Earlier quoted context omitted.
Sony’s bet was that they could overcome the strategy tax by sheer talent. They could for a while (2 decades ?) but ended up losing when software became a major part of the business. Software has always been their Achiles heel. Their laptop where cool but running widows with super custom drivers. Their music players were cool but running weird formats with proprietary interfaces. Anything that needs software intercomp…
Sony's PlayStation is a popular consumer software platform, showing they’re not completely incapable of providing usable software. I'd point more towards the competitiveness of the digital music market making their aggressive attempts to lock customers into their own narrowly focused music platform much less appealing. In game consoles, proprietary content is the point; not so much in audio gear.
In that respect their MD player was also running decent software, it just didn’t talk to anything not Sony produced.
Anecdotally, they also have a joint venture with Docomo that worked on NFC payment solutions that was super successful with genuinely strong software.
On the music market, I think the lockin wasn’t so much an issue (iPods also locked you in to some extent) than Sony’s desktop software being utter garbage.
I actually bought a Net Walkman at that time because I liked the hardware more, and it was hell: I’m not even sure there was any mac support, I might have run a VM for that, and even in a proper windows environment it was still buggy, extremely time consumming to move tacks to the player, yet limited and low quality. I personally think Sony lost to itself, more than the competition coming for Sony.