASDAQ:MSFT) getting into the game as well.

Still, Apple has, so far, been far ahead of the game, having recently celebrated 100 million downloads served and a heck of a quarter. In case you're not yet one of the iPod faithful, consumers can play MP3s on their iPods.

Sony's announcement of this change in strategy comes in tandem with data from IDC that paints a bullish picture of the MP3 market. Regardless of how you feel about market research prognostications, digital downloading of music is becoming increasingly mainstream. IDC said that "broad consumer acceptance" of MP3 players should allow units sold to grow from 12.5 million this year to 50 million, with the MP3 market overall generating nearly $58 billion in sales by 2008.

So, there's no question that Sony has to make this move to remain competitive, although the big question is why it didn't make the move sooner. (It's rock 'n' roll science, not rocket science, after all.) It's not hard for anyone to see that MP3s are the industry standard; after all, MP3s were what all the old Napster brouhaha was all about.

Sony's shift in strategy to embrace the MP3 format could occur next year, news reports said (although rumor has it that the Sony Connect store still won't offer up tunes in MP3 format). Given the current excitement over digital music, the upcoming holiday season, and the fact that Apple's iPods have captured the pop culture imagination, it sounds like Sony still might be missing the train.

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Do you think Sony can catch up with Apple's iPod? Strike up a conversation on the Apple discussion board.

Alyce Lomax does not own shares of any of the companies mentioned.