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Microsoft on Friday opened a new front in the battle against Apple’s dominance of the digital music market after it confirmed plans to launch its own music hardware and software service.
The music system, called Zune, is to launch this year. It represents a broadside against Apple’s iPod, the diminutive music player that redefined the market for portable music and revived the flagging Apple brand.
“When a player the size of Microsoft jumps into the pool, it definitely makes a splash,” said Michael Gartenberg, an analyst at Jupiter Research. “The question is will it have a lasting impact?”
Mr Gartenberg said Microsoft’s plans marked a “huge departure” from its previous strategy of promoting a broad ecosystem of devices powered by Microsoft software. “If they are willing to spend a lot of money they can buy themselves market share, but [it’s not going to come from] disgruntled iPod owners . . . it’s going to come from their partners like Creative, iRiver and Yahoo! Music.”
Plans to launch a closed system for music players underscore the extent to which Apple’s tightly linked iPod and iTunes music download service have come to dominate the industry, far surpassing the market share of rival services built on open platforms.
Christopher Stephenson, Microsoft’s marketing manager, who unveiled the company’s plans in an interview with Billboard magazine, said the Zune brand represented Microsoft’s “strongest effort yet to rein in Apple Computer’s iTunes/iPod juggernaut”.
The iPod commands 75 per cent market share in the US market for portable music players, and holds dominant positions in other markets worldwide. IPod sales accounted for about 40 per cent of Apple’s revenues last year. Other companies’ attempts to unseat Apple have failed to make significant headway against the company’s iPod and iTunes combination.
Microsoft’s shares, which rose more than 4 per cent on Friday to $23.87, fell slightly in after hours’ trading. Apple’s shares were little changed after the close.
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