Report: Microsoft Mulls Making Its iPod Competitor, but With Games

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[Editoris Note: TMO covered this on Thursday, but todayis coverage includes a Spin that looks at what Microsoft might be missing.]

Microsoft is contemplating making its own digital media device to directly compete with Appleis iPod, according to a report from BusinessWeek. Writing for the magazine, Jay Greene reported that the company is considering its own device as an end-to-end solution that could compete on the same ground as Appleis end-to-end iPod and iTunes solution, but Microsoft is also considering adding games to the device in an effort to leverage its Xbox console brand.

This would mark a departure for Big Redmond in the digital media space, as the company has heretofore focused on providing the software and other tools to third party manufacturers to use in developing there own devices. This is the same model Microsoft used to dominate the market for computer operating systems, but that strategy has so far not worked in this newer market. According to the NPD Group, Apple owned 67% of the digital media player market in 2005.

Copying the iPod wonit be enough, however, according to a Microsoft executive who spoke with BusinessWeek. Peter Moore from Microsoftis Xbox division told Mr. Greene that leveraging the Xbox brand "is an opportunity," and that, ""It canit just be our version of the iPod."

That means adding games to such a device, a move that would really put Microsoft in direct competition with Sonyis PlayStation Portable (PSP) more than the iPod. The PSP plays movies, music, and games with a form factor designed from the ground up for the latter of the three functions.

Despite the comments from Microsoftis Peter Moore, the company officially declined to confirm whether or not such a product is actually under consideration.

The full article also addresses some aspects of why Microsoft finds this market important, and thatis namely looking into the future of digital media.

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