• Austin American-Statesman, Monday, November 2, 2009 12:15 PM

Omar L. Gallaga calls the a phenomenon "going Sega." It's the tendency for tech marketers to redefine themselves as new products come along and obliterate the raison d'etre for their hardware. (When Sega could no longer compete in the game console market, it began to produce games like "Sonic the Hedgehog" for its former rivals.)

It happened again last week when Slacker, a music-streaming company, said it would discontinue the G2 portable music device it introduced in late 2007 and stick to streaming its radio-for-a-fee service over iPod, Zune and an increasing number of smart phones for $3.99 a month.

The company only got into the hardware business in the first place because portable MP3 players weren't capable of getting Internet content over the air when it started out two years ago, according to Jonathan Sasse, Slacker's svp of marketing. "There was nowhere to put our radio service at the time," he says. Things have changed dramatically since then: more than 30 million iPhones have been sold, and the total smart-phone market is expected to grow to 412 million units by 2014, according to a recent report by In-Stat.

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