|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | |
SEPTEMBER 1, 2004
By Jay Greene Microsoft, the Entertainer? Betting that video will give them an edge, Gates & Co. take aim at Apple's iPod. Their first attempts, however, could fall short Since the dawn of the PC era, you would be hard pressed to find much that Apple (AAPL ) CEO Steve Jobs and Microsoft (MSFT ) Chairman Bill Gates agreed on. Now that Apple has reinvented itself as the king of the digital music world, Microsoft is trying to wrestle that mantle away with a new breed of iPod rivals, including ones that play color video as well as music. It's one more instance of clashing world views. "We don't think people have a burning desire to watch video on tiny little screens," Jobs said earlier this year. But Gates points to the growing phenomenon of kids watching videos during long car trips as proof that there is a market for small screens. "I guess Steve's kids just listen to Bach and Mozart," Gates quips. "But mine, they want to watch Finding Nemo. I don't know who made that, but it's a really neat movie." Of course, Gates knows: It was Jobs's own Pixar Animation Studios (PIXR ). When the boss gets sardonic, you can tell Microsoft is getting serious about a market. On Sept. 2, the company is launching its most comprehensive foray yet into the digital media world. Portable video players, which run on Microsoft software and are made by Samsung Group and others, are just a piece of the tech giant's plan to steal Apple's rock 'n' roll mojo. Microsoft also is opening the doors to an online music store that includes a handful of popular artists that Apple's iTunes site doesn't have, such as Radiohead. GRAB FOR YOUTH. More important, the Colossus of Redmond is rolling out an update of its Windows Media Player audio and video software that's designed to make it just as easy to purchase and manage music with Microsoft-powered gear as it is with Apple's iPod and iTunes combo. "There's nothing that the iPod does that I say: "Oh, wow, I don't think we can do that,'" Gates says. The digital media push is aimed at helping Microsoft recapture a measure of its youth. The company has been wrestling with questions about maturity as its growth slows. Analysts expect that as the digital media market grows over the next few years it could contribute $400 million to Microsoft's revenues. While that's a fraction of its $36.8 billion annual take, the company is hoping over time to generate far more meaningful revenue for its MSN unit by jump-starting the sale of low-cost digital goodies. Once music shoppers give MSN credit-card numbers to buy songs, Gates believes they'll be more willing to buy other products Microsoft is developing, from text-messaging services to digital characters that can be used as personalized icons for instant messaging. "There's a lot that has to be done to make it really comfortable and easy to spend small amounts of money online," Gates says. "Music is definitely one of the applications that's going to bootstrap that kind of consumer, lots-of-transactions-online e-commerce." ENTRENCHED RIVAL. The new technologies are also key to Microsoft's march into the living room. If consumers get used to Windows Media Player and the portable video and audio players, they're more likely to use Redmond's technology as they shuttle digital content around their homes. Wide customer acceptance may help Microsoft persuade record labels and movie studios to wrap their music and video in its software. The idea is that the cycle could feed on itself, making Microsoft's media technology as ubiquitous as its Windows monopoly. "You don't have anybody investing more in bringing these consumer scenarios together," says Gates. Yet for all the effort, Microsoft isn't going to displace Apple anytime soon. The stylish, simple elegance of Apple's iPod, together with its pioneering iTunes download service, has come to define digital music. Apple has sold nearly 4 million iPods and more than 100 million songs, and its momentum shows no signs of abating. By comparison, Microsoft hasn't shown the flair that's necessary in digital entertainment. It's relying on partners to gin up iPod killers, and to date, they haven't come close to Apple's allure. And even as Microsoft's partners are improving their designs, so is Apple, making its lead that much more difficult to overcome. "The iPod has transcended being a consumer device and become a cultural icon," says Jupiter Research analyst Michael Gartenberg. UNTETHERED VIEWING. With the iPod so strong in the digital music biz, Microsoft thinks that video-on-the-go may be its best chance to pull ahead long term. There, it sees a market that looks an awful lot like the digital music business did just five years ago. Back then, about 13% of Web-connected U.S. homes had music files on their PCs, according to Jupiter. That's roughly the same percentage as those who have digital video files today, according to tech research firm the NPD Group. Now, 63% of Web-connected U.S. homes have music stored on their PCs. Microsoft's devices, which record video as well as songs, can untether prerecorded TV shows and movies so people can watch them wherever they want. The first devices, by Samsung, Creative Technology (CREAF ), and iRiver, will store 20 gigabytes of digital content -- about 80 hours of video or 5,000 songs. "Video is definitely the gee-whiz factor here," says Lisa O'Malley, a senior brand manager at Creative Technology. The gadgets, though, aren't likely to instantly kick-start a video revolution. Their biggest drawback is simply that they're inconvenient. Users can copy video only from a PC, not directly from a TV or DVD player. IDC analyst Roger Kay estimates that fewer than 1% of the world's computers have the TV tuner cards that are required to copy TV programming. Those can be bought for $70, but even then the only way to watch the latest episode of, say, The Daily Show with Jon Stewart on a Portable Media Center is to connect a cable jack to a PC, copy the show onto a computer, and then download it to the portable device.
BW MALL
SPONSORED LINKS
Buy a link now! | | |
 Copyright 2004, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version
