Microsoft finally announces its entry into the MP3 player market. And although you can't see it just yet, it's nicknamed the 'iPod killer'

July 27, 2006|By MIKE HIMOWITZ

Over the two decades that I've been writing about personal technology, I can't think of a more successful gadget than the iPod. Since it appeared four years ago, Apple Computer has sold 58 million of them in various shapes and sizes and now has 60 percent to 70 percent of the market.

With that kind of money and clout at stake, it's surprising that Microsoft has taken this long to take on the iPod. After all, the company has a history of muscling the early leaders out of any race it eventually decides to enter. Remember Netscape?

But it wasn't until last week, after years of trying to rally iPod's competitors, that Microsoft announced its own music player, known as the "Zune," which should be on sale by the Christmas holidays.

What will Zune look like and do? Nobody knows for sure - other than Microsoft's hints that it will have two features the iPod doesn't.

The first is Wi-Fi connectivity. Does that mean it will communicate wirelessly with another computer? With another Zune? Microsoft isn't sure yet, or won't say. The second feature is an interface with Microsoft's popular Xbox game console - a heavy-duty entertainment center with a loyal and growing fan base.

Nor has Microsoft revealed details of the online music store it will open to service the Zune - and possibly other non-iPod players.

Whatever the details, Microsoft knows one thing. Its current approach - selling media player technology and copy protection schemes to manufacturers fighting for the crumbs that iPod leaves on the floor - is not a spectacular success.

So Microsoft will go toe-to-toe with Apple in the gadget hardware ring. Apple has been unbeatable there, but then, it hasn't had competition with marketing budgets the size of Microsoft's. Also, even though it's a software company at heart, Microsoft can make decent hardware when it wants to - or feels compelled to.

What does this mean for you as a consumer? Well, more competition is usually better than less. With the usual caveats.

Before Apple introduced the iPod, digital music players were niche gadgets. Online song traders loved them, but they were often cranky and incompatible with one another - as well as too expensive for their limited capacity. There also was no source of music to support them directly and legitimately.

Losing millions of dollars to file traders every day, the recording industry considered digital players pure poison. They tried to sue the manufacturers into oblivion. (Thankfully, the industry lost.)

At that point, Apple's entry was the competition, and it changed everything. The iPod's elegant design and friendly interface made it a smash hit with nongeeks and dedicated gadgeteers alike. More importantly, Apple talked the music industry into licensing its catalogs, so that the iTunes store could fill up all those iPods legally - for a buck a track.

The iTunes store brought online music distribution out of the pirate's cave and into the light. It proved that Internet music sales were not only possible, but profitable.

Since then, a dozen hardware makers have been trying to catch the iPod, with no success. Some of them, including Samsung, iRiver and Creative Technologies, have produced excellent players. But none of them is demonstrably better than the iPod - or cheap enough to persuade hordes of buyers to look seriously at alternatives.

On the shopping side, the online music stores that compete with iTunes (such as RealNetworks' Rhapsody and the reformed Napster) can match iTunes for selection and friendliness. They also offer subscription deals, which Apple doesn't.

But you still can't fill up an iPod directly at these competitors, because the iPod uses Apple's proprietary copy protection scheme, and Apple won't license it to anyone else. That's how Apple stays in business.

Until a couple of years ago, non-iPod manufacturers used whatever copy protection scheme they wanted, and they typically weren't compatible with other players. Online music stores had to decide which music players to support - not a great way to build market share, particularly with Apple so dominant.

In response, Microsoft has marketed its Windows Digital Rights Management system (a euphemism for copy protection) as the standard for every player that isn't an iPod. Under that scheme, any music player that displays Microsoft's "Plays for Sure" logo is supposed to work with music purchased from any online service that displays the same notice.

The system worked but not enough to steal market share from iPod. To the average buyer, if the player is great and the online music selection is great and the price of music stays reasonable, why go with something else?

That's the problem Microsoft faces. It has to give music customers a reason to abandon iPod. And in doing so, it has to keep faith with millions of buyers who have chosen Windows-based players and Microsoft's Plays-for-Sure technology.

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