Sony says its digital music players will now play MP3 format music tracks, and not just its own Atrac format.
Sony's announcement should help it compete against rivals
It is a major move for the electronics giant which has been criticised for only letting its own format be played.
The change of heart should help the company compete better with Apple's iPod and other portable digital music players which play MP3 music files.
A Sony spokesperson said new devices which will play both Atrac and MP3s would be launched later in the year.
It also plans to offer software to upgrade existing digital music players so they too can play MP3s.
In July, Sony announced it was launching a revamped Walkman, called the Network Walkman NW-HD1, as a rival to music players which use hard drive memory, like the Apple iPod, as well as devices from Creative Technology and Dell.
It said the 20 gigabyte device, released on Europe in September, would be about £80 cheaper than the 20 gigabyte iPod model.
The announcement was also meant to bolster its online music store, Sony Connect, because it said the Walkman would only play songs in the company's own format.
Portable music players are becoming a must-have item
Although some of Sony's CD players have had the ability to play MP3 converted from CD collections, the company has been hit by competition from other digital music players.
Currently, Sony users have had to convert tracks into the Atrac format using desktop software.
Portable music players are fast becoming a must-have gadget.
A recent report by Informa Media predicted more than 10 million players would be bought in 2004, with a total of 21 million in use around the world by the end of the year.
Analysts IDC say the worldwide market for MP3 players will be worth $58bn (£32bn) by 2008.