“In the battle over digital music, Microsoft may be forced to play kingmaker – or else be reduced to a pawn. There are dozens of online music stores that back Microsoft’s digital format, but they may be too fragmented to successfully dent the lead of Apple’s iTunes software, analysts said. So Microsoft has been quietly shifting some of its marketing muscle to back a few of the rival stores – particularly Napster,” Stephen Lynch reports for The New York Post.
“‘They certainly don’t want to see [Apple] become so dominant it becomes the de facto service,’ said Michael Goodman, an analyst with the Yankee Group. ‘Microsoft doesn’t really care how many stores there are, but it does care that they’re established.’ Microsoft talks up the diversity of its format, called ‘.wma,’ noting that more than 60 digital-music players support it,” Lynch reports.
“But that very diversity may be hurting .wma, as marketing efforts are disjointed compared to Apple. There are a dozen online music stores supporting the .wma format, but they command only about 30 percent total market share, according to estimates from Nielsen SoundScan,” Lynch reports.
“‘One advantage for Apple is that they can market the iPod and iTunes together,’ said Laura Goldberg, chief operating officer for Napster, which is owned by Roxio. Apple also benefits, marketing-wise, from its partnership with Hewlett-Packard, which is particularly grating for Napster. According to the San Jose Mercury News, Roxio was in talks with H-P to put the Napster logo on new computers, but then H-P unceremoniously returned a $250,000 check and signed a deal with Apple instead.”
“‘The iPod is the 800-pound gorilla,’ Goodman said. The success of the iPod Mini, and the launch of an H-P-branded iPod in the spring will only continue Apple’s roll, he said. ‘Until the [.wma] players gain a large installed base, Napster will have problems,'” Lynch reports.
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