| | Microsoft to Launch iPod Rival...
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
July 21, 2006 4:07 p.m.
Microsoft Corp. confirmed it will launch a line of music and entertainment products under the Zune brand name, including a portable player and online service that will challenge Apple Computer Corp.'s dominant iPod and iTunes.
The news was first reported in the July 29 edition of Billboard Magazine, in an interview with Chris Stephenson, the company's new general manager of marketing for MSN Entertainment Business.
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.
The creation of a Microsoft device to battle Apple has long been speculated. Apple has been able to reinvent itself with the massive popularity of the iPod. As such the iPod has helped rejuvenate sales of Apple's Macintosh personal computers.
In an email statement, Mr. Stephenson said the company sees "great opportunity to bring together technology and community to allow consumers to explore and discover music together." The company said the first device, and an online service, will launch this year.
The widely-anticipated move comes a year after Chief Executive Steve Ballmer tapped Robbie Bach, the head of its Xbox videogame unit, to revamp the company's music strategy to better compete with Apple.
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. 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. In contrast, Apple is the only maker of the iPod. Consumers have praised the device for being easy to use. It is the only device that can play music files purchased from Apple's iTunes store.
The news comes a day after Microsoft reported quarterly earnings fell 24% and announced plans to spend up to $40 billion on share repurchases. The company also shed more light on its expenses for the current fiscal year, saying that it will spend $1.5 billion on developing new products. |
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