Since Apple began rolling out iPods in 2001, Microsoft has held more or less the same stance: one device doesn't provide enough choices. Therefore, MS has set up hundreds of partnerships with other companies, offering sleek designs and online music while figuring that the lack of choice would eventually drive customers away from Apple.
Microsoft's plan has obviously not been working. Apple has gained marketshare at an absurd rate, and the iPod brand name is as interchangeable with "digital MP3 player" as Sony's Walkman was with "portable tape player."
Well, it took more than four years, but Bill Gates may finally be admitting his rock solid plan has a few holes. BusinessWeek learned that Microsoft may be planning a device that will compete directly with the iPod.
But, according to Xbox head Peter Moore--who wouldn't confirm that such a device is in the works--if Microsoft were to tackle such a project, it would be on its own terms. Instead of just video and music, though, Microsoft would take advantage of its consumer recognition in video gaming, thus creating a device that could meld all three.
The planned device sounds an awful lot like Sony's PlayStation Portable (PSP). If that's the case then Microsoft is looking to gnaw at a much smaller piece of Apple's pie: the video gaming market vs. the digital media market. More dangerous, perhaps, is the possibility that Microsoft could tick off its partners--the partners it went through great lengths to secure.
If Microsoft's potential new device failed, it would likely lead to a double whammy of bad. Microsoft would keep watching as Apple grows, but would no longer have the partnerships--Microsoft's ammo--to take on the beast. Worse, the company would have a brick--a failed device no better than a paperweight.
I think Microsoft is a little too late on this one. I'd love to see a device such as the PSP on which I could play Halo, but I'm not looking to replace my iPod or PSP anytime soon.