Will Apple stand still in face of Microsoft iPod killer?

Stan Beer
Sunday, 09 July 2006 19:55

IT Industry - Strategy

The contrast in marketing styles between Apple and Microsoft is interesting. Apple gives away nothing concerning its future products; Microsoft leaks everything. Where iPod is concerned, we know Microsoft's intentions. The question is how will Apple respond?

Last week we heard that Microsoft was going to release an iPod killer in time to hit the shelves for the Christmas Holiday season. Since then we've all heard much about this device from "sources close to Microsoft". For instance, this device is going to have a bigger screen than iPod. It's going to be Wi-Fi enabled, so users can download tunes (and videos?) from hot spots. It's going to have a bigger storage capacity than iPod - 8 GB we hear.

Here is what we already figured out. The new Microsoft device, which will be made by the company's hardware division, will integrate with Windows Media Player 11 and the MTV-Microsoft music store collaboration called URGE. The music store will not only offer music downloads at the same 99c US per track price, but will also offer subscription pricing plans as an alternative.

All of the above already give the new device a considerable advantage in functionality over the present day iPod options. Now there is another rumour that, if true, would demonstrate in breath-taking fashion that Microsoft is so serious in taking on Apple in this space that it's not funny. There is talk that Microsoft is prepared to pay record companies to allow iTunes users to transfer their tracks to Windows Player 11 for free. Given that iTunes users had already downloaded well over 1 billion tracks near the beginning of this year, that's a hell of an investment for Microsoft to make to enter the market. However, why else has the company got tens of billions in the bank if not to buy its way into markets?

Microsoft has succeeded in wiping the floor with Apple in the past. However, this time things are different. Apple now enjoys the same sort of dominance in the digital entertainment space that Microsoft has on the computer desktop. Microsoft has telegraphed to Apple what it intends to do. It would be foolish to believe that Apple intends to stand still and let Microsoft just move in on its territory. One thing is for sure, however, Apple will not be telling us what it intends to do.

Finally, we have heard that Microsoft intends to create the same sort of proprietary integration between its music store and its portable music player as Apple has between iTunes and iPod. If so, will France and the Scandinavian countries also deny access to the Microsoft service and product? Based on the French legislation, loopholes aside, it would have to treat Microsoft the same as Apple. Thus, France and other European countries may end up with a situation where laws designed to curb free enterprise in the digital music market condemn their citizens to second rate services. {moscomments}