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Deals with network operators make more sense

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Opinion Microsoft has begun to try and win over the hearts, minds and hardware of mobile phone vendors in a bid to dominate the emerging market for music downloads on handsets.

The move was signalled last week by one Erik Huggers, director of Microsoft's Windows Digital Media division, in an interview with Reuters.

Surprise, surprise. Whatever you may think of Microsoft, you know it's not daft, and its latest Windows Media DRM technology, 'Janus', incorporates code to allow devices other than PCs to buy tracks from Windows Media-based online song shops.

Thus far, the technology is being pitched as a way of moving DRM-protected songs from a PC to a portable music player, and until 3G networks become more common that's probably how most users will get music onto their mobiles, GPRS connections being both slow and expensive.

Samsung revealed the word's first mobile phone with a built-in hard drive earlier this month, and while its puny 1.5GB is a long way off the likes of the iPod and Creative Zen's tens of gigabytes capacities, it points the way to more capacious handsets.

Indeed, Apple announced a deal with Motorola this summer to put an iTunes-style player on some of the latter's handsets, starting next year.

Essentially, that means support for the AAC music format and presumably Apple's FairPlay DRM technology too. While MP3-supporting handsets have become popular of late, pressure from the music industry is pushing the major handset vendors away from that format and toward those that, like AAC, can incorporate DRM usage rules.

Indeed, AAC's role as a key component of MPEG 4, the standard around which handset vendors are grouping for mobile video, puts the format in a strong position to become the key music format for mobile phones. Industry sources tell us that a number of major manufacturers are set to rally around AAC next year.

That doesn't preclude support for Windows Media, of course. Microsoft has already seen Motorola and NEC build Windows Media Player technology into their 3G phones. Nor does it mean there's going to be some sort of war between Apple and Microsoft, much as some technology hacks might like to portray it that way.

Choose the music

It's far more important that handset users have a choice of formats and music providers, and so it's in no one's best interest that Microsoft or Apple come to dominate the market. Don't doubt that both companies would like to do just that.

Apple is certainly talking to handset manufacturers, and so is Microsoft. The software giant's interest runs deeper, however, since it's also a handset operating system provider. It's not beyond the bounds of possibility for the company to leverage access to its media technology to promote Windows Mobile for Smartphones. That's a possibility that rival OS vendors, like Symbian, and their backers will not want to ignore.

But don't let's forget the network operators in all this. These are the companies who 'own' the customer and who arguably have more clout than the hardware vendors over which services they allow their customers access to via their various multimedia offerings. The networks may well be keener to partner with a digital music distributor for an own-branded service from which they can accrue revenue beyond mere data traffic fees.

Nokia's partnership with Loudeye, owner of OD2, provides a template for such services - it's all about providing networks with access to Loudeye's distribution service. Microsoft may have happy with similarly low-profile arrangements since it's as motivated by selling technology as selling content. Apple, on the other hand, with a music brand based on retail, may have more of a difficulty playing second fiddle to the Vodafones, Cingulars, Oranges and T-Mobiles of this world. ®

Related stories

Nokia moves to counter Apple-Moto music alliance
Apple, Moto, iPhone deal full of promise...
Samsung shows 'world's first' hard drive phone
Apple licenses iTunes to Motorola
Microsoft listens to the music
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Peter Gabriel sells digital music firm

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