XPod 360

So, Bill Gates has come out and said that Microsoft is going to compete against the iPod.

"I don't think what's out on the market today is the final answer," Gates said, speaking to a group of minority students. "Between us and our partners, you can expect some pretty hot products coming out over the next few years."

I think that's great, with a large exception which I will get to. Microsoft will not phone this one in. If they have a team as talented as the XBox team working on this they will give Apple stiff competition. That's good for us consumers because it means that innovation should be driven by the competition between the two.

That being said, one major caveat is DRM and consequently, interoperability. I don't want to worry too much about the technical details on a product that doesn't even exist yet, but one could safely assume that any hardware from Microsoft will focus on playing DRM WMA files. Will Microsoft rely on "partners" (read: future Microsoft targets) for music and/or video content? Would they be so bold as to license FairPlay from Apple and leverage the fact that almost 1 billion FairPlay protected tracks are already out there? Would Apple and Microsoft be willing to do a cross-licensing deal where Apple would support WMA+DRM and Microsoft would support AAC+DRM?

Now, here I am thinking how cool that would be for "the consumer" while all my EFF friends (current and former) are screaming at me that DRM is, almost by definition, consumer unfriendly. I understand and I may be a bit of a defeatist here, but DRM is not going away...especially if it stays close to the usability of FairPlay. We will never be able to attack both sides of the DRM equation (the consumer who wants content and the producer who doesn't want the content floating around "unprotected") unless the producer side goes too far in their restrictions and they clearly haven't. Yet.

Of course, it's a moot point because the chance of an Apple/Microsoft cross-licensing deal is about as good as me having a post-30 growth spurt and making it to the NBA. Neither side will want to give away the lock-in card. Microsoft will talk a lot about choice, probably in terms of services that provide content. But it's a bit like Henry Ford saying that you could have a Model-A in any color you wanted because every service they talk about is selling you WMA files. Apple doesn't even talk about choice because they are the market leaders and don't have to.

While we're in the realm of things that will never happen, what if Microsoft and Apple got together and standardized on input/output? Imagine being able to use all your accessories on either piece of hardware. Apple and Microsoft would have enough sway over the market to make this the de facto standard and then maybe vehicle manufactures could do better integration without having to worry about being tied to one company. One can dream...one can dream.

But enough speculation about formats and specs. Lets turn to what the "conventional wisdom" will likely be.

"It's Microsoft, of course they will crush Apple. Again."

There is no doubting that Microsoft is every bit the 800lb gorilla that everyone makes them out to be. They came extremely late to the console game, took their lumps, and have made a very strong showing with the 2nd version of the XBox. So, yes, they can "do" hardware. But for this to be a complete comparison one must put Apple/iPod in the place of Sony/PS2. The problem there is that Apple doesn't seem to be as stupid as Sony and they will fight to protect their own status as the 800lb music selling gorilla.

"Microsoft will not fail like Creative/Dell/et al."

Perhaps. Nobody can know for sure though and there certainly is a long line of "iPod killers" heading to the dustbin of history. Some, myself included, would argue that the iPod killers fail because they only take into account the hardware for the player and they don't understand that part of the iPod's success is rooted in Apple's digital hub strategy. Microsoft at least has a digital hub strategy.

All we have now is talk from Microsoft. In the "old days" we would call this FUD and see it as an attempt by Microsoft to undermine Apple's sales. Apple has such a dominating lead right now that I doubt this announcement even really registers with consumers looking at buying a music/video device, be it an iPod or anything else. Nobody is going to wait for Microsoft on this. And by "nobody" I mean "any statistically significant segment of a potential market" and not "Warren S. Taylor."

Even after it comes out Microsoft will have their work cut out for them, but if anyone can make a run at it, it's Microsoft.