Bill Gates Speaks on iPod Success, Refers to Mac as Past Hit

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LAS VEGAS, NV -- Microsoft Chairman Bill Gates discussed Apple in an interview with CNet News published early Thursday. In that interview, he acknowledged the success Apple is having with the iPod, and spoke about the differences in the way his company is approaching the market. He also, perhaps accidentally, spoke of the Mac as a has-been hit in the same company as the Apple II.

Music

CNet News reporter Michael Kanellos asked Mr. Gates if Microsoft was going to put effort into selling content. The comparison, though unspoken, was to Appleis major effort to make the iPod and the iTunes Music Store a big part of its business.

"Weive said that having the music platform there is just part of the overall online relationship that we want to have with these customers, " said Mr. Gates. "The boundary between whatis game playing, whatis socialization and whatis communication--you will have really broken down the barriers there."

Noting that "the Windows ecosystem provides variety," Mr. Gates contrasted this to Apple.

"Apple is doing things the way Apple does -- where itis the Apple hardware and the Apple store," he said in the interview. "Thatis great for them. Weire doing it the Windows way, where youive got things like this Creative Zen Micro, which sold out this holiday season. This brings the photo capability in, and itis a very attractively priced device. So the variety story is an important one for us; it uses our rights management format and supports a subscription approach that we think can be a significant part of online music sales."

Creativeis Zen Micro did sell out, but itis not likely to have touched the number of iPods sold during the December quarter. Estimates have ranged from 4 to 4.5 million units sold by Apple, but neither Apple nor the tracking services have yet released numbers for the quarter. Apple will most likely report iPod units sold when it announces its quarterly financial results on Wednesday, January 12th.

Has-been

Mr. Gates Freudian mention of the Mac as a past hit came during CNet Newsi follow up question about what Mr. Gates thinks of Appleis success with the iPod. In his answer, Mr. Gates acknowledged the success of Appleis digital media device, and described it as one of three hits the company has had.

"They had a hit with the Apple II, they had a hit with the Macintosh, and they have a hit with the iPod, so this is a company thatis had three hits, and thatis very impressive," he said in the interview. "There are a lot of companies that donit have three hits. And in the same way that Macintosh helped get people exposed to the graphical user interface, the iPod is doing a great job getting people to think about digital music.

The key to his comment is his choice of verbs: "had a hit with the Apple II," "had a hit with the Mac," "have a hit with the iPod" (emphasis added).

In the immortal words of Sesame Street, "one of these things just doesnit belong here," unless of course one considers the Mac a has-been. At the same time, perhaps it can be properly argues that the Mac is no longer a hit in that it no longer commands a large double digit share of the computer market.

With growing Mac sales and the supposed iPod Halo Effect, however, there are no clear answers to such a question. Oneis perspective on the issue is subjective, but Mr. Gates choice of wording was, at the very least, interesting.

Looking pragmatically at the situation, where Apple currently dominates the music player market, Mr. Gates said: "In the long run, there will be a lot of people making digital music players, and we think that there will be a very different market share with dozens and dozens of companies."

He brought his message home, by saying, "other than Apple, all those player makers are signing up to work inside the Windows PlaysForSure ecosystem."

The PlaysForSure marketing campaign is Microsoftis effort to brand the many, many competing music players on the market that donit work with the iTunes Music Store, but instead rely on Microsoftis Windows Media format.

There is much, much more on many other topics and issues in the full interview, which we recommend as an interesting read.

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