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.