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Microsoft gets in the music biz

This column originally ran in ComputorEdge on April 29, 2005
(Issue 2317, The College of Your Choice)

Microsoft has now launched its answer to Apple's iTunes online music store. Located at, MSN Music has the same 99 cents-per-song price point as Apple, and what seems to be about as large an installation of songs to choose from.

But here's Microsoft's challenge: The company actually has very little experience in selling directly to consumers.

Bill Gates' billions have been made off of selling Windows and Office. And while you and I both likely have Windows and even Office on our PCs, odds are we didn't buy them from Microsoft – or even from a local retailer.

Rather, Windows was already on our PC when we bought it.

Instead of selling Windows directly to consumers, Microsoft sells Windows to the companies that sell us our PCs. And selling to manufacturers is a whole lot different than selling to the masses. Sign Dell up as a Windows re-seller and, boom, there's 20 million units moved for the year.

In the OEM (direct to manufacturer) world, you can leverage market position into repeat sales – establish yourself as the (or at least a) standard, and the market will follow without repeatedly being harangued. It's a more clubby, personal world than the retail market.

Even Office's installed base is largely in the corporate and business worlds. The number of copies of Office Microsoft sells via CompuUSA is minuscule compared to the numbers it sells directly to large and mid-sized corporations. And there is even an OEM component to Office sales – most of the larger computer companies offer a PC package pre-loaded with Office.

Again, it's a matter of Microsoft leveraging its dominant position as the largest operating system and office suite publisher, and then just riding the wave.

In other words, the OEM market is less fickle than the mass consumer market – a lesson Microsoft learned the hard way with its Xbox gaming console.

While Microsoft was able to nudge Nintendo's GameCube aside and establish the Xbox as the No. 2 gaming system on the market, it got its butt kicked by Sony's PlayStation – even though most everyone agreed that the Xbox was the superior system.


Well, Sony's been in the retail business for more than 40 years. Sony knows how to market consumer electronics in a way Microsoft just doesn't.

And as hard-nosed and dominant as Microsoft is in the OEM world, Sony is twice that tough in retail.

Heck, the gaming mags are already abuzz with rumors that PS3 is going to steal the mantle of best technology away from Microsoft's next-generation Xbox system – seems that Sony noticed that Xbox's whole marketing scheme was built around having better technology, and so Sony has decided to take that away next go-round.


Online, but still mass market

Which brings us back to the music business

True enough, Microsoft isn't going into the retail world this go-round, but they are trying to sell to consumers directly – rather than forcing their software on us via OEM deals.

Despite millions spent in advertising (and pre-setting every copy of Internet Explorer to use MSN as its default home page), MSN has never been able to establish itself alongside either Yahoo! as a portal, nor CNN as a news site.

To be honest, the MSN Music interface isn't particularly attractive – it's decidedly low-tech, and not at all the kind of hip, slick environment that Apple, Real or the new Napster provide.

If you have the latest version of Windows Media Player, you can access the MSN Music store from within the media player just as you can use Apple's iTunes player to access the iTunes store.

However, even within this more controlled environment, the presentation is lacking.

As has been noted earlier, the Microsoft proprietary music format is not compatible with Apple's iTunes, and vice versa – if you've already started building a music library in iTunes, you're not likely to want to start a new, incompatible one in Windows.

Your portable digital music player (iPod, MP3 players, etc.) also may or may not be compatible with the Windows proprietary music format – you'd want to check before buying music, or before buying a portable music player to make sure you can play your MSN Music tracks on your portable player as well as your PC.

Folks who've not yet dipped a toe into the online music purchasing arena may want to take a look at MSN Music. But before making a decision, you might also want to try the free iTunes player for Windows available as a download from Apple's Web site.