Analysts: Microsoft faces uphill fight to supplant Apple’s iPod+iTunes market dominance

“Apple Computer Inc. could soon find itself facing more competition for its iPod digital music player from its old rival Microsoft Corp., as the software giant is reportedly ready to launch its own portable media player in time for the key holiday shopping season,” Rex Crum reports for MarketWatch. “According to published reports, Microsoft is preparing to roll out a competitor to the market-leading iPod which will be capable of downloading songs wirelessly, something that current iPod models can’t do.”

“Gene Munster, an analyst with Piper Jaffray, said that while Microsoft isn’t saying anything directly about entering the fray against the iPod, the company’s history of leaking information in advance of product releases suggests a device is in the works,” Crum reports.

“Still, it’s far from certain that a Microsoft-branded device will be able to supplant the iPod, which holds about 75% of the U.S. market for digital media players, according to the research firm NPD Group. Apple’s iTunes Internet music store accounts for more than 70% of all legally downloaded songs,” Crum reports. “‘The question will be, ‘Does anybody want it?’ Munster said. ‘If it’s just the same old MP3 player, there are already lots of those out there. It doesn’t mean Microsoft won’t be successful, but they will have to do something more,’ by adding new features, he said.”

Crum reports, “The latest reports come amid the usual summer speculation about what Apple has up its sleeve for the back-to-school and holiday seasons. Apple hasn’t released a new iPod since bringing a 1-gigabyte version of the iPod Nano to market earlier this year, and analysts and investors have begun to wonder what the company will do next… Analysts are looking for Apple to do a redesign of the iPod that could include everything from an iPod cellphone to a new video iPod with a larger screen.”

“Such a move could see Microsoft competing against its own partners instead of Apple, according to Shaw Wu, an analyst with American Technology Research,” Crum reports. “No matter what Microsoft says, this move essentially puts Microsoft in direct competition with its partners that it has worked with over the past three-to-four years,” Wu wrote in a recent research note. Wu said Microsoft’s entry into the digital-media player market would likely have a larger competitive effect on its partners such as Sony Corp., Samsung and Creative Technology Ltd.”

“Wu said that Microsoft could do something similar to what Apple has done with the iPod and iTunes Music Store, but that the company has struggled to make money with similar business extensions, including the Xbox. Wu questioned whether Microsoft ‘is willing to fund another potential highly unprofitable business,'” Crum reports.

Full article here.

MacDailyNews Take: Sounds like Microsoft hopes to “liberate” your tunes from Apple FairPlay’s “house arrest” to their monopolist-friendly, Windows-only “maximum security prison.”

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28 Comments

  1. There are an awful lot of refreshed/reconditioned iPods on the Apple Red Tag page of it’s on-line store these days. They are even bundling accessories for free with them. It makes me wonder if the iPod market is softening.

  2. Soft Market:

    1. Apple’s secrecy about new products and the rampant speculations regarding the next iPod releases tend to slow current iPod sales in anticipation of the next great thing. I am waiting for the new flash drive models myself.
    2. It is no surprise that most manufacturers want to decrease current inventories by offering bargains and bundles prior to the release of new products.
    3. With ever increasing sales of iPods, it is reasonable to expect more second hand iPods made available for resale.
    4. Take the first and second derivative of the curve to determine the rates of change in sales of iPods and other portable music devices, this may give you a better idea of current market demand.
    5. Never underestimate the fickleness of the consumer.

  3. Analysts: Microsoft faces uphill fight to supplant Apple’s iPod+iTunes market dominance

    Typos and dupes seem to occur quite a bit on MDN when it’s late like this.

    Perhaps it’s not a dupe, but a copy of a dupe.

  4. There are an awful lot of refreshed/reconditioned iPods on the Apple Red Tag page of it’s on-line store these days. They are even bundling accessories for free with them. It makes me wonder if the iPod market is softening.

    No, when you sell sh*tloads of iPods your bound to get more rejects/returns.

    Microsoftie can try to challenge the iPod, but most people already have plunked down the money for a great MP3 player and organized all their music. So they are already commited to Apple even if M$ gives duplicate music for free.

    Then there are Apple Stores, which people like because they know they can go there to get parts and repairs.

    What stores does M$ have? Best buy? CompUSA? I see more tired crapola in their with the same tired people who just don’t care.

    What sort of design does M$ have? It’s going to look ugly or it’s going to copy the iPod’s great looks.

    In either case everybody knows they won’t want it, a iPod is a status symbol.

    Where’s the Dell Junkbox by the way? If Dell couldn’t make a go because of the iPod, and the opportunity to bundle a music service on each Dell computer they sell, what does M$ think they have a chance of?

  5. MS will fail on at least four counts:

    Firstly, there will likely be no Mac-based solution since there is no WMA-DRM, so it will not affect the main market of early adopters at all. Secondly, two days before the release Apple will likely change the iTunes directory format and stuff MS’s conversion application. And thirdly, are we expected to throw away our iPods? Hardly. Like Windows users we’ll stick with what we’re familiar with until it breaks or our needs change. Fourthly, will their solution provide support for music videos, audio books, podcasts, TV shows, 1000+ accessories, etc. I doubt it.

    To replace a dominant player it must be much better, or redefine the paradigm or be much cheaper. The MacOS X gets two out of three vs Windows. I doubt the MiPod will get even one.

  6. I agree with Channel Z. The iPod is but one part of a whole seamless user experience. Thus far, in all that Microsoft has done, they completely ignore this factor while it seems to the a core focus for Apple. I see no reason why a MS MP3 player would be any different than the current hellish experiences that MS seems to install in all of their software and devices.

  7. Microsoft should know it is very difficult to dislodge someone who has a monopoly.

    But then they brought Xbox against the other game consoles and seem to be making headway.

    This is not a positive development for Apple. Hence the stock price drop.
    ————-

    To me the bigger question is: Who doesn´t already have an MP3 player? I think the market is fairly mature with not much room for growth.

  8. Well they will try to tie it in with the Xbox to leverage some impact. would be so great if Apple and Sony could agree to do a similar job with the PS3. If done right it would bnefit both parties and destry MS’s one chance of making inroads.

  9. One further problem for Microsoft is that it doesn’t merely have to get people to throw away their iPods and music, but also all their iPod accessories too.

    If you have anything that uses the dock, then an alternative player isn’t going to be too attractive.

  10. MS can do a couple things their “partners” (lackies) cannot :
    – Integrate with Xbox
    – Integrate with URGE / WMP 11
    – Sell their product at a massive loss and not go out of business

  11. The iPod is last years technology that no one wants. Apple is in deep trouble with their stock crash and very slow computers (Try running Photoshop on Rosetta). Between the new player from Microsoft and Vista, they will be the final nails in the coffin of Apple. Apple does not have the money, knowhow, engineering, or markets to take on anything that Microsoft produces. In three to six months we will be hearing about Apple dropping its computer line to focus on music and video in a vain attempt to compete with Microsoft. Time to short the living daylights out of Apple stock before they go out of business.

  12. first of all, methinks ‘mac realist’ is our old ‘friend’ known as ‘mac dude’ who I personally would never call a troll, but some others might. Anyway, Microsoft Xbox is a perfect example of a microsoft ‘loss leader’ which got them 2nd place in the console market – 23 million units sold to Sony’s …. wait for it …. wait for it …. 100 MILLION UNITS SOLD!!!!!!
    WOW! To lose money AND be almost 80 million units behind should tell anyone where microsofts head is at. This is basic microsoft FUD which will probably ramp up by Christmas confusing the fanboys into not getting an ipod. Guess who’ll be the real sucker by the time they figure out microsoft has squat – and every store is sold out of ipods until february. ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

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