Tag: iPod

Sony Walkman and Scenario Planning

The Sony Walkman: Scenario-type planning

Sony didn’t do the proper scenario-type planning and only relied on standard forecasting, which is why it’s market share fell behind Apple’s.  A key requirement for scenario planning is for everyone in the planning session to understand that knowing the future is impossible and yet people want to know where the future could go (Wade, 2014).  However, it is important to note that scenarios are not predictions; scenarios only illuminate different ways the future may unfold (Wade, 2012)! Sony should have created a brainstorming session to identify as many of the driving force(s) or trend(s) that could have an impact the Sony Walkman (Wade, 2014)?  Thus, Sony should have thought of any trend or force (direct, indirect, or very indirect) that would have any effect in any way and any magnitude to the problem.

The Sony Walkman Story

Before the introduction of the Sony Walkman, cassette player technology existed in the 1960s, but households preferred to listen to vinyl records instead (Haire, 2009). The Walkman, a device that merged a light weight and portable cassette player with a light weight headphone, was introduced to the Japanese market in 1979 where it was sold out in three months at $150 per device (Adner, 2012; Franzen, 2014).  The device even had two headphone jacks so that two people can listen to the same music/recording at the same time (Haire, 2009). In the 1980s, the Walkman commanded about 50% of the market share in both Japan and the U.S. selling over 200 million devices over 30 years (Adner, 2012; Haire, 2009). The iPod made by Apple from 2001-2009 sold 160 million units (Haire, 2009).

Then, in 1990 CDs and digital music files like the mp3 came into existence (Adner, 2012; Franzen, 2014).  CDs and mp3s provided better quality and integrity than cassettes, which started to drive the cassette player’s market share towards zero.  Cassettes worked on the film, which tends to degrade with time as well, where the digital files didn’t.  The first mp3 player was from Saehan Information Systems, in 1998 (Adner, 2012).  Sony quickly adapted to these new formats as well and created the CD version of the Walkman and eventually the mp3 version of the Walkman, but it still stuck onto is proprietary music format the ATRAC (Franzen, 2014; Haire, 2009). Also, the industry saw this change from cassettes to CDs to mp3s has happened and was trying to figure out which mp3 player would eventually dominate the market like the Walkman did (Adner, 2012).

In 2001, the iPod came into the scene and took over the market, even when the market was already saturated with about 50 different types of mp3 players (Adner, 2012).  Steve Jobs learned that on its own, the iPod was useless, but with broadband download speeds and mp3 marketplace the market was ready for the easy to use the device at $399 and 5 GB of storage (Adner, 2012, Apple, n.d.). What made the iPod so successful was the analysis of the challenging forces that made mp3 players a hard market to sell and addressing them by providing seamless integration with an mp3, which was introduced the iTunes music management software in its first iteration in 2001 and re-imagined storefront called the iTunes Music store in 2003 (Adner, 2012).

By 2008, Apple had claimed 48% of the market share in mp3 devices which was similar levels of the Walkman in the 1980s (Adner, 2012). In 2010 the cassette version of the Walkman device line came to an end (Franzen, 2014). In 2015, the newest mp3 Walkman device the ZX2 is $1200 with 128 GB and expandable microSD card slot, which is now Sony’s aim for higher quality audio devices (Miller, 2015). Unfortunately, the ZX1 and ZX2 doesn’t have smartphone features like apps (Franzen, 2014; Miller, 2015).

Challenging forces to move from the Walkman to mp3 players:

Legally: In 1998-2001 there was no storefront to download mp3 music legally (Adner, 2012).

Technology: Even if music was obtained legally from CDs, people had to use a third party software to convert files, which in those computational computing days took hours to conduct (Adner, 2012).

Therefore, who cares if you are first to market (Saehan Information Systems) if there is no easy way to download mp3 music easily and legally.

Supporting forces to move from mp3 players to the iPod:

Legally: The iTunes Music Store, allowed for songs to be downloaded at a modest price and legally for $0.99, which Apple was able to get 10% commission from it (Adner, 2012).

Technology: The seamless integration of the iPod to the music storefront made the device easy to use, which helped increased its market share in the mp3 market. By 2009, over 8 Billion songs were sold, totally $800 Million in revenue (Adner, 2012).  This iTunes storefront, became a cash cow for Apple, while the iPod went under further innovation into the iPhone product line and the iPod touch product line (Apple, n.d.).

Example Scenario Planning four quadrants for the Sony Walkman case based on the forces listed above:

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Conclusion

Sony didn’t do proper scenario-type planning and only relied on standard forecasting, which is why it’s market share fell behind Apple’s.  However, the lesson learned from this case study is that a company doesn’t need to be the first mover to make it big in the market. A proper scenario planning could be the key to succeeding when entering a saturated market.  Apple was three years late to the party, yet it was their patience, learning about the supporting and challenging forces for mp3 player dominance, and letting the key market players align for their product, was the key to Apple’s success.

It is easy to do a scenario planning exercise on past events to today’s events (Wade, 2014). It is harder to do scenario planning moving into the future. Also, scenario planning events should never remain static.  The future is always evolving.  Thus, the scenario plan should change to reflect the new landscape, but the difference is that this planning allows for the mind to be more flexible and receptive to pivot quickly (Wade, 2014).  Scenario planning can take into account any force, not just the two listed above Political/Legal, Economical, Environmental, Societal, Technological, etc. (Wade 2012, Wade 2014).

References