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August 29, 2006

Microsoft Partners with Toshiba to Challenge Apple’s iPod

By Susan J. Campbell, TMCnet Contributing Editor

Microsoft is fed up with the amount of the portable media player market it does not have due to the success of Apple’s iPod.

 
While the giant with the fruit appeal has not been able to match Microsoft’s (News - Alert) success with its Windows operating systems, the company has been able to dominate the digital portable music market with its popular line of iPod products. Microsoft is planning to combat that success with its gadget, expected to be built by Toshiba (News - Alert).
 
Marketed under Microsoft’s Zune brand, the gadget will allow users to share songs, photos, music playlists and other content through a wireless connection. One of the gadget’s features will enable a person to act as a DJ while sending music to up to four other devices.

Toshiba filed papers with the Federal Communications Commission on Thursday, indicating its plan to manufacture the device for Microsoft. This agreement was confirmed by a spokesman for Microsoft on Friday.

In the filing provided by Toshiba, photos of a prototype closely resembling the iPod indicated the gadget the electronics giant planned to manufacture for Microsoft. The device was white, rectangle in shape and featured a large screen with several buttons. The resemblance could be Microsoft’s strategy to attempt to knock iPod from its number one position.

Microsoft had announced in July that the company planned to launch a series of music and entertainment products to challenge Apple’s (News - Alert) iPod player and iTunes music service. The first of these products is expected to be available this year. While few other details are available, the software giant did warn financial analysts that the launch will require millions of dollars in investment and is not expected to pay off immediately.

Zune is positioned by Microsoft as being critical to the software conglomerate’s overall entertainment strategy and will capitalize on the company’s other entertainment offerings. The entertainment side of Microsoft includes the Xbox video game console, Microsoft’s television technology and the media-focused version of the Windows operating system that allows consumers to record and watch live television.
 
The music player produced by Toshiba for Microsoft will not be the first attempt the company has made at gaining share in this market. Both Creative Technology Ltd. (News - Alert) And Samsung Electronics offer portable media players using Microsoft software and have seen little success in Apple’s wake.
 
What seems ironic about Apple’s success with the iPod, in spite of Microsoft’s efforts to defeat its foe, is that Apple followed much of the same strategy that has led to Microsoft’s enormous success. The iPod is designed by Apple, built by Apple, marketed by Apple and intended to work to its optimum in the Mac environment. The company did make one strategic move outside of this proprietary practice that included interoperability with the Windows environment.

It is hard to predict whether or not this new attempt by Microsoft will be successful, but up to this point, no one has been able to knock iPod off its throne. Microsoft has the technology know-how to offer a stiff challenge, but consumers are buying into more than just the technology—they’re also buying status.

Susan J. Campbell is a contributing editor for TMC and has also written for eastbiz.com. To see more of her articles, please visit Susan J. Campbell’s columnist page.
 








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