Microsoft Wants To Take Bite Out of Apple’s Music Biz

Discussion
Aug 31, 2004
George Anderson

By George Anderson


Microsoft is hoping to leapfrog a competitor once again.


The company, which has made a practice of entering markets such as personal computer operating systems and web browsers after others and then dominating the market, is hoping to repeat its success in the downloadable music arena.


Today, Apple Computer is far and away the most successful service offering downloadable music. This is due, in large part, to ever growing demand for the company’s popular iPod that works with both Mac and Windows operating systems.


On Thursday, however, Microsoft plans to begin contesting Apple’s dominance in the downloadable music arena with a service of its own.


Others, including heavyweights such as Wal-Mart and Sony, have contested Apple’s position with little success. Even substantial price-cutting, such as that done by Real Networks, has failed to move the needle much in the direction of Apple’s competitors.


Microsoft is counting on several factors to achieve a better outcome.


Mike McGuire, research director with Gartner G2, said Microsoft is looking to turn visitors to Microsoft’s MSN portal into downloadable music customers. “What we’ve (seen) there is that potential sitting there of all that traffic,” he told the Associated Press.


Josh Bernoff, principal analyst with Forrester Research, doesn’t see Microsoft supplanting Apple as the leader in the download market but it could be a strong number two.


Mr. Bernoff, however, isn’t willing to write-off Microsoft’s chances. “Microsoft tends to win in these areas by being persistent and making adjustments,” he said.


Moderator’s Comment: What will it take for Microsoft to capture significant market share in the downloadable music business? Are there lessons for it
to learn from any of the other competitors that have taken on Apple with little success to date?


Having spent some time recently at an Apple retail outlet, we informally polled 12 or so customers on their reaction to Real Networks offering downloads
(at half the price of the Apple Music Store) that work on Apple’s iPod.


We were surprised to hear many objected to RN’s reverse engineering process to get a system that would work with the iPod. This was true of both Mac zealots
and Windows users in the store.


At the same time, most agreed Apple should open up its system to allow others to sell music for iPods. Ultimately, however, it was the choice of Steve Jobs
and company and no one else, said those we spoke with.


At least in this small sample, consumers seem connected to Apple and the iPod and do not appear anxious or even willing to shop elsewhere.
George Anderson – Moderator

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