Microsoft co-founder Bill Gates issued stark warning to Apple yesterday.

"I don't think the success of the iPod can continue in the long term, however good Apple may be," he told German daily newspaper Frankfurter Allgemeine Zeitung.

Gates looked to Apple's historical fortunes in the wars of the desktop operating system, when Apple managed to lose dominance to an upstart company with aggressive business practices called Microsoft.

"I think you can draw parallels here with the computer — here, too, Apple was once extremely strong with its Macintosh and graphic user interface, like with the iPod today, and then lost its position," Gates said.

Apple currently holds 58 per cent of the flash-based music player market, 90 per cent of the hard drive-based music player market, and around 70 per cent of the legal music download industry.

Music players based on Microsoft technologies from multiple vendors battle over the remaining market share, though many predict a threat to Apple's position from mobile phone companies.