MS takes on iPod, iTunes

Microsoft today confirmed that it will launch an iPod competitor branded as "Zune." The offering will include portable media players as well as an online service, similar to Apple's iTunes Music Store. The Wall Street Journal reports that Chris Stephenson -- Microsoft's general manager of marketing for MSN Entertainment Business -- said that Microsoft sees "great opportunity to bring together technology and community to allow consumers to explore and discover music together." Stephenson said the first musical device will contain a hard drive as well as Wi-Fi connectivity, and that the company is looking at seven or eight different wireless scenarios, which range from enabling users to view as well as sample music from other Zune devices in the same hotspot to purchasing and downloading music directly to the device.

The Microsoft manager said users will be able to view each other's playlists, as well as recommend music and sample tracks. The capability will also reportedly extend to the Xbox 360, PCs, and mobile phones running Microsoft Windows.

Microsoft chairman and former CEO Bill Gates in February pledged to bring new iPod competitors to the market by working with hardware partners in developing new digital media products.

"I don't think what's out on the market today is the final answer," Gates said. "Between us and our partners, you can expect some pretty hot products coming out over the next few years."

The WSJ notes that Microsoft is shifting its music technology licensing strategy for Windows Media technology, although it worked successfully for PCs. "Until now, Microsoft has approached music much as it did the PC market, creating what it calls an 'ecosystem' by licensing its software to any and all hardware makers," according to the report.

"For media devices, Microsoft widely licenses an audio and video format known as Windows Media, in the same way it licenses the Windows operating system to PC makers. It has many partners making hundreds of music devices, and there are multiple services that provide music that can run on these devices. The ecosystem strategy worked well in PCs. But in music, instead of turning Microsoft's technology into the industry standard, the strategy has confused consumers with scores of different devices and services under different brand names that haven't always worked well together," the report said.

In contrast, Apple uses its own FairPlay DRM technology to offer songs, television shows, and short films from its iTunes Music Store. Rumors have also circulated that Apple is preparing to sell full-length films, although the movie industry is wary of Apple's growing clout. Reports have already surfaced that Amazon may be teaming with Microsoft on such a service.

Microsoft denies rumors

Microsoft in early June aggressively denied rumors that it had teamed up with several other companies to contest Apple's dominance in the Japanese portable music market, saying that the rumors stemmed from translation issues. In addition, the software giant flatly denied reports that it was developing a digital media player to compete with the iPod earlier this month, saying that such reports were based on rumor and speculation. Microsoft said it had nothing to announce, denying statements from unnamed music industry executives who said they received briefings about the product.

Other recent rumors suggested that Microsoft would lure customers from iTunes to its own service by offering iTunes customers free musical tracks to match those purchased from Apple's online store.

by MacNN Staff