Sony is closing its online music store and abandoning its proprietary digital audio format in favour of more successful MP3 and other "open" format options.
The Japanese electronics group announced the strategy shift at the launch of its line of Walkman portable music players.
The timing of the Connect music store closure would be based on market demand but would not occur before March 2008, it said.
Connect, which sells music in Sony's ATRAC format, has like most other online music shops faced a battle against Apple's iTunes.
Sony admitted its audio format had failed to match the success of MP3 and others.
Its new line of flash memory-based digital Walkman portable music players will play in formats including MP3, Microsoft's popular Windows Media Audio, and the Advanced Audio Coding, or AAC.
Like many rival portable digital players including Apple's iPod, Sony's models can also play video and display photographs.
They will also include an FM radio.