Microsoft has fired a salvo in a war for the nascent digital-music industry on the Windows platform, following Apple's release of iTunes for Windows last week.
The company's general manager of the Windows Digital Media Division, David Fester, claims iTunes to be too limited for Windows users. He's looking at how Windows users equipped with iPods cannot buy tunes through other existing services and transfer them to the market-leading MP3 player.
This is because most existing services currently exploit Microsoft's Windows Media 9 (WM9) standard. Partially, this is because until Apple launched iTunes for Windows, WM9 was the only multimedia solution that integrated the digital rights management technologies required by the music business. Apple has now evidently developed its own competing standard, based on QuickTime.
"Unless Apple decides to make radical changes to its service model, a Windows-based version of iTunes will still remain a closed system, where iPod owners cannot access content from other services," said Fester. He also criticized Apple because the iTunes browser is unable to handle WM9 files.
"Music fans should look for services that offer the best experience and take advantage of the best digital media platform available on Windows. With Windows Media 9 Series, you get faster starts, better quality music, and support for the most devices," he said.
Recent news suggests Microsoft to be moving to establish WM9 as a standard, and that it intends porting the software to Mac OS X. Speaking to Macworld UK, Apple's QuickTime marketing director, Frank Casanova, was equally critical of Microsoft: "It is interesting to see how Microsoft has decided to follow our lead in supporting open standards by submitting Windows Media 9 technology as a standard. Microsoft must open up its technology to expand out of the proprietary and into the standards-driven industry."
Casanova then asks: "Do you think for a second that Microsoft will stop working on WM9? I don't think so. So suddenly you've got two standards."
Despite the Microsoft executive’s criticisms, Apple's Mac-only iTunes Music Store has captured 70 per cent of the existing US digital download market, Apple CEO Steve Jobs said last week. The iPod is also the number one-selling MP3 player.
It's a sign of what's to come. Newsweek today claims that the digital distribution market will one day come down to Apple against Microsoft.
Apple's stiffest competition at this stage appears ready to come from Roxio's Napster 2.0 service. This service uses WM9 for its tracks, and Napster 2.0 users can also acquire a co-branded Samsung/Napster hard drive-based MP3 player.
Saturday's Boston Globe reports research analyst US Bancorp Piper Jaffray, who predicts that Napster 2.0 will grow to take a 30 per cent share of the online music market and that Apple's share will become 20 per cent.
It also reports Needham & Co analyst Charles Wolf, who said Apple's move to ship iTunes for Windows shows Apple "finally breaking away from the Mac religion".
Apple last week explained the aim of its store is to sell iPods, as selling music online is insufficiently profitable. Wolf described an 8-10 cent-per-track margin, from which administrative and bandwidth costs must be paid. Unlike the Napster/Samsung player, where two companies share profits, Apple retains the entire margin on its iPod sales.
Apple's recent moves are transforming analysts' opinion of the company. Lutherans analyst Jim Grossman told the Northwest Herald Online: "The product momentum Apple has right now is the best I have seen since I started following the company in 1996."