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In This Corner, The iPod


In mid-August, Sony Corp. (SNE) will roll out its answer to the iPod music player. The Japanese giant's NW-HD1 Network Walkman weighs in at less than four ounces, making it slightly smaller than Apple Computer Inc.'s (AAPL) popular iPod. More to the point, Sony claims that its 20-gigabyte Walkman can store 13,000 songs, compared with the 5,000-song capacity of a similarly equipped iPod.

Faster than you can say download, Apple was all over Sony's boast, saying that its rival was misleading consumers. Sure, Sony can cram 13,000 songs onto its player, said Apple, but only by reducing sound quality. Sony fired back, arguing that its superior technology allows it to give consumers more music at comparable quality to the iPod.

Welcome to the latest iteration of product one-upmanship. PC makers have been playing this game for years, marketing their boxes on the basis of gigahertz, or how quickly the microprocessor runs applications. Now that the computer industry is moving into consumer electronics -- making and selling everything from music players to digital cameras -- they are wooing (and confusing) consumers with a barrage of arcane statistics touting everything from battery life to music quality as measures of superior performance. In the coming months, as the music-player wars heat up, expect to hear a lot of marketing spin about compression and bit rates. "Everyone is trying to show their product is faster, bigger, better," says Omid Rahmat, U.S. general manager of independent reviewer Tom's Hardware.

"MARKETING TRICKERY"

How do consumers wade through all of the hype? By understanding that compressed music is an issue of quantity vs. quality. Getting a lot of songs onto a player or a PC, or making them small enough to download fast, entails compressing digitized music files. The maker crunches them down by deleting redundant sounds as well as those that humans can't hear. The industry uses a standard compression measure called bit rate; the lower it is, the smaller the music file and the more you can squeeze onto a PC or music player. The downside of that, however, is that a lower bit rate generally means lower sound quality.

That's the logic Apple used to attack Sony's new player. The creator of the iPod notes that to jam those 13,000 songs onto its player, Sony would have to compress music files to a bit rate of 48 -- well below the default 128-bit rate Apple uses. "Clearly, they are trying to use a little marketing trickery," says Apple Executive Vice-President Philip W. Schiller. Moreover, Sony's default bit rate for the new player will be 68. But Sony says its compression technology is superior to Apple's and can maintain quality even at lower bit rates. "Listen to it yourself," says Todd Schrader, a Sony Electronics vice-president. "I don't have a golden ear, but it sounds great."

For now it's impossible to verify Sony's claims, since experts have yet to conduct tests on its music player. In a decidedly unscientific test, one BusinessWeek writer and two friends listened to Frederic Chopin's Etudes Opus 10 and Opus 25, compressed from a store-bought compact disc to a 48-bit rate using Sony's technology. Then they compared it with the original CD. Guess what? They couldn't tell the difference.

That prompts the real question: Does any of this really matter to the average music lover? Audiophiles insist that compressed music files in no way measure up to CD clarity. And while it's true that hooking up a PC or music player to the home stereo might not deliver CD sound, plenty of people are doing it anyway. Besides, if the sound quality of compressed music was substandard, it's hard to see how Apple moved 860,000 iPods during its fiscal third quarter, a performance that helped the company triple its profit to $61 million and boost revenues 30% to $2.01 billion.

In the end, consumers will decide whether they want quality or quantity. As it happens, they already have the choice: Both Apple and Sony's music management software allows users to choose from a range of bit rates. So chalk up the Sony-Apple spat to old-fashioned hype.

By Cliff Edward in San Mateo, Calif.


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