Now Sony has finally admitted that this was the wrong decision to have made - and as a result the Walkman has been virtually frozen out of the rapid growth MP3-player segment. But it's probably too late. Devices like the iPod have stolen brand awareness from Walkman, and other MP3 devices are offering full recording capabilities (like my new iRiver H320). It's a market Sony may never get back.
Ken Kutaragi, president of Sony Computer Entertainment has said "It's just starting. We are growing up."
But it may be too late. How about starting by opening up the UMD format for the PSP? Or allowing third parties to write code that can work with non-encrypted ATRAC?