In plain BA terms, the music and electronics corporations failed to define the product and did not understand the market. It's a remarkably conservative business, if the automotive industry behaved like this, we'd still have our spare wheels bolted to the trunk lid and be signalling the turns with our hands out through the window.
That's not entirely true as I recounted in an early post in this thread. There were many circumstances that were beyond the control of both CE and music industry. If there was a miscalculation made, it was thinking that there would be a larger market for surround music product. The iPod put the nail in that box.
And btw, the automotive industry is conservative because the design-to-production cycle on a new car model is 4-5 years. That's why cars still have CD players, but very few have hard drives.