Microsoft Confirms It Will Offer Device To Battle the iPod

Microsoft Corp. yesterday confirmed weeks-old rumors that it will offer a new mobile entertainment device this year to compete with the popular iPod.

The software giant already has a hand in a number of portable music devices through partnerships with such companies as Samsung Electronics Co. and SanDisk Corp., a strategy that some analysts say Microsoft should stick to. Taking a cue from Apple Computer Inc., Microsoft plans to develop a new family of devices, code-named "Zune," and the software that powers them. The devices will also offer some kind of community networking features, the company said.

"We see a great opportunity to bring together technology and community to allow customers to explore and discover music together," said Christopher Stephenson, general manager of marketing at Microsoft's entertainment and devices division.

Microsoft would not comment on the finer details of the product, which technology Web sites have speculated for months as including wireless digital music sharing capability, XBox gaming and a dedicated management tool similar to Apple's iTunes.

Given the popularity of Apple's products, which have 75 percent of the digital music device market, analysts are skeptical that Microsoft can make any significant dent against the iPod. Apple has broadened its lineup of iPod devices, which range from the $70 iPod shuffle to the $400 iPod with video playback capabilities, and its iTunes music store, which has been popular in attracting new music and video offerings.

Stephen Baker, a technology analyst at NPD Group Inc., said Microsoft would do better to concentrate on promoting its existing digital music products and partnerships rather than trying to build something from scratch. The company does not have much experience building hardware, he said, and the product could suffer if it tries to incorporate too many functions into one device.

"One of the beauties of iPods is they are relatively simple," Baker said. "Apple hasn't tried to cram everything in there. One of the specs I've seen on [Microsoft's] hardware scared the hell out of me. They're talking about building the kitchen sink."

Scott Kessler, equity analyst at Standard & Poor's, said the challenge for Microsoft will be to take a hint from Apple's simplicity but also to distinguish itself by offering something that iTunes does not have, such as a music subscription service. The other challenge, he said, will be for Microsoft to overcome the perception that its products are just not "cool."

Apple's recent advertising campaign highlights that with two male actors representing the two companies. Microsoft is portrayed by a geeky-looking man wearing khakis and glasses compared with Apple's laid-back, casual guy.