Microsoft to undercut iPod price with player

[adamz]

From the Denver Post:

"Microsoft Corp., the world's largest software maker, will begin selling portable music players for as much as 80 percent less than Apple Computer Inc.'s iPod.

The Microsoft-branded devices will "look and feel" as good as the iPod for as little as $50, said Yusuf Mehdi, corporate vice president of MSN at Microsoft Corp., at the Goldman Sachs fifth annual Internet Conference in Las Vegas. The iPod sells for $249 to $499.

Microsoft, based in Redmond, Wash., will release a number of music players when it launches its online music service later this year, giving customers more choices than Apple, Mehdi said."

I wonder what kind of interface these will have. The Windows Mobile version of Windows Media Player really needs a much better interface for organizing and playing music. Even Voice Command can sort music in Media Player better than Media Player itself. I wonder what Microsoft will call these iPod competitors? Portable Media Centers? Oh wait, maybe those are something different.

[ChrisSpera]

Ok... 80% of $499 is $99.50. If I can get a 40GB player for under $100 bucks, I'm all over it. I don't care what I've got invested in PPC's. They all sell on eBay just fine.

This is very exciting. I am very much into legal, downloadable music right now. I know I will be downoloading their digital store interface in WMP (or where every they put it so I can at least take a look at their catalog.

I hope the players are worth while.

[rpommier]

I'm all over it for that price! I've been eyeing the iPod for awhile now but could never pull the trigger. I don't listen to MP3's, I'm exclusively .wma, for the size and compatibility with all of my stuff.

If MS can get make a player for around $150 with at least 15gb of storage it'll be a killer and probably bring along loads of lawsuits to boot :)

[ChrisSpera]

Let them come...

As long as I can get one before they stop making them due to some sort of injunction, I don't care. :D

Seriously, why would a law suite be filed? Am I missing something??

[johncruise]

Originally posted by ChrisSpera
Seriously, why would a law suite be filed? Am I missing something??

I'm pretty sure somebody will reply with "because they're Micro$oft". (not me by the way)

[Pony99CA]

Originally posted by ChrisSpera
Seriously, why would a law suite be filed? Am I missing something??
I can think of at least two reasons.

It would be viewed as Microsoft expanding their dominance in PC operating systems to the music player field.

Microsoft is likely going to get slapped hard in Europe for bundling Windows Media Player in Windows, and this could be seen as an extension of that.

At $100, it sounds like it would be a "loss leader". Selling goods for less than it costs to make them could be viewed as anti-competitive, an attempt to drive other music player makers out of business.

I don't know what it costs to make a hard-disk music player, but can Microsoft really price theirs for less than half what any other company can?

Of course, whether they get sued or not is anybody's guess. I would have expected somebody to sue Microsoft over XBox (which they sell for less than it costs to make), but I haven't heard of any antitrust suits there.

Steve

[ChrisSpera]

Thanks, Steve. I appreciate the response.

Ya know, I thought of these and dismissed them. If your first one is true, then MS can NEVER introduce new products because other competitors will sue them, which is crazy; but I do see where this could be a problem for them in Europe.

I have no idea what it costs to make a hard drive music player, but it doesn't surprise me that they might sell these at a loss. If there's one company that can do this, its MS...to what end, tho, I'm not certain...

[trophyofgrace]

Microsoft isn't getting sued over the xBOX because they own very little share compared to the PS2, if they were #1 in the video game realm as they are in PC's, then they would be sued.

It is worthwhile to note that Nintendo is taking a loss for each Gamecube sold. They're only $100 here. I think nobody is buying them because there are no good games for the platform. It's nothing personal, but get decent games!

[Pony99CA]

Originally posted by ChrisSpera
Ya know, I thought of these and dismissed them. If your first one is true, then MS can NEVER introduce new products because other competitors will sue them, which is crazy; but I do see where this could be a problem for them in Europe.
I'm not a lawyer, but my understanding is that Microsoft can't unfairly leverage their dominance in the PC operating system market to dominate another market. So Microsoft can introduce new products (as you said, it would be crazy if they couldn't), but, as a monopoly, they have limits on what they can do.

For example, if Microsoft bundles their online music store software with Windows, I think that would be a huge antitrust issue, because it would put other music stores at a major disadvantage. That's one reason Internet Explorer became the dominant browser, in my opinion.

Of course, whether competition will be harmed or unfair leverage is being used is open to interpretation; competitors may see things differently than Microsoft. :D That's why we have courts.

Originally posted by ChrisSpera
I have no idea what it costs to make a hard drive music player, but it doesn't surprise me that they might sell these at a loss. If there's one company that can do this, its MS...to what end, tho, I'm not certain...
The end seems fairly obvious -- if the player only plays WMA audio, they could make major bank from their music store, especially if the software is tied to the player.

Microsoft loses something like $100 (or more) for every XBox sold, but they hope to make it up by selling games (and probably online services).

You might not even have to be a monopoly to get sued for loss leaders; it could well be anti-competitive in and of itself.

Steve

[Pony99CA]

Originally posted by trophyofgrace
Microsoft isn't getting sued over the xBOX because they own very little share compared to the PS2, if they were #1 in the video game realm as they are in PC's, then they would be sued.
You posted as I was writing my previous post. I think that answers why they could get sued.
Originally posted by trophyofgrace
It is worthwhile to note that Nintendo is taking a loss for each Gamecube sold. They're only $100 here. I think nobody is buying them because there are no good games for the platform. It's nothing personal, but get decent games!
Actually, I heard Nintendo sold a lot of Gamecubes when they dropped the price to $149, and again when they dropped it to $100.

Where Nintendo could get sued is if they tried to leverage their Gameboy's portable gaming dominance to dominate the console market. That's not likely to happen, but anything is possible.

Similarly, Sony could get sued if they tried to leverage the Playstation 2's console dominance to dominate the handheld market with the PSP.

I'm not saying that they would lose those suits, mind you, only that there could be some merit to them.

Steve

[adamz]

Originally posted by Pony99CA
For example, if Microsoft bundles their online music store software with Windows, I think that would be a huge antitrust issue, because it would put other music stores at a major disadvantage. That's one reason Internet Explorer became the dominant browser, in my opinion.


Apple bundles a ton of stuff with their Operating system now. iTunes is bundled, Mail, Calendar, Contacts are bundled (putting Entourage to a disadvantage), Safari is bundled (putting Internet Explorer to a disadvantage), etc.
And since they've crippled the iPOD from playing WMA files (I hear it's possible), that inhibits anyone from purchasing music from any online store other than iTunes.
I doubt Microsoft would take the same approach since they've been preaching the use of WMA files to all of the other online music stores and online movie rental services. I'm betting that Microsoft's portable media players will be able to use any type of Windows Media. They've got investments in Napster 2.0, so I'm sure Microsoft's online store will only be another choice (at least initially).
What would really attack the iPOD is if the Microsoft Players would work with iTunes and play protected AAC files. I'm sure that's one reason people don't buy non-iPODs... they're locked in to using iTunes since all their music is in the iTunes format.

[ChrisSpera]

My friend and fellow Great Karnacian, Paul Thurrott just shot out WinInfo for Friday with a clarifying bit on this subject.

Microsoft won't be producing this player, some of their hardware partner(s) will. Microsoft had a great deal of input into the design and engineering of the player, but they aren't producing it...

[Pony99CA]

Originally posted by adamz
Apple bundles a ton of stuff with their Operating system now. iTunes is bundled, Mail, Calendar, Contacts are bundled (putting Entourage to a disadvantage), Safari is bundled (putting Internet Explorer to a disadvantage), etc.

And since they've crippled the iPOD from playing WMA files (I hear it's possible), that inhibits anyone from purchasing music from any online store other than iTunes.
The difference is that Apple isn't a monopoly. A company that has a monopoly has to play by a different set of rules to avoid injuring competition.

Now, if Apple somehow becomes a monopoly in portable music players (which isn't likely), they may have to change their rules.

Steve