A senior Microsoft executive warns that Apple faces tougher competition in the music player market in the coming year.
The company is concerned that Apple's success in the burgeoning new digital music industry has made Microsoft and Microsoft-backed solutions increasingly less relevant.
Microsoft wants to remain relevant in all markets as it prepares to release its 'Mac-alike' new operating system, Windows Vista, hopefully as soon as late 2006. Vista's release has experienced much delay, leading The Age to describe it as "insanely late".
Microsoft's challenge - design, usability, features
Speaking to Bloomberg News, the head of Microsoft's Digital Media Division, Erik Huggers, warned: "Come this fall there is going to be a number of devices that get close to competing with Apple's iPod."
He also promised that by the spring 2006, "there will be a whole range of products that can compete with Apple in industrial design, usability, functionality and features."
Determined to make its Windows Media software a standard for digital media, Microsoft has begun working more closely with third party companies, including Creative Technology and others.
Apple holds 75 per cent of the music player market, transforming its QuickTime-based iTunes software into the de fact digital media standard, despite Microsoft's protests to the contrary.
May take effort - analysts
Analysts see challenges for the Redmond giant. Jupiter Research analyst Michael Gertenberg told Bloomberg: "It's going to take a lot to dethrone Apple. It won't sit on its laurels and I expect we'll see another iteration of the iPod for the holiday. Unless Microsoft is really willing to spend the time and effort to get behind a player or a select group of players, it's not going to happen."
The analyst says that as yet, Microsoft's hardware partners have failed to meet Apple's challenge, though Huggers counters that his firm is working to create a "world class" family of solutions.
Apple's world class solutions already command the market. This means the firm has become a prime target for consumer electronics companies, who are, "just not going to let them get away with it", Huggers warned.