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Despite Microsoft denials, Brier Dudley at the Seattle Times says the iPod Killer is for real and has more details:
Microsoft is indeed developing a digital-media player to compete with Apple’s iPod, and there’s much more to the story.
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What’s being developed is actually a complete line of Xbox-branded digital-media products, including a device that plays media, a software media player and an online media service.The project, or at least part of it, is referred to internally at Microsoft by the code name Argo — a reference to the huge warship used by the hero Jason in Greek mythology.
Argo is being developed within the Xbox group under the leadership of Xbox co-founder J Allard. His team includes people who previously worked on MSN Music, an online music service that had a promising debut in 2004 but fell victim to Microsoft’s dithering over its music strategy.
Now the company is firmly behind Argo. It has committed hundreds of millions to produce and market the devices.
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It’s a grand plan, but as with a few other big projects in Redmond, it may be a struggle to get it all done by the end of 2006. The project isn’t completed yet, the holidays are approaching fast and the team is under intense pressure to get everything absolutely right.The timing of the hype cycle is perfect, however. Microsoft’s annual meeting with financial analysts is July 27, and it’s looking bleak.
More by following the link, but while the end of the year shopping season is approaching at a furious pace, July 27 seems a little soon to be spilling to the analysts. Dudley also asks the big question, “Can Xbox’s young guns get past the old guard with a less Windows-centric venture?” Looks like they already have. Now they have to deliver.
Microsoft finally commented yesterday on the recent iPod Killer reports as Scott M. Fulton, III describes at TG Daily:
In a carefully worded response this morning, a Microsoft spokesperson denied his company’s participation in a demonstration of a portable music device capable of wireless networking to music industry executives, calling a Bloomberg report on Wednesday and a Associated Press report this morning “speculation and rumors.” However, the spokesperson stopped short of denying a demonstration of such a device from someone took place.“For the stories you are seeing,” the spokesperson wrote TG Daily, “they are based on speculation and rumors and, as such, Microsoft didn’t participate. We don’t have anything to announce at this time.”
Curiouser and curiouser. The BBC has a similar story.
Now that the first buzz is over and it’s taken as a given that Microsoft will be offering its own personal media player before before Christmas, it’s time to assess the pros and cons of Microsoft going out on its own to beat Apple’s iPod. One of the more thoughtful press articles in that regard is from Peter Burrows at BusinessWeek Online which starts out with a brief digression:
In mid-June, Jonathan Sasse, president of digital-music-player maker iRiver America, was making the rounds with the press, talking up his latest gizmo, the clix. His message was that this music player, unlike so many other iPod wannabes, had a chance to hit it big and maybe even take some business from digital music kingpin Apple Computer (AAPL).His reasoning: The clix was created in close partnership with Microsoft (MSFT), which provided the underlying software, and engineers from MTV’s Urge music service, another Microsoft licensee. Microsoft had approached iRiver the year before about working more closely to develop a product to give Apple a run for its money. For nearly four months staffers from the three companies had holed up in Microsoft’s offices in Redmond, Wash., to make sure the product was glitch-free. “This time, it felt like all the pieces really worked together,” said Sasse.
But for all the partnership talk, it turns out Microsoft may have plans to take on Apple with an approach that doesn’t rely on either iRiver or Urge.
Or more succinctly, the printing on the iRiver Clix packages was barely dry when Microsoft’s “alternative arrangement” leaked and that illustrates one of the problems: Microsoft has brought a lot of baggage with it.
Sources instead expect that Microsoft’s device will be able to play songs purchased from other services built around Microsoft’s Windows Media technology, such as Urge and Napster.com (NAPS). And songs purchased from Microsoft’s new, improved online music service will also likely play on devices made by longtime hardware partners such as Samsung, Creative Technologies (CREAF), and iRiver.That could leave Microsoft saddled with a web of complex relationships and business models, in which it tries to go head-to-head with Apple—but without Apple’s luxury of not having to worry about keeping its devices compatible with partner products.
As far as more mundane concerns go though, Microsoft’s baggage will actually help. Everybody and his brother has a portable media player these days so it won’t be a problem for Microsoft to roundup design services, components, and manufacturing plus the Xbox crew certainly knows how to act as a general contractor for hardware. As described, Microsoft has the experience with the online music store part of the business as well as the device software from its work with partners and can always hire consultants to provide spiffy user interfaces just as they did on the Xbox 360. Sounds like a slam dunk, right?
But the objective isn’t to just enter the mobile media player business – it’s to take over the mobile media player business and all Microsoft’s experience to date hasn’t slowed Apple a bit. The question then is what does Microsoft uniquely bring to the table that will actually beat the iPod? Frankly it’s a little tough to answer. The Burrows article mentions the rumored Wi-Fi capability of the Microsoft device and a possible handheld gaming device combination, but when you get down to it, the big Microsoft pluses are big bucks and persistence:
No doubt Microsoft has the financial resources to make a go of it. One music industry source says the company plans “to put a boatload of marketing behind this.”
Throwing money at it may be enough to dent Apple’s position, but the unspoken question is whether this is truly the best investment Microsoft could make with the bucks it is going to take. Successful companies often have midlife crises where money from their core businesses gets dumped down rat holes as they try to broaden their reach. So far, Microsoft hasn’t had much luck expanding beyond their client, server and office software base and the consumer electronics business isn’t exactly a day at the beach as the continuing drain on the balance sheet from the Xbox 360 illustrates. But what the heck – Apple did it, so maybe they can too. And then again, maybe not, and isn’t this rather a diversion from the “Live” initiatives that were going to transform the company?
I guess “entertainment industry executives” just can’t keep their lips zipped since after yesterday’s Bloomberg News story about a Microsoft plan to compete with Apple’s iPod, they seem to have been falling over themselves to dish to a reporter. Jeff Leeds at the NY Times:
Microsoft has been developing its own hand-held music and video player to challenge Apple Computer’s iPod and expects to have it in stores in time for the holiday season, entertainment industry executives briefed on the company’s plans said last night.
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The company has also held negotiations, the executives said, with major record companies and some major television networks in order to settle on terms that would allow it to sell music and video content online through a service similar to Apple’s iTunes Music Store.
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A senior executive at a major TV network said Microsoft had not yet received commitments from the networks to supply programming to its online store. But the executive said that the networks would welcome competition for Apple in downloads.Music industry executives in particular have complained about Apple’s control over the digital music market and its power to determine pricing of songs and albums.
And the fact that Microsoft’s previous hardware partners for the Portable Media Center specification and related media player software would be getting the shaft has begun to attract notice:
The shift is likely to anger Samsung, Sony, Creative Technology and other manufacturers that were persuaded to use Microsoft’s software in their devices, because a Microsoft player would compete with theirs.
It’ll probably get smoothed over, but it does make you wonder how Microsoft feels about its personal computer partners.
Update: Engadget has more including this gem:
To attract current iPod users Microsoft is going to let you download for free any songs you’ve already bought from the iTunes Music Store. They’ll actually scan iTunes for purchased tracks and then automatically add those to your account. Microsoft will still have to pay the rights-holders for the songs, but they believe it’ll be worth it to acquire converts to their new player.
They also are predicting a combo player and mobile phone.
