September 2, 2004 2:41 PM PDT
MSN Music is off-key, Apple says
The creator of the trendsetting iPod music player and iTunes music service on Thursday took its on-again-off-again rival to task for the new MSN Music download service, saying it has fewer features and fewer songs than the market-leading iTunes.
"Its biggest problem may be that its downloaded songs can not play on the iPod," said Eddy Cue, Apple's vice president of applications.
Apple has a strong, early lead, having been in the business for more than a year, having sold more than 125 million songs and having established a dominant share of the player market with its iPod.
But Microsoft may have some advantages, in addition to its sheer mass.
Where Apple has concentrated on music, Microsoft is giving nearly equal weight to video. The Redmond, Wash., software giant is pushing a new category of devices, dubbed Portable Media Centers, that play TV shows and video in addition to songs. The products, which use Microsoft technology, are sold by consumer electronics firms such as Samsung and Creative Technology.
And while Apple has taken an exclusively sales-oriented approach, Microsoft has also developed technology that allows people to "rent" music through a subscription service. However, the MSN Music store, which opened Wednesday, only matches Apple on the typical price per song, at 99 cents.
Executives at Apple continue to downplay the importance of both music subscriptions and portable video. "The video market isn't really something that customers have shown an affinity to," said Greg Joswiak, vice president of hardware marketing at the Cupertino, Calif., company.
Pointing to the past generation of devices, Joswiak noted that Sony has sold 200 million of its Walkman music players and not very many "Watchman" portable TVs.
Both Apple and Microsoft have been dialing up the rhetoric. In an interview this week with BusinessWeek magazine, Microsoft Chairman Bill Gates rejected the notion promoted by Apple CEO Steve Jobs that portable video isn't important.
"Ask kids in the back of a car on a two-hour trip, 'Hey, would you like to have your videos there?' My kids would," Gates said. "I guess Steve's kids just listen to Bach and Mozart. But mine, they want to watch 'Finding Nemo.' I don't know who made that, but it's really a neat movie."
In that interview, Gates stressed that Microsoft's approach is to offer a variety of music services and digital players, but noted there is probably room in the market for both Apple- and Microsoft-based products.
Apple focused much of its attack Thursday on the MSN Music store, rather than Microsoft's overall approach.
"The iTunes Music Store is currently selling over 16 million songs per month (a rate of 200 million songs per year)," the company said in a statement. "How many songs will Microsoft's new online music store sell during its first month?"
While it's debatable whether the MSN Music store can single-handedly dethrone Apple in the near term, the bigger question is whether Apple will be able to maintain its current lead--claiming 70 percent of legal music downloads and roughly half of the U.S. digital music player business.
"Our job of course is to continue to make that so," Joswiak said.
Apple plans next month to expand its music store from a few European countries to the rest of the continent and sees opportunities beyond that.
"The wonderful thing is that everyone on the planet likes some kind of music," Cue said. "There is a huge opportunity (to sell music) in every country, including developing markets."
Cue said that, at least so far, Microsoft's strategy of enabling many partners and trying to create a larger ecosystem hasn't worked. "It kind of put them in a position of having to open" their own store, Cue said.
As for the fact that songs bought at MSN Music don't play on the iPod, Microsoft places the blame on Apple.
"We're sorry that this isn't easier--unfortunately Apple refuses to allow other companies to integrate with the iPod's proprietary music format," Microsoft states on its site. "If you are an iPod owner already and unhappy about this policy, you are welcome to send feedback to Apple requesting that they change their interoperability policy."
On the site, Microsoft also outlines a rather cumbersome workaround that entails burning a purchased song onto a CD and then using iTunes to rip the song from the CD into an iPod-compatible format.
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