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Sony has announced that it is shutting Connect, its online music store, admitting defeat at the hands of Apple's iTunes.

The service - which sold songs in a proprietary format that prevented them from being played on non-Sony devices - will close in Europe some time after March next year, depending on demand, the company said in a statement.

Officially, the explanation given by Sony was that it had "listened to its customers," but sources at the company said that selling songs in the 'ATRAC' format - which was used only by Sony - went against the tide of making devices more compatible with a range of download services.

The next generation of Sony Walkman digital media players - details of which were released simultaneously with the Connect announcement - will use the Windows Media Player platform. The switch means that the new Sony devices will be able to download songs from third-party music sites, such as HMV and Napster, the company said. They will not work with Apple's iTunes store, however, which commands as much as 80 per cent of the market

"Customers don't want to be constrained in their music choice, and to fear that if they change computers or their device, they won't be able to use certain types of services," a source close to Sony said. "ATRAC was a a great codec [a type of audio format] and it served its purpose for a time, but the world has moved on."

The two new series of Walkman - the NWZ-A810 and the NWZ-S510, which will be available from October - will be able to download movie trailers, songs, and music videos from "a range of websites" that are Windows-compatible, Sony said in a statement. They will also be able to connect wirelessly with other Sony devices, such as the PlayStation 3.

Sony launched Connect in the UK in July 2004 as part of an attempt to provide an integrated music service that incorporated both the online platform and the device in a proprietary format, much in the manner of Apple's iPod-iTunes system.

The company has always been tight-lipped about how many customers the service had, but in 2005, Sony's vice-president for network services in Europe said that Connect had "done a lot of sales."

Ultimately, however, the service struggled to gain a foothold against Apple's iTunes store, which is by far the dominant player in the digital download market.

Today shares in Sony were down 1c, at $46.10.

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