Microsoft Aims To Take A Bite Out Of Apple's Online Music Business - InformationWeek

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Microsoft Aims To Take A Bite Out Of Apple's Online Music Business

It's gearing up to launch its own Web site for selling songs over the Internet.

SEATTLE (AP) -- Microsoft Corp., hoping to take a bite out of Apple Computer Inc.'s highly popular online music service, is gearing up to launch its own Web site for selling songs over the Internet.

With Thursday's planned debut, the software maker will become the latest competitor in a market experts say is still in its infancy--but one that is expected to grow considerably more popular in the coming years.

Microsoft has a formidable foe in market leader Apple, which boasts both the popular iTunes music store and the iPod music player.

The landscape also is dotted with plenty of smaller services, including RealNetworks' Rhapsody, Roxio Inc.'s Napster, and offerings from companies like Wal-Mart Stores Inc. and Sony Corp. But none of those has managed to capture hearts and minds like Apple.

"There's one company that matters here, and that's Apple," said Josh Bernoff, principal analyst with Forrester Research.

The stakes are high for Microsoft because the software behemoth is eager to establish its Windows Media format as the standard for copyright-protected digital music and video distribution. The popularity of Apple's products, which use different technology standards, could derail those plans.

"ITunes is a big threat to them," Bernoff said. "They see how rapidly it's growing, and the more iTunes and iPod gets out there, the more they feel like they're losing an important part of that experience."

Microsoft declined to provide more details of its offering ahead of the official launch, including whether it would match Apple's standard 99-cent-per-song price.

Analysts expect Microsoft to take advantage of two big guns.

First is its popular MSN Web site, which will provide the base for the service and could potentially draw millions of users to its offering.

Mike McGuire, research director with Gartner G2, said Microsoft's success in turning those visitors into users will depend on whether users can easily spot the service among the celebrity gossip, movie promos and other MSN offerings, and whether they immediately find it compelling and easy to use.

"What we've (seen) there is that potential sitting there of all that traffic," McGuire said.

Microsoft's other big gun is its Windows Media technology, which is already available on most Windows-based PCs as well as on portable media players from companies such as Rio Audio and Creative Technology.

McGuire said that broad swath of availability is a big advantage in terms of wide access to its product. But it also could turn into a big headache if one or more of the players proves faulty or just hard to navigate.

"What's going to be really important is that every single one of those players, those devices, has to deliver that base experience," McGuire said.

Bernoff thinks it would be a considerable challenge for Microsoft to best Apple in the online music market. But if Microsoft is able to execute well, he thinks the company stands a good chance of becoming the second most popular service within a year.

Microsoft has come from behind plenty of times and still managed to dominate, thanks to its broad reach with products like Windows and ability to play catch-up quickly.

Most notably, the company was late to the Internet browser wars, but it didn't take long before its Internet Explorer browser had soundly beat out Netscape's Navigator.

"Microsoft tends to win in these areas by being persistent and making adjustments," Bernoff said.

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