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Microsoft Planning an iPod Attack for Christmas

Thursday, August 11th, 2005 at 10:15 AM - by Staff

Apple's iPod digital media device will come under increased pressure from competitors as early as this Christmas season, a Microsoft executive said in a published report Thursday.

In an interview with Bloomberg News, Erik Huggers, head of Microsoft's Digital Media Division, said this fall "there is going to be a number of devices that get close to competing with Apple's iPod."

"There is going to be a whole lineup of products that can compete with Apple in industrial design, usability, functionality and features," he said, naming devices that will bear Microsoft technology from labels such as Royal Philips Electronics, Samsung Electronics and Creative Technology.

Now that Apple has single-handedly taken the market, all the world's consumer electronics makers are zooming in on it," Mr. Huggers said. "They are just not going to let them get away with it. The first quarter of 2006 is going to get very interesting."

Microsoft is helping electronics makers "build world-class devices, that really work well, with great industrial design, with lots of content available, with great software on the PC to make it all work together," Mr. Huggers commented.

But the threat might not be so easy to pull off successfully, according to Michael Gartenberg, an analyst at Jupiter Research.

"It's going to take a lot to dethrone Apple. Apple won't sit on its laurels and I expect we'll see another iteration of the iPod for the holiday," said Mr. Gartenberg. "Unless Microsoft is really willing to spend the time and effort to get behind a player or a select group of players, it's not going to happen."

At the moment, Apple holds a 75% share of the U.S. market for digital media devices, according to IDC.

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Tiger said:

member since 17 Jun 2003 with 1018 posts, unranked, send him a message or view his profile

Thu Aug 11, 2005 10:38 am

Thanks for the warning.

Microsoft is under attack every single day from hackers, virus writers and defecting employees.

Wake up and smell the iceberg. The Titanic is sinking......

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squintbro said:

member since 23 Jul 2002 with 241 posts, unranked, send him a message or view his profile

Thu Aug 11, 2005 11:03 am

Tiger wrote:
Thanks for the warning.

Microsoft is under attack every single day from hackers, virus writers and defecting employees.

Wake up and smell the iceberg. The Titanic is sinking......

Um, ok. Did you even read what the article was about?

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A guest said: (hide)

Thu Aug 11, 2005 11:20 am

Its good to see the originality of Microsoft coming through. Can they ever stop trying to best someone else? Why cant they come up with something original?

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loki said:

member since 22 Dec 2004 with 37 posts, unranked, send him a message or view his profile

Thu Aug 11, 2005 11:24 am

"a number of devices that get close to competing with Apple's iPod"

Does he mean a couple of devices that might start to try and figure out how to get almost to where they can sort of begin to kind of attempt to nearly replicate some of the features to act close to something pretty much like the iPod?

Then what about iTunes?

iTMS?

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A guest said: (hide)

Thu Aug 11, 2005 11:31 am

In the long run, the iPod might not be able to sustain it's current market share. But, I don't think people will throw away their current iPods (mini, shuffle, photo, etc) with all of the music just because something new has come out.

Maybe in 3-5 years when everyone is thinking of replacing their iPod might the challenge be real. This is assuming that people haven't bought too many songs off of the iTunes store - why would you want to pay for music again?

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A guest said: (hide)

Thu Aug 11, 2005 11:36 am

The correct response to this is:

"Bring it."

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Intruder said:

member since 07 Jul 2004 with 3149 posts, TMO Mac Specialist, send him a message or view his profile

Thu Aug 11, 2005 11:45 am

"They are just not going to let them get away with it."

Get away with it? Like Apple has done something wrong?

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A guest said: (hide)

Thu Aug 11, 2005 11:49 am

You know that they are in trouble when they start talking about a lineup…just the usual suspects…and they're guilty as charged.

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boodle said:

member since 13 Jun 2004 with 42 posts, unranked, send him a message or view his profile

Thu Aug 11, 2005 12:25 pm

Not long ago Bill Gates peed on Apple's prospects and OS X, too. When Microsoft can't dominate a market segment it covets, then it runs down the competition. Classic.

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Jonkun227 said:

member since 02 Mar 2004 with 238 posts, unranked, send him a message or view his profile

Thu Aug 11, 2005 12:40 pm

Man, that's funny. "get close to competing". It must be scary to work at Apple with that kind of pressure.

Seriously, can you imagine anyone making a better device than the iPod? I've seen some that are starting to match the first generation's usability, but Apple is so far ahead of the game. AND 500 MILLION SONGS HAVE ALREADY BEEN SOLD THAT ONLY WORK ON AN iPOD! Just try to stop that inertia.

- Jon

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Ampar said:

member since 04 May 2005 with 44 posts, unranked, send him a message or view his profile

Thu Aug 11, 2005 12:43 pm

What does an iceberg smell like? If doom has an odor, it's probably like sweat.

"iPod Attack." Sounds like Redmond wants to re-release Invasion of the Body Snatchers?

: D

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A guest said: (hide)

Thu Aug 11, 2005 12:43 pm

I wonder how Creative is going to do it? Reproduced below is the business report from Channel News Asia a Singapore news company reporting on its own home grown tech firm. Not very promising IMHO.

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SINGAPORE : Creative Technology sank into the red in the fourth quarter to June with a net loss of US$31.9 million as a bruising battle with Apple's iconic iPod took its toll, the company said Thursday.

Sales in the June quarter totalled US$305.4 million, up 51 percent from US$201.8 million in the same period a year ago, the Singapore-based digital entertainment products maker said in a statement.

In the same quarter last year, the company had turned in a profit of US$6.63 million.

The fourth-quarter loss was worse than expected.

The June quarter's dismal performance was a drag on earnings for the full fiscal year to June 2005 with net profit amounting to just US$588,000, down sharply from US$134.25 million in the previous full-year period.

Craig McHugh, president of subsidiary Creative Labs, said sales of MP3 music players in the June quarter jumped more than 260 percent year-on-year but this was still far short of the target the company had set.

Falling prices also hurt the bottom line.

"We had set our targets higher for unit volume and average selling prices for our MP3 players than we achieved in the period," McHugh said.

"Missing our targets caused us to miss our revenue goals and we were not able to reduce our inventory levels as rapidly and as much as we had expected," he said.

Inventory writedowns during the fourth quarter also severely affected the company, Creative said.

"During the quarter, there was a decline in the value of certain components in our inventory, including flash memory and hard drives, so we needed to take an inventory write down," McHugh said.

"Even though we increased overall revenues 50 percent year-over-year, the lower-than-expected selling prices for MP3 players and the inventory writedowns negatively impacted gross margins in the period," he said.

Creative, which found global fame with the Soundblaster cards that turned personal computers into entertainment machines, branched out into the digital entertainment segment in a bid to grow its portfolio. - AFP /ch

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fartheststar said:

member since 04 Jan 2004 with 222 posts, unranked, send him a message or view his profile

Thu Aug 11, 2005 1:01 pm

So... up until now the efforts of all of those companies were just "trials" before they thought about mounting "real threats"?

LOL.

By Christmas I expect we'll have a 5th Gen iPod with the sensor wheel (check out www.appleinsider.com ) that'll blow them all away again.

Nothing like saying "yeah, 3 years after the craze started, we're catching up and thinking about things like that". Those companies don't understand about simplicity and usability.

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A guest said: (hide)

Thu Aug 11, 2005 3:38 pm

""There is going to be a whole lineup of products that can compete with Apple in industrial design, usability, functionality and features," he said, naming devices that will bear Microsoft technology from labels such as Royal Philips Electronics, Samsung Electronics and Creative Technology."

Say, I hope the next generation of iPod-killers from Philips and Samsung and Creative do better than the last generation, because so far all of their "iPod-killers" have been complete and absolute turkeys. Especially the ones from Creative "now in the redline" Technology.

And by the way, hasn't Microsoft's Janus DRM been scheduled to kill the iPod and iTMS dead for almost a year, now? What's that happening, exactly?

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Biff said:

member since 08 Apr 2004 with 1479 posts, unranked, send him a message or view his profile

Thu Aug 11, 2005 4:24 pm

YOU expect a 5th Gen. iPod by Christmas with a "sensor wheel"? Sounds more like AppleInsider expects that. Although I'll give you bonus points for making up your own name for the Apple-sourced scroll wheel mentioned in the rumor.

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loki said:

member since 22 Dec 2004 with 37 posts, unranked, send him a message or view his profile

Thu Aug 11, 2005 6:31 pm

All that AI article said was that Apple is working on their own version of the scroll wheel. It makes no mention of any features that would separate it from the current design other than them saving money on licensing and royalties and hopefully passing those savings on to 'we the addicted'!

Apple is already selling the scrolling track pad on all of their current laptops. All they have to do is make a round one instead of square and it's done.

Now bring on the Newton!!!

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A guest said: (hide)

Thu Aug 11, 2005 8:03 pm

Is that all Microsoft is aiming for? "close to competing" Is that like just making it out of the trial heats and into the final race in the Olympics, where they finish 7th or 8th?

And they expect to fool the consumer into buying something "close to competing" with the real thing? I guess that's what they've always done with Windows, so if it worked once, it must work again!!!

By the way, I was two airplanes today: scorecard: 9 iPods, 1 non-Apple player.

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A guest said: (hide)

Thu Aug 11, 2005 10:25 pm

I wanted an ipod after using itunes---to me that is 1/2 the player experience. nothing else is itunes..you can make a cheap ipod imitation but you cant copy both easily.

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jacrav said:

member since 04 Jul 2001 with 268 posts, unranked, send him a message or view his profile

Thu Aug 11, 2005 11:33 pm

What these companies are going to find out is that, unless MS writes an iTunes clone (software and store), they're not going to make a significant dent in Apple's market share. Apple seems to have established a strong identity as the consumer’s alternative to MS, and even if MS could piggyback on IBM this time again, it would do no good, as IBM isn't into consumer electronics. The closest in that field is Sony, but even they have been beaten at the starting gate. I can't imagine the royalties Apple could be pocketing if it licensed iTunes to all electronics manufacturers, but, for the moment, building the iPod is bringing in more cash. If margins start to drop on the iPod, they probably will end up doing it … and keep cashing in …

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A guest said: (hide)

Fri Aug 12, 2005 1:07 pm

Subconsciously they used the phrase "getting away with it" because that is what MS has been doing with substandard software and services.

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Steve W said:

member since 22 Nov 2002 with 482 posts, unranked, send him a message or view his profile

Mon Aug 15, 2005 4:10 pm

Considering the number of "pundits" and others whining that Apple "must" license WMA (hack, ptui!) playback in the iPod for "compatibility" with "everyone else," the full-court press has already begun. The MS FUD machine has swung into action.

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Dirt Road said:

member since 24 Oct 2002 with 1239 posts, unranked, send him a message or view his profile

Tue Aug 16, 2005 1:07 pm

Same old FUD, as far as I can tell. Given Microslobber's track record, "in time for Christmas" means maybe out by next July 4. "Get close to competing" means a direct (but not well-executed) rip-off of the iPod interface, crippled with horrendously restrictive DRM.

Bleah. I don't have an iPod yet, but I seriously doubt this "iPod attack" is going to turn my head.

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