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Microsoft Finally Giving iPod Touch a Serious Competitor?


Apple (s aapl) isn’t the only company enjoying a storm of recent hardware rumors. Its chief competitor, Microsoft (s msft), is also under scrutiny due to whispers concerning a new addition to its Zune line of portable media players. Early reports gave the device HD playback capabilities, but little else was known about what it might offer. A new report by Teamxbox adds more intriguing details, describing a device that is well-positioned to go toe-to-toe with Apple’s entertainment portables.

Citing sources in both Redmond and Santa Clara, Teamxbox describes a “digital entertainment handheld” nearing the final stages of preparation for release. Dubbed “xYz” internally at Microsoft, the new portable is meant to be positioned between the Xbox and the Zune in Microsoft’s line-up (x-Y-z, get it?). The idea is that it will offer gaming and media playback, and also Internet connectivity and related features. Sound familiar?

Apparently, the device’s software will be its defining feature. The OS is described as resembling a smartphone interface (even though the source stresses that this will not have cell phone capabilities), and will evidently not run a version of Windows Mobile. Tight integration with Xbox seems to be what will separate the xYz from competitors — and probably what will end up being its strongest selling point. All music, video, and Xbox Live Arcade content will be playable either at home on your console or on your device, with syncing capabilities that remember where you are, no matter which device you’re using to view content.

If these rumors are true, Microsoft has a couple advantages over Apple with this device: integration with the already massively successful Xbox platform, and lots of gaming experience. Apple has already established itself as the dominant player in this particular market, though, so Redmond will still have an uphill battle ahead of it. I think the only way that it can gain significant ground is by appealing to core, as well as casual, gamers and grab even more market share from Nintendo (s nto) and Sony (s sne), rather than trying to convert Apple’s devoted user base.

I hope Microsoft does go ahead with this, because regardless of how the device fares, competition in this space would light a fire under Apple and, hopefully, force it to introduce significant hardware upgrades more often. Thus far, its main “competitors” have been Sony and Nintendo, both of which so far seem only interested in retaining their gaming supremancy. Another do-it-all device from a major player like Microsoft would force Apple to compete on all fronts, not just in the gaming arena. And when companies compete, customers win.

20 Responses to “Microsoft Finally Giving iPod Touch a Serious Competitor?”

  1. Christian

    i think for apple to improve they should go together with sony and ill be cool if we could use ipod and ps3 together ill bring sales up too i think

  2. Steve W

    Microsoft, the guru of vapor(soft)ware; is now entering the vapor(hard)ware market!

    What Microsoft should do is take a page from Windows 7, and release beta hardware. That way people can develop more realistic expectations.

  3. MS is poised to release Windows Mobile 6.5 with lots of fanfare, if this new device isn’t running WM, that would be a death sentence to the new version even before it arrives–it would be MS admitting that WM sucks…

  4. Steve

    It’s ridiculous to comment on a product that has no credible evidence of even existing. Let’s see if / when Microsoft makes it’s next move. To date, we know that Microsoft is not capable of designing better software or hardware as compared to Apple, especially in a mobile device. Unless Microsoft does something completely revolutionary, it doesn’t have a chance. Just doing another lame Zune copy of the latest iPod isn’t going to cut it. It hasn’t cut it over the past few years and won’t cut it in the future.

    The xBox is a nice gaming platform, but there is absolutely no link between a cutting edge console and portable device that must rely on low power consumption, etc. and will have very different controls. Having a successful console does not translate into automatic success in the handheld market. Further, Apple’s iPod Touch, etc. (both hardware and software) are a moving target.

    Now, let’s just wait for an actual Microsoft announcement before we proceed to guess what they may be up to.

  5. Windows Mobile as a gaming platform? Not much success so far with that OS as far as extending capabilities. Portable hardware, battery life, etc., makes it difficult to satisfy gamer’s dreams. If Apple brings out a tablet form device it could expand the iPod Touch hardware capabilities and bring expanded game capabilities.

    Yet we see Microsoft 2 years behind promising a small hand held solution. I doubt it will be much more of a success than the Zune. Remember they billed it as a iPod “Killer”!

  6. Don’t own an Xbox. Don’t want a Zune. Don’t want an Ipod Touch until it has over 30 gigs of space either. I’m needy. I have to have my library with me all the time.

  7. iphonerulez

    There is no Zune HD. That’s just an MS fanboy’s dream for lack of a real device. Any company can draw up a concept and say the real thing is on it’s way. Give it whole lots of awesome features that make it ten times better than a real iPhone or iPod Touch. What the heck. It doesn’t cost anything to dream. With Microsoft pushing cheap Windows PCs on buyers, they’re going to practically have to give a Zune HD away so that people will buy it.

  8. Blad_Rnr

    @ Darrell: “…massively successful Xbox platform…”?

    Please define that statement. dave W already gave the financials for last quarter. And let me know when anything MSFT produces has the abilities of the iPod Touch: 30K apps (besides gaming), Internet, email, calendar, maps, YouTube, weather, etc. And how will serving the Xbox clientele really penetrate the market for those who don’t have one? MSFT needs to close shop on the Zune. They can’t and won’t compete with Apple. Game over.

  9. Peter

    “And when companies compete, customers win.”

    Just like in the banking sector when they competed over mortgage lending?

    This is not always true. There is also the backdoor wheeling and dealing as well as advertising that affect customer behavior. Customers are not as smart as many people think. I don’t always make choices that are good for me. I am sure there are many more like me.

  10. dave W

    The Zune is on life support whether any future ‘advances’ will save it is highly debatable.

    PC advisor in Jan said Zune heads ” to Zero Market-share”

    Wall Street Journal: “at its much faster rate of decline, the Zune player looks like it’s headed from low to no market share”.

    Jan 09 quarter Zune sales decline 54%. After hundreds of millions spent Zune barely registers 2+% vs iPod’s 70+% of the market.

    April 09 quarter the Zune division (Msft. Entertainment and Devices) loses 31 million. Considering that this huge division contains media downloads like Xbox Live, all Zune stuff, Xbox hardware, Games Studios, Devices like keyboards, mice, joysticks PLUS all Windows Mobile (all phone , PDA licenses) LOSING money is a big deal!!! If every division (there are only five) performs like E&D Msft is in trouble.

    Zune was given everything Msft had: a 100 million for the launch “Welcome to the Social” alone, but Msft has a poor record for building consumer devices. Msft. has no hardware technology brilliance. Msft just rebranded a Toshiba Gigabeat Player to make the Zune in spite of the fact it had the iPod out for several years to copy from. Even the Xbox a “success” is not a big money earner as problems in technical design again caused one billion dollars in warranty claims from burnt out Xboxes (to put a billion into perspective the E&D division had a relatively good fiscal 2008 (June 08) but the profit of the ENTIRE division even with Win Mobile etc was only 426 million!)

    With this history thinking that Zune HD will put a dent into iPhone iPod Touch momentum (already 30 plus million devices out. In comparison Sony after many more years has sold a total of 50 million PSP devices) is wishful at best.

  11. @Henk

    The iPhone has proven itself in that people are spending a fair bit of money on the games, and having fun. I absolutely agree that if you could play Live Arcade games it would be pretty powerful, and I’d be pretty jazzed about it.

  12. As far as gaming is concerned, the iPhone hasn’t really proved itself. Although there are truckloads of iPhone games available, only a handful are more than simple timewasters. iPhone games seem to be targeted at a non-gaming audience and this is where xbox live arcade could have a serious advantage.
    If the new Zune has a physical gamepad, its advantage will be even bigger.

  13. Adam Blaiss

    As an Xbox 360 fanatic, the ability to take my XBLA games on the road plus have the basic music, photo, and video capability of a Touch would be awesome. That said, knowing Microsoft, there won’t be a way to sync to Macs. My biggest “Mac” issue is that there is a great music manager built-in but you have to sync it to an iPod. I would love iTunes to open up to other MP3 players for even basic sync capabilities but I’m smart enough to know that wouldn’t happen. And with all of my movies ripped to H.264 and everything running nicely through iTunes, I’m stuck with my iPod Touch (which I do like very much, I’d just prefer a choice, like this new Zune).