Microsoft to launch iPod rival

By Yinka Adegoke





NEW YORK - Microsoft will start selling a wireless digital music and video
player to compete with Apple's iPod by Christmas, sources close to the matter

said.






The new player, which Microsoft Corp. has been touting to record companies in
the last few weeks, will let users download music and videos over the air,

according to one source, a feature which would give it an edge over the iPod.






Microsoft Corp. has also been showing a new media software, developing an
application akin to Apple Computer Inc.'s iPod/iTunes integrated ecosystem,

according to another source.






Record companies are expected to be receiving prototypes to test in the coming
weeks, said the first source. The sources said Microsoft will be throwing

significant marketing dollars behind the launch.






"They're proposing an iTunes model approach," the first source told Reuters.
"They're now interested in controlling the whole vertical stack of technology

from the device to the service to the software."






Both Apple's iPod player and iTunes Music Store are runaway leaders in their
respective market sectors. The iPod has more than half of the digital media

player market, according to research company NPD, while iTunes accounts for over

70 percent of digital music sales in the U.S.






Robbie Bach, appointed president of Microsoft's entertainment and devices
division in December, is working with J. Allard, vice president of its Xbox

team, on the unnamed digital media player/software project, according to a

source close to Microsoft.






Allard's involvement is seen as significant because he is one of the few
executives at Microsoft with experience in launching a consumer electronic

device from scratch with the X-Box gaming system.






Analysts believe that for Microsoft to have any chance of competing with Apple
in the next year, the software giant will need to have a player and service

ready in time for the Christmas season, seen as crucial for the success of any

consumer electronics launch.






Apple's simple approach to providing an integrated, seamless ecosystem for
digital media is seen as the key to its success with iPod/iTunes.






"The success of Apple is that they've been able to create a very seamless
experience, said Mike McGuire, analyst at Gartner Research."That ability to

control the hardware and software has given them an edge."






But McGuire cautioned this was not enough in itself.





"Sony had a similar approach. They owned content, devices, software and an
online store and it hasn't enjoyed nearly the success Apple has," he said. "It's

also about how you execute the plan."






Microsoft declined to comment.





(Additional reporting by Daisuke Wakabayashi in Seattle)