Microsoft confirms ‘iPod Killer’ plans

20 years ago

“Microsoft said Friday it plans to release a new music and entertainment player and accompanying software under the ‘Zune’ brand this year, in a belated attempt to challenge the dominance of Apple’s iPod player,” Reuters reports.

“The world’s largest software maker faces an uphill climb in closing the gap on Apple’s iPod media player and iTunes Music Store, the runaway leaders in their respective areas,” Reuters reports. “The iPod holds more than half of the digital media player market, according to research company NPD, while iTunes accounts for better than 70 percent of U.S. digital music sales. ‘Creating a lifestyle device, Microsoft is clearly going to face a battle here,’ said Michael Gartenberg, research director at JupiterResearch. ‘It’s going to be hard for them to create the same level of cachet that Apple has with the iPod.'”

Full article here.
[Thanks to MacDailyNews Reader “Lurker_PC” for the heads up.]

“Billboard Magazine broke the news in its July 29 edition in a exclusive interview with Chris Stephenson, the company’s new general manager of marketing for MSN Entertainment Business,” The Wall Street Journal reports.

“The new product is the company’s strongest effort yet to rein in Apple Computer’s iTunes/iPod juggernaut, currently responsible for about 70% of the digital music market and 75% of the portable digital music player market, Mr. Stephenson told Billboard,” WSJ reports.

Full article (subscription required) here.

Antony Bruno reports for Billboard:

• Microsoft officials for the first time have confirmed that the Redmond, Wash.-based company is readying a portable music player and integrated service, shedding new light on a topic that has fueled rampant speculation in news reports and blog postings for weeks.

• In an exclusive first interview with Billboard, Chris Stephenson, Microsoft’s new GM of marketing for MSN Entertainment Business, says the company will later this year launch Zune, an umbrella brand for what he says is “a family of hardware and software products” targeting various digital entertainment services.

• The first implementation of this will be the portable music player and digital music service, in what is the company’s strongest effort yet to rein in Apple Computer’s iTunes/iPod juggernaut, currently responsible for about 70% of the digital music market and 75% of the portable digital music player market.

Full article (subscription required) here.

“Gartenberg said, in creating its own products Microsoft also risks alienating partners such as Creative Labs Inc. and Samsung Inc. Those companies are already using Microsoft’s software for their own portable entertainment players, although they’ve had little success against Apple’s juggernaut,” Allison Linn reports for The Associated Press.

“‘This is a very tough message,’ Gartenberg said. ‘If you’re the head of Creative, as of this afternoon you’re not just facing Apple, which was bad enough, you’re now facing you’re partner.’ He said it could have even deeper repercussions if people in other industries grow wary of partnering with Microsoft for fear the company will decide to launch its own, competing product. Microsoft’s success has been built on working with hardware manufacturers to make products running its software. ‘It’s certainy going to cause a lot of fear and uncertainty and doubt in the ecosystem,’ Gartenberg said,” Linn reports.

Linn reports, “Gartenberg said Microsoft confirmed to him that it would release a wireless device that would play both music and video this year. The device will have an accompanying content service, Gartenberg said.”

Full article here.

Michael Gartenberg blogs for JupiterResearch, “This is an acknowledgement that Microsoft is clearly not happy with Apple’s dominance in digital music. I don’t think it is concern about new growth scenarios. It’s more a concern that Apple controls a key endpoint in the digital home and that Apple bits flow only to other Apple controlled bits or devices. That scenario doesn’t bode well for Microsoft’s larger ambitions Second, even though Microsoft still talks about the diversity of the Windows platform asan overall advantage, let’s face it, the platform argument is dead and licensees will have to deal with it. On one hand, no one has ever successful created a business where you license technology to licensees and simultaneously compete with them on the device side. On the other hand, it’s not like there’s a lot of other places for licensees to go to get technology.”

“Bottom line, when Microsoft decides to enter a market, you can’t ignore the impact they will make. It’s likely that by force of will and spending lots of money on marketing with a high cost of acquisition on new users, they will can capture some market share,” Gartenberg writes. “Early market share, however, isn’t likely to come from disgruntled iPod users looking to switch. The real losers in the short term are likely to be the likes of Creative, iRiver and other former partners that have failed to deliver to market share from Apple and will now find themselves not only competing with Apple but with their former partners from Redmond.”

Full blog posting here.
So, it’s confirmed. We suspect that Microsoft is really shooting for Apple’s iPod+iTunes market leftovers, not the iPod+iTunes market itself. Regardless, we hope Microsoft spends a lot of money on “Zune,” even if they are way too late (as has been the case for quite some time — as there are way too many iPods out there and iPod+iTunes is simply too good). While we don’t see Microsoft’s efforts as much of a threat to iPod+iTunes, we also hope it pushes Apple by providing some measure of real competition that will drive innovation even faster.

As we’ve written before in response to the “Zune” rumors, it remains to be seen how their so-called “partners” like Creative, SanDisk, Toshiba, Sony, MTV, Napster, etc. will react to this betrayal by Microshaft. There still is, after all, a nice minority share of the market that iPod+iTunes doesn’t own. It looks like Microsoft wants it all for themselves as usual.

Of course, if Microsoft starts to show any momentum, Steve Jobs could just call up the also-ran device makers and music services and license FairPlay to them. Then everyone except Microsoft would be iTunes and iPod compatible. Whoops! All Zune-related development, marketing, manufacturing, and other costs = total write-off. Game, Set, Match.

That’s one way to go. Another is to just stay the course, which would be even easier to do if Mac growth were to continue to ramp up at the same time. And, if just some of what’s rumored for next-gen iPods comes true, then Microsoft and the rest of the roadkill are in for the usual world of hurt. Even if Microsoft could somehow manage it, it’d take quite some time for them to significantly impact Apple’s iPod+iTunes juggernaut.

Patent application shows iPod capable of live wireless video conferencing – June 13, 2006
Apple patent application filed for wireless iPod+iTunes distribution – May 04, 2006
Generator Research: Apple to Ship $4.2bn in Wireless iPods (WiPods) by 2010 – March 14, 2006
Ready for your wireless Apple iPod? – February 09, 2006
Wireless iPod? CSR and PortalPlayer to bring wireless connectivity to personal media players – February 08, 2006
Wireless Apple iPods coming in 2006? – December 09, 2005