The Advantages of Proprietary Products Over Open Source Products

1. There are several advantages to proprietary products over open source products: better quality control issues in creating products; a firmer control over the licensing, either the technology the product is based on or what material (music in this case) can be used with the proprietary device; the potential to build brand loyalty (for example Sony memory cards only work in their products, if you’ve already bought these cards you could be more likely to purchase additional Sony products in the future); pricing – companies could possibly charge a premium price for their proprietary products as there could be few to no competitors in a specific market space; vertical markets (if Sony is providing the device, memory card and music the majority of revenues are staying in-house); and proprietary products could potentially create barriers to entry.

I think a benefit to the proprietary product model is either when a company is the first entrant into a new market or if a company is introducing a product that is incredibly more innovative than any other competitor’s product being sold in the marketplace. A proprietary device will allow the company to better control all aspects of the marketing chain: pricing, promotion, product and promotion to further ensure the viability of the product as a new entrant.

Could this force the company to continuous innovate to prevent the products from entering a mature market? You have to give the customers reason to upgrade. I think that is why Apple has been so successful – by releasing an updated proprietary product every year (iPhone and iPod). This strategy has allowed them to stay ahead of their competitors, forcing the competitors to chase them and also continuously bring new products to the...

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...cts and identify different market segments they could market the products to—both could have been a success. For example, one of the players could have been a cheap entry-level product and the other a higher-end product. Or have little differentiation between the two products, but introduce one of the players in the US domestic market and another in overseas markets.

Sony Music should have been better engaged to allow this division’s management to properly voice their concerns over the piracy of their content. If there had been a taskforce, as mentioned above, developers for the two music devices could have worked with Sony Music to adjust their products to meet the piracy concerns. Maybe then either team could have produced a product that not only did not have sizeable technical drawbacks, but was innovative enough to capture the attention of the marketplace.