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Sony boss rues losing to iPod, on guard against iPhone

In a rare candid interview, Sony's chief executive expresses regret over his company's blown opportunity to one-up the iPod years in advance —and vowed not to repeat the same mistakes with the appearance of the iPhone.

The frontman for the Japanese electronics behemoth's, Sir Howard Stringer, admitted in a yet-to-be-broadcast TV appearance that his corporation's stubbornness in its design philosophy likely cost it a head start in digital music.

Speaking to CEO Exchange, Stringer noted that upon his taking the helm in 2005, virtually every branch of Sony's empire was a "silo" —sheltered from one another and interested only in how one of its products trumped another.

"All the divisions were in their own little worlds," he said.

The fenced-off approach ultimately doomed Sony to squandering its one and best chance at capturing the fledgling digital music player business, according to the executive. Protectionism by the company's music label (now Sony BMG) virtually guaranteed that engineers working on what would become the Network Walkman were blocked at every turn from creating the jukebox they wanted.

Such a delay is an especially sore point for Stringer: just as he took hold of the American division in 1997, he was forced to watch as the company froze its digital media efforts and shut itself out from a market that would later be dominated by Apple.

"We were working with IBM on electronic music distribution and could have put this out five years earlier [than the iPod]," he complained. "But we couldn't get our people to understand software. And we are a music company. They saw digital media, panicked and didn't like it."

The result created Sony's ill-fated ATRAC format, which was used by the electronics maker's Connect music store and which for years was the only choice for storing songs on its Walkman players. The company only reluctantly changed course and allowed for MP3 (and later, AAC) tracks once Apple had already taken control of the industry.

In his interview, however, Stringer was adamant that the fate of the Sony-Ericsson cellphone partnership would be different in the battle against the iPhone. Instead of stonewalling, the Japanese-Swedish partnership has already warmed up to the concept of music on phones and has seen the benefits through outstanding sales, especially in Europe. Apple, the Sony leader said, has only "spotted a trend" that Sony-Ericsson identified years before.

Regardless, the chief was careful not to exhibit the same hubris that left Sony holding merely a fraction of what was once a commanding lead in music. To him, ruling out Apple's determination under its current leadership would be a potentially fatal mistake.

"I would never sit up here and say I'm not worried about Steve Jobs," Stringer cautioned. "I wouldn't bet against Steve."