ALL TOGETHER NOW.(The Talk of the Town)(Sony)

In 1979, Masaru Ibuka, the co-founder of Sony, asked the company's engineers to make him a portable stereo cassette player that he could take on a plane. Within a few days, the engineers had delivered a prototype. The headphones were gigantic, and the device required special batteries, but it worked, and when Akio Morita, Sony's C.E.O., saw it, he realized that this was more than a gimmick--it had the potential to change the way people listened to music. In a matter of months, Sony launched the Walkman, one of the most successful products in history, and the story came to epitomize what made the company great: innovation instead of imitation, a dedication to big ideas, and a willingness to pursue its obsessions no matter what others thought.

A quarter century later, Sony is still pursuing its own obsessions, but it hasn't produced anything like the Walkman for a long time. Today, Sony is known for floundering into new markets, not for creating them. Its televisions, music players, and portable devices--the old mainstays--no longer lead the pack, high price tags notwithstanding. Its profits have shrunk, and its stock price is a third of what it was five years ago. Last month, the company replaced its C.E.O. with Howard Stringer, the head of its entertainment business, who's neither an engineer nor Japanese. The old ways, apparently, will no longer do.

Companies often become victims of their own mythologies. Sony's track record of game-changing inventions--the transistor radio, the Walkman, the Trinitron--led it to believe that success lay in self-sufficiency and absolute control. Sony's ideal future was one in which just about everything--TVs, DVD players, cameras, computers, stereos, handhelds, digital songs--bore the Sony brand. The company became an exemplar of what's sometimes called the "Not Invented Here" syndrome: if it wasn't invented at Sony, the company wanted nothing to do with it.

"Not Invented Here" is an old problem at Sony. The Betamax video tape recorder failed in part because the company refused to cooperate with other companies. But in recent years the problem got worse. Sony was late in making flat-screen TVs and DVD recorders, because its engineers believed that, even though customers loved these devices, the available technologies were not up to Sony's standards. Sony's cameras and computers weren't compatible with the most popular form of memory, because Sony wanted people to use its overpriced Memory Sticks. Sony's online music service sold files in a Sony-only format. And Sony's digital music players didn't play MP3s, which is a big reason that the iPod became the Walkman's true successor. Again and again, Sony's desire to control everything kept it from controlling anything.

To be fair, "Not Invented Here" has an excellent pedigree. For much of the twentieth century, innovation was ...