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Microsoft moves in on music downloads

No Apple turnover, this time

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Microsoft has even tried, with this launch, to steal the thunder of the Digital Living Network Alliance, and has put a logo, the 'PlaysForSure' logo onto any device that offers its proprietary software.

It does this to steal the high ground, claiming that lots and lots of players work with its software, and only Apple's (with a 70% music market share) is somehow proprietary.

The entire rationale for the DLNA is to test particular implementations of standards so that new digital consumer technology applied in the home and in portable devices just works together first time. It will then be giving up its logo for proof in the same way as this PlaysForSure initiative.

Microsoft says that PlaysForSure is supported by Audiovox, Creative, D-Link Systems, Dell, HP, iRiver, Rio, Roku, Samsung Electronics and Thomson, who have all either launched a new player or put Windows Media 10 on one they already have or applied for the PlaysForSure logo, as well as by online music and video stores including CinemaNow, For Your Entertainment, MSN Music, Musicmatch, MusicNow, Napster LLC and Wal-Mart Music Downloads; and by retailers including Best Buy, Circuit City, CompUSA, Tower Records and Wal-Mart.

The idea is to isolate Apple with ownership of the market and imply that Apple is the odd one out. And we're sure, that to some extent, among some types of customers, it will work.

Apple turnover is not on the menu

The only other business that has followed the Apple line is Sony, putting out its own Pocket Vaio (and other) player, and launching its Connect service in all the territories that Apple has entered. These two are the only ones that share a philosophy, even if they still hate each other and Apple remains the original.

This week Microsoft has sponsored a huge number of new devices, and Virgin Electronics has been one of the surprise additions to the player market, announcing a 5GB player with an FM Tuner with weird dual headphone jacks for shared listening. But this just bears out the point that without Microsoft, it wasn't something that Virgin could have done; hence it had to do it Microsoft's way.

Audiovox and AT&T Wireless announced a Windows Mobile phone claimed to be the first phone to receive the PlaysForSure logo which will be the target for AT&T's mMode music service which has just been launched.

So by default, without a single customer, Microsoft has been able to position its new MSN Music as if it were the market leader, and within weeks, no doubt we will hear Microsoft indeed claiming that it is.

But the idea that Microsoft beat Apple in the PC market, and so quite naturally it can pull the same trick in the music market, is perhaps a little oversimplified. Apple has its customers already, Microsoft has yet to find its customers. Apple makes over $1bn of revenue from iPod sales, Microsoft cannot expect that money, because it's only supplying a small part of the software for the MP3 players.

Microsoft gives its media player away free (illegally in the view of the European Commission), so where does it make its money? From music sales? Well so far that only amounts to $150m, even for Apple, and most of that goes to record companies. Microsoft may have covered the Apple play, just to stop it stealing a head start in other markets, but we can tell what the US stock market thinks by the way that Apple's stock climbed over $2bn after its figures came out, while Microsoft's has stayed flat as a pancake all week.

Investors, at least, don't think that Microsoft can undo everything Apple has worked for over the past three years, in one single announcement.

Copyright © 2004, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of events that have happened each week in the world of digital media. Faultline is where media meets technology. Subscription details here.

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