Microsoft’s multitude of devices, to compete with the iPod
Yusuf Mehdi, Corporate Vice President of MSN, addressed Institutional Investors, via webcast last week. In his address he revealed some of the ideas that Microsoft will use to compete against Apple’s iPod and Apple’s music service. It looks the main tactic will be to overwhelm the competition with low priced products and a greater selection to choose from.
Okay, yes. The question was how are we going to compete with Apple when a big part of what’s driving their success both with consumer excitement and probably financially is the iPod.
A couple things. Number one, our strategy is certainly to offer a multitude of devices. So we think that the Apple iPod, I think that’s a great product but there’s a lot of opportunity. They’re only in 4 percent of U.S. homes today, even with all the success they’ve had. There are a number of other great devices that are coming out. I’ve spent time with a bunch of hardware manufacturers who will launch hardware products when we ship our service that will look and feel as good as the iPod product. And they will undoubtedly be a little bit less expensive and so head-to-head against Apple we’ll have a device that will be available to the consumer. We won’t produce it but it will be available to the consumer. We gave a lot of input. And then we’ll have a bunch of other devices, some that we’ve already talked about, one the Portable Media Center, which is a device that’s a little bit bigger and a little more expensive that has video and audio, much higher end looking device. It’s for people who really want to sort of look at music videos and not just music, which is very powerful, we’ll have that offering. And then a bunch of devices in between, little ones that cost 50 bucks and you can go running with.
And so the proposition is that you can buy a number of different devices with the MSN Music Service as opposed to just a single device from Apple and that will be a good choice.
The other thing is, of course, we’ll have a very broad selection of music. My goal is that if we don’t have the broadest selection, we’re tied for the broadest selection of music. We’ll have the best discovery. It will work with your Windows PCs and that alone I think will give us a big enough market share that we certainly should be able to go out there and be in a nice horse race if not take the lead at some point in the future.
The only tough part with what you were saying is there’s a lot of financial benefit to Apple that is made on the sale of the iPod that we don’t have because we don’t sell that device ourselves. I do think there’s a lot of opportunity financially for us on online advertising and on search efforts that music will help that we are going to invest in that will allow us to fund and drive.
And again one of the nice things about us at Microsoft is we’ll take a long-term view and so we will fund and we will invest to be competitive. The lack of economics from a device will have no real impact in terms of how we compete in the marketplace.
I’m anxious to see what the specs will be for the $50 device that you can go jogging with. Also, the high end products Yusuf proposes, will this force Apple to start looking into the merits of creating a video iPod? Let’s see how this story turns out.
Source: Microsoft