The NY Times put out a convincing rumor yesterday about Microsoft's plans to get into the MP3 player business.
The Times says they received information about a Microsoft digital media player that would be launched by Christmas from:
“…entertainment industry executives briefed on the company's plans ... who did not want to be identified because they were not authorized to discuss the device.”
Microsoft is no stranger to manufacturing small PC hardware peripheral items like mice, keyboards and the odd network card. Microsoft really stepped into the hardware biz when it muscled its way into the console game war and went toe to toe with Sony. With confidence in its hardware manufacturing prowess Microsoft now wants to take it to an old adversary that has long owned digital media online sales and the media player markets. It's a fight that one can sense Microsoft has been itching to get into but thus far has had to sit it out on the sidelines while names like Sony, Creative and Samsung dueled against Apple. Each of these iPod competitors has agreed to use Microsoft's media player and compatibility to Microsoft's DRM10 aka PlaysForSure. DRM10 makes devices by Samsung, Creative and many others compatible with the subscription based online music services like Napster, MSN Music and Yahoo Music. But despite the best efforts of the competition 72% of all legally downloaded music is from Apple's iTunes and Apple also holds 77% of the MP3 player market. A popular music service that can take over a chunk of iTunes share is where real profits are to be made and since "entertainment industry execs" are on board with Microsoft you can be sure they're looking at not just music but also TV shows and movies.
So, what's Microsoft going to do differently? Each of Apple's competitors seems content to build iPod clones, add an FM radio and call it a day. Sony has carved some innovation out of the portable digital music player with its Walkman branded players using a unique screen and interface that doesn't try to copy the iPod as close as possible. But so far Sony's Walkman is proving far more successful as a phone than a dedicated digital media player.
According to the execs, Microsoft is going to sock it to Apple's market share with real innovations. They say an "advanced video screen" and wi-fi capabilities will give the upcoming Microsoft Media players an edge. Exactly what constitutes the "advanced video screen" is unclear. Perhaps a higher resolution or larger screen than the iPod Video is what Microsoft has planned. But wi-fi is definitely a plus. The leaked information suggests Microsoft's MP3 players will be able to download music wirelessly from the Internet - no computer, USB or Firewire cables. Hopefully the Microsoft wi-fi MP3 player will include WEP/WAP security compatibility. Without it the actual networks you'll be connecting to using Microsoft's new MP3 players will be severely limited. Most people who want to use a wireless handheld will likely want to use it in a variety of hotspots for a hassle free connection. Hassle free connections discounts the local Starbucks that charges for its wi-fi bandwidth, unless Microsoft can include a browser that will let you enter an access code.
There is a wireless MP3 player already on the market that's certainly worth a look. It's called the MusicGremlin and has its own online music service from which you can download via wi-fi. It also lets you interact with other MusicGremlin subscribers over the Internet letting you beam a song to any other wi-fi connected subscriber. There are many wi-fi possibilities in a handheld digital media player. If Microsoft can keep the costs down and integrate with its existing services like MSN it'll could potentially let you message and then share playlists with subscribers on your friends list. Apple hasn't even touched this area yet. Conventional wisdom in the digital media business has been that people don't like to subscribe to music, we subscribe to TV but buy music and that's why people like iTunes but shy away from the subscription music services. Perhaps people's minds will change if wireless possibilities open new a relationship with music and connectedness with your friends. Many already have an MSN account, add music to that, add wireless compatible hardware that connects you from any wi-fi hotspot (so much cheaper than the cell phone wireless network) now throw in the possibility of an MSN / Xbox Live connection and the mind boggles.
It's been long speculated that a bridge between MSN Music services and Xbox Live's marketplace is a future possibility. A portable media player with its connections to the "entertainment industry execs" that provide the media - might just close that gap between MSN and Live. How many Live members would jump at the chance to download music and movies using the Xbox 360's remote control? Or just synchronize with the Xbox Live Marketplace when the latest episode of your favorite TV show is available, then stored on your Xbox 360 or through Managed Copy to your Vista PC and if you like - synched wirelessly to your Microsoft MP3 player.
Welcome to the world of end to end Microsoft DRM compatibility. Soon a user should be able to download media to their home entertainment system and then offload it to Microsoft's own mobile device. As cool as it all is, does all this DRM and Managed Copy give anyone else the feeling that big brother is watching just over our shoulder?