Microsoft is aiming to hit the must-have gadgets market with a two-pronged attack. The software giant will target the youth market with a range of “iPod killers” to be released over the next two years and go after high-flying executives with a revamped rival to BlackBerry, the mobile e-mail service.
After legions of business reporters failed to extract a frank answer from Bill Gates, the Microsoft founder, on how he views the iPod – and just how he intends to tackle its massive popularity – the breakthrough was made by an inquisitive schoolchild.
“Is Microsoft going to develop a hand-held, you know, MP3 player, to combat iPod?” Schyler Mishra, of John Marshall High School in Seattle, asked Mr Gates, the world’s richest man, at a questions-and-answers session that was beamed to classrooms around America.
Mr Gates admitted that “Apple has done a fantastic job with the iPod” before asking the group of assembled students how many of them owned one of the music players.
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Surveying a sea of raised hands, there was evidently only one answer he could give.
“We are talking with partners about how we … can make even better music players,” Mr Gates said.
“We’ve got some in the market today. I’d say in total they have about 20 per cent market share, which is lower than we like, and so we’re seeing where we can come together to make a device that’s less expensive and connects in better ways, does photos and videos in better ways.
“Between us and our partners, you can expect to see some pretty hot products coming out over the next couple of years.”
In the more conventional surroundings of the 3GSM conference in Barcelona Microsoft today announced a e-mail joint venture with Vodafone, the London-listed mobile telecoms giant.
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Windows Mobile Email will offer Vodafone’s corporate customers e-mails direct to their phone, which are synchronised with office-based Microsoft Outlook or Excel software packages. The service will rival BlackBerry, the mobile e-mail leader which has been tangled in a protracted legal row in the United States.
The company is expected to use the Barcelona event to announce a partenership with BT and Virgin, to enter the British mobile television market tomorrow.
Bill Gates’s comments on the iPod, made at an event organised by the Blacks @ Microsoft group, came amid heightened speculation over how the online music market will develop as more major players wade in.
BusinessWeek recently suggested that Microsoft was considering launching a branded portable media player, but Mr Gates’s remarks suggest the software giant will concentrate on working with hardware manufacturers and other partners.
Any rival product would have to deal with Apple’s formidable lead – the company accounts for around 70 per cent of all legal downloads through iTunes, its online music store, which sells around 3 million songs a day.
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Apple sold 14 million iPods during the last quarter of 2005. Apple says it is selling 100 iPods every minute.
But with the market in legal downloads exploding three-fold last year to become worth more than $1 billion, it appears that the largest names in the internet market are preparing to show their mettle.
Reports circulated over the weekend that Amazon and Google are both in talks that could lead to the creation of digital music services.
Google was last month forced to play down speculation it was poised buy Napster, the one-time illegal music website. It has long been thought that the internet search and advertising company would eventually offer online music. The company, which earns the majority of its revenues through internet advertising, is under pressure to show it can leverage its powerful brand in other markets. It already offers video services where customers pay for content.
Google sources have also told Times Online that the company is concentrating heavily on developing digital rights management systems to protect content providers’ copyright. Such work would be a necessary precursor to Google developing its own online music service.
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The company has owned the googlemusic.com domain since 2003. However, Google has suggested that it plans to work with partner companies to deliver content, rather than setting up a branded site.
Amazon is though to be even further advanced in talks with music industry players.
Jeff Bezos, Amazon’s chairman and chief executive, said last week that the company’s investment in digital services were “a longer term initiative”. He added that he was “excited about the opportunity” digital media offers and suggested Amazon could take a larger share of the digital media market than it currently has of physical sales.
A heavyweight rival to Apple’s iTunes online mobile store would appeal to the major record labels which have suggested that Apple’s one-size-fits all pricing system is dampening demand. However, rival services, such as that developed by Sony, or the website of HMV – run in conjunction with Microsoft – have failed to make any real impression on Apple.
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