Cnet has a great article
up detailing how Sony's Connect (their answer to iTunes) failed so miserably. Sony, by all rights, should have the position in digital music that Apple has, but a series of missteps ensured that Sony would be... well not so successful.
They tried, they really did. They hired a former Apple employee, they wanted to use the Walkman brand, but it never worked out. Read the gory details, if you dare.