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Thursday, August 11, 2005 - Page updated at 12:00 AM

Microsoft enters the ring to give iPod competition

Bloomberg News

Microsoft said Apple Computer's best-selling iPod music player will face increased competition from new products in the end-of-year shopping season.

Microsoft is working with electronics makers including Royal Philips Electronics, Samsung Electronics and Creative Technology to design and test music players that rival iPod, said Erik Huggers, head of Microsoft's Digital Media Division.

"Come this fall there is going to be a number of devices that get close to competing with Apple's iPod," Huggers said yesterday in San Francisco. By the second quarter of next year, "There is going to be a whole lineup of products that can compete with Apple in industrial design, usability, functionality and features."

Microsoft and its partners beat Apple to market with digital music players that work with Microsoft audio software. They proved unattractive and difficult to use, leaving the field open for Apple, which has sold 21.8 million iPods since October 2001, grabbing 75 percent of the U.S. market share.

"It's going to take a lot to dethrone Apple," said Michael Gartenberg, an analyst at Jupiter Research in New York. "Apple won't sit on its laurels and I expect we'll see another iteration of the iPod for the holiday. Unless Microsoft is really willing to spend the time and effort to get behind a player or a select group of players, it's not going to happen."

The difficulty is that Microsoft builds the software and doesn't control the hardware, Gartenberg said.

Microsoft is helping electronics makers "build world-class devices, that really work well, with great industrial design, with lots of content available, with great software on the PC to make it all work together," Huggers said.

While Apple's iPod and iTunes music store work together easily, Microsoft has faced difficulty showing customers which of the many Windows-based players and music stores are compatible. A campaign called "PlaysForSure," to put a logo on devices that would show consumers what works together, hasn't helped because not all devices with the logo actually work with the promised services.

"We tend to call it 'PlaysForAlmostSure,' " Gartenberg said. "Meanwhile, Apple's iPod and iTunes are dancing together like Fred Astaire and Ginger Rogers."

Natalie Kerris, a spokeswoman for Apple, declined to comment on Microsoft's efforts.

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Microsoft in June said Xbox console chief Robbie Bach has also been assigned to oversee Microsoft's digital-music efforts in a bid to better coordinate the work of several different Microsoft units in this area.

The software giant has opened laboratories to make sure that new devices are easy to use and fast enough to attract consumers, Huggers said.

"Now that Apple has single-handedly taken the market, all the world's consumer electronics makers are zooming in on it," Huggers said. "They are just not going to let them get away with it. The first quarter of 2006 is going to get very interesting."

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