Microsoft takes on the iPod
2006-06-17 08:42
New York - Microsoft is developing
a music and video device to compete with Apple's iPod and
creating its own music service to rival Apple's iTunes, sources
familiar with the plans said on Friday.
Robbie Bach, a rising star at Microsoft who headed
development of the Xbox video game business, is overseeing the
project, one source said.
The company has held licensing discussions with the music
industry and is already demonstrating the entertainment device,
the sources told Reuters.
Microsoft declined to comment.
The news comes a day after Microsoft founder Bill Gates
announced he would ease out of a day-to-day role at the company
he built into the world's biggest software maker.
Bach was promoted to president of Microsoft's entertainment
and devices division after it was restructured in December. At
that time, he wrote in an e-mail to co-workers, "While I will
continue to play an important role in the games area, I will
spend more time thinking about our broader challenges and
opportunities across the division."
A Microsoft-branded music service would reflect a
digression from an existing strategy to provide software for
other such services, just months after the company announced a
service called URGE with Viacom's MTV Networks.
"It seems like a shift in strategy... (Microsoft) is very
committed to it," one source said.
Microsoft's software technology has provided the copyright
protection framework for a number of subscription music
services globally, some with well financed backers including
Yahoo Inc. But Apple Computer Inc. remains dominant in the
multimillion-dollar field of music and device sales.
Most iTunes rivals charge monthly fees to access a catalog
of entertainment, but some allow consumers to buy single songs
for about $1 each. Microsoft's service will emphasize the
pay-per-download, or a la carte, model, sources said. A
subscription component will also be offered, according to early
accounts of the planned service.
One source, who has seen a demonstration of the service,
said it was an improvement over iTunes.
"They have been developing technologies that have really
good music discovery and community," another source said.
"iTunes is the 7-11 (of music stores). You don't hang out
there."
Microsoft joins a crowded field of competitors in the music
service sector, including an entertainment device and service
expected to be launched by Internet retailer Amazon.com Inc.
Amazon plans to heavily subsidize the cost of the digital
device, much like wireless service companies do with the cell
phones they sell, one source said. Some of the devices will
come preloaded with music.
Microsoft earlier this year denied rumors that it was
developing a hand-held video game device to complement its Xbox
video game console.
It is unclear when Microsoft, based in Redmond, Washington,
plans to launch the entertainments device and music service,
the sources said.
Apple could not immediately be reached for comment.
Shares of Apple fell $1.82, or 3.1 percent, to $57.56.
Microsoft shares closed up 3 cents at $22.10 on the Nasdaq.