[Xeo]

This is stupid. The only reason MS offers "choice" is because every other MP3 player supports their stupid proprietary format. That's not open, that's a monopoly working in their favor. I can't believe they advertise themselves as open.

Originally here
Microsoft pushes online music entry
By Rex Crum, CBS.MarketWatch.com

SAN FRANCISCO (CBS.MW) -- In a bid to dethrone Apple Computer as the king of the online music market, Microsoft formally launched its own service Tuesday.

Microsoft's MSN Music service virtually mirrors the scope of music offered by Apple's iTunes Music Store, with a library of more than 1 million songs from the five biggest recording labels and several independent companies. Microsoft (MSFT: news, chart, profile) is also matching Apple's price point by charging 99 cents per songs.

However, Microsoft is trying to appeal to users of digital music players other than Apple's iPod by pointing to its position as the world's most dominant computer operating system. More than 70 different music devices can download songs from the MSN store.

Microsoft executives made the service official as part of a broader promotional event the company held in Los Angeles under the theme "Digital Entertainment Everywhere." See full story.

Based in Redmond, Wash., the software giant said it intends to charge 99 cents to download a song, the same amount as Apple (AAPL: news, chart, profile) charges through its rival iTunes store.

Echoing a comparison that it has been made for two decades, Microsoft said its music store's advantage comes down to consumer accessibility.

"ITunes has done a great job of helping to elevate the [digital music] market," said Christine Andrews, lead product manager of MSN. "We're different because Apple is a closed system. If you want Apple, you have to use the iPod. A lot of people want choice and we offer that."

In its response, Apple said its products remain the favorite among consumers.

"Ninety-two percent of customers buying hard-drive based music players are choosing iPods, and over 65 percent of customers buying any type of portable digital music player including flash-based players are choosing iPods," Apple said in a written statement.

"This means that the iTunes music store, with its catalog of over 1 million songs, works with 65 percent of all MP3 players and 92 percent of all hard-drive based music players being sold today. There is a lot of customer choice happening today, it's just that Microsoft doesn't like the choices customers are making."

Microsoft had offered a preview version of its music store since Sept. 1. Andrews said the formally launched version includes small updates and other changes made in the past six weeks. Store access will be available in 17 countries by the end of the month.

As part of the MSN Music launch, Andrews added that Microsoft would be the exclusive home of the rock band AC/DC and its music catalog for one month.

Microsoft's stock fell 3 cents to close at $28.03. Apple was down 30 cents at $38.29.

[demograph68]

I'm kinda scared. I hope Microsoft fails miserably.

[Thilo Ettelt]

Originally posted by Xeo:
This is stupid. The only reason MS offers "choice" is because every other MP3 player supports their stupid proprietary format. That's not open, that's a monopoly working in their favor. I can't believe they advertise themselves as open.

They always did, and they will continue to do so until they notice that Unix and Linux has more to offer to their customers. Windows is not exactly open either.

I think Apple is just having yet another advantage. They are the software and hardware maker. That's what Microsoft will never be like, although they might want to be that. But obviously they can't. Microsoft is very dependent right now, so they could make their own platform and leave the other PC competitors out. That's what we have in the music market as well. Apple is the only company that is able to deliver one solution. Music. Microsoft and it's partners are offering individual solutions.

These solutions are:

• music distribution (MSN Music Store, Wal Mart, etc.)
• music format (WMA)
• music players (not by Microsoft)

You can see that in Microsoft's business model of being the supplier of the format for music distribution as well as players they are clearly a winner. At least in that small percentage market left over by Apple.

But this leads us to the unbreakable nut: How can Microsoft make a profit in a low-profit, monopoly market. Well they know how to do that from their PC partners. Those are fighting over prices and so most of them go bankrupted, only the strong survive. So Microsoft profits in a long term. They don't have to innovate on the player level, this is an annual proccess as you can see with the iPod. So that's a plus, the only thing they have to do is promote their music distribution and spread their music format longterm. Microsoft has enough money for that.

Apple offers one solution. What does that mean? The two principles a closed and an open system are a oversimplification of two different business models. Apple clearly is a hardware maker; the iPod was there before music was sold online. But Apple had another idea: why not sell the music to our customers as well? The side-effect is that music customers would buy iPods eventually. Due to the limitation to Apple's own products you can speak of one solution. The major difference to the Microsoft one is that is it a very strong short term profit (with unknown long term results as nobody can predict the future). Since Apple can make the products easy to understand and use as well as appealing it was an easy take for Apple.

So Apple is Saddam and Microsoft the USA? Apple is closed and Microsoft is free. Wrong question, and wrong answer. There is a certain irony when Microsoft says Apple is a closed system. Not just because Microsoft has a lot of closed systems too, but rather because there just is no compelling music distribution alternative there yet. Other companies have not made it easy and simple for customers to bring music shopping to the internet. Same goes with music players. The music digital player market has been relatively small before the iPod entered. Again when there is no alternative, why should Apple sell music for other players? The problem is the generalization of limited and free systems. Music lovers still have a choice. They can buy cds, buy vinyls, get a discman, or any digital player. And they can get all free music (from cds, radio, tv, etc) on every digital player anyway. That implies that they can choose between an Apple and a Microsoft-format based player. Yes, they can't choose the digital music distribution for the iPod, but when this is only 2% of the over all music distribution, why is it such a big problem?

Maybe it is because Microsoft only has a long term strategy. And when you think of long term, what comes to your mind? To my mind come Analysts who predict the bright digital music future. A multi billion dollar market. In the future of course. Since the iPod and iTunes Music Store together are the only growth motor right now competitors want to use one of them for their own business. But just why? Instead, they could build up their own concept of digital music. That's difficult because only few companies can come up with music distribution, music format and music players.

Unfortunetely most can't and it is one of Microsoft's faults since they rule over what multimedia format should be played. Their monopoly power can be related slightly to the situation that we have now. Apple is the only opponent left in the market. And the only one that is not as dependent as others. This is the key to success.


- Thilo