March 13, 2003 4:00 AM PST

Media2Go team gets Creative

Microsoft on Thursday added Creative Technologies to its stable of manufacturers developing Media2Go portable devices that are capable of playing digital video and music.

Microsoft made the Creative Media2Go announcement at CeBit 2003 in Hannover, Germany.

Creative will join iRiver, Samsung, Sanyo and ViewSonic, which also plan to develop Media2Go devices. But Creative's success in delivering PC audio and video technologies makes the company's support potentially the biggest endorsement to date for Media2Go, say analysts.

"Creative has done a great job over the years in terms of trying to turn some of those portable technologies into great products," said Stephen Baker, analyst at market research firm NPDTechworld. "They've always had a great design flare, and they have strong technology areas such as sound and graphics they can bring to bear as well."

Brian Riseland, product manager for Microsoft's Embedded and Appliance Platforms group, also regarded Creative as a big-win manufacturer for Microsoft. "We're really excited because they're the largest manufacturer of hard disk drive-based audio players," he said. "They're going to market with a Media2Go device for the holidays."

Still, Creative is not a retail leader in portable audio devices, mainly "because their stuff is pretty expensive compared to some of the other players," Baker said. Most portable music players are sold at retail.

During the fourth quarter, Creative ranked five in retail portable music player sales, as measured in dollars, with nearly 8.1 percent market share, according to NPDTechworld. In terms of unit sales, Creative ranked sixth, with 7.2 percent market share.

Redmond, Wash.-based Microsoft unveiled Media2Go, which runs the upcoming "McKendric" version of the Windows CE .Net operating system, during the Consumer Electronics Show in January. Built around a hard drive, as are Apple Computer's iPod or Creative's Nomad, Media2Go will be capable of storing or playing back digital video, music or photos.

The devices will be capable of playing Windows Media Audio or MP3 audio files and Windows Media Video and MPEG 4 video files. Support for Windows Media 9 Series and MPEG 4 means the devices can play back fairly high-quality video at lower file sizes than that available with other formats, such as MPEG-2.

Manufacturers optionally will be able to add support for other audio and video formats, such as Apple's QuickTime or RealNetwork's Real Audio, according to Microsoft.

Media2Go devices can play about 175 hours of VHS-quality video or 8,000 songs stored in Windows Media format. Battery life is expected to be about six hours.

Riseland would not discuss an official launch date for Media2Go devices or pricing, although Microsoft has set a target of holiday availability.

Media2Go or no go?
As Microsoft and its hardware partners prep their Media2Go devices, Apple looms as a potentially threatening competitor, say analysts. The Cupertino, Calif.-based company reportedly has been testing several iterations of a portable video device that would build on the success of iPod. Like Media2Go, Apple's portable video devices, if ever brought to market, would be built around a hard drive.

Apple would have as a starting point success in the portable music player market, where iPod is a leader in retail sales. During the fourth quarter, Apple's dollar market share reached 27 percent compared with about 10 percent for second-ranked Rio, according to NPDTechworld. In terms of unit sales, Apple captured 11.2 percent market share, following closely behind Rio at 11.3 percent and top-ranked RCA at 13 percent.

Still, Baker remained skeptical the portable video player category would take off anytime soon. For one thing, "it usually takes a few iterations to get this kind of thing right," he said. "This was certainly the case with music players."

Using the limited demand for computer DVD burners and other video technologies as a gauge, Baker concluded "the demand is quite small" for a portable video player.

But Riseland disagreed. In testing, "the technology really resonates with consumers, because they see it as a natural extension of the audio devices they have today," he said. "A lot of people already do video on their PCs, so they can take it with them."

The software giant, in fact, already is laying the groundwork for portable video. In January, Microsoft started selling Plus Digital Media Edition, an add-on pack to Windows XP. One of the features lets consumers sync content with Pocket PC handhelds and cell phones, including audio and video from Web sites.

Microsoft sees Media2Go's larger appeal as helping people reduce the number of portable devices they might carry. "They can now have one device that will tackle both audio and video, and pictures if they like," Riseland said.

More important, the company is betting that public transit commuters would be interested in a video device for playing recorded TV shows. For this reason, Microsoft is working on technology for synchronizing Media2Go devices with PCs running Windows XP Media Center Edition.

Windows Media Center PCs, which are capable of recording TV shows to the hard drive, offer a second user interface for accessing the operating system's digital media features. Media2Go devices will use the same interface.

"Media2Go would be a great companion to Media Center, because it would give you portable access to that digital media," Riseland said. "We're hard at work on how to make that a consumer experience."

The second version of Windows Media Center, code-named Harmony, is in the first round of beta testing. Microsoft is expected to release Harmony in the third quarter.

 

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