New unit combines Japanese, U.S. operations.

Sony Corp. reportedly has set up an operating unit that will focus on developing portable hard-drive players and corresponding digital entertainment services for music, movies and more.

The new division, Connect Company, will be headed by Koichiro Tsujino, the electronics engineer behind the launch of Sony's DVD recorders, and Phil Wiser, chief technology officer for Sony Corp. of America, according to a published report.

The aim of the business unit is to fold its Walkman hardware and SonicStage music-management software operations, both based in Japan, under the same umbrella as the new U.S.-based Sony Connect digital music service.

Sony earlier this year announced product support for the MP3 format. The company is also said to be considering adopting digital rights management standards other than its own for use in its players. The company is hoping to drive greater sales of its digital music and video hardware devices and grab market share from the likes of Apple Computer.

Sony did not return calls seeking comment.