by , 1:15 PM EST, January 5th, 2006

Apple and Microsoft Battle for Entertainment Dominance

CES may be the big name in consumer electronics and entertainment, with the likes of TiVo, Google and Yahoo! all puffing their chests and beating their drums, but the king of the digital entertainment market is very absent: Apple. Well, not exactly absent, since the iPod is a dominant theme at this year's show, but the company has no booth on the Expo floor, nor will you see a keynote presentation from Steve Jobs, or any other Apple executive, for that matter.

Despite the fact that Las Vegas is gearing up to be a full-on assault on our digital senses, there is an underlying theme -- Digital Rights Management (DRM) -- that is playing out. Apple falls clearly on one side of the battle, with its FairPlay DRM technology, while the rest of the industry is on the other side with a little of everything else... and Microsoft. Microsoft is pushing its own DRM technology, and many vendors are climbing on board.

The DRM battle is at the core of a larger issue. Currently, companies like Apple, RealNetworks, Yahoo!, and Microsoft are are all trying to cut out a piece of the digital entertainment industry for themselves. Apple clearly has the lead with the iPod, iTunes and the iTunes Music Store (iTMS). According to MarketWatch, it sold over US$1.2 billion worth of iPods in its fiscal fourth quarter alone. Over 500 million songs have been sold at the iTMS, and it is selling videos, TV shows and more from the likes of Disney, Pixar, ABC, the Sci Fi Channel, and USA.

So far, Apple is not letting other companies take advantage of FairPlay. Microsoft, on the other hand is licensing its DRM to anyone that it can. Despite the fact, however, that Microsoft is pulling in electronics and music vendors, it still hasn't been able to keep up with Apple.

Microsoft's next shot across Apple's bow comes in the form of Urge. Urge is a new online music store that Microsoft is codeveloping with MTV. When Urge launches, it will have about 2 million songs available, and Microsoft hopes that it performs better than its own MSN Music service.

By not attending CES, Apple is sending a message to its competitors. The message could be "We don't care what you are doing," but more likely, it's "We don't need to attend your show." With Macworld Expo only days away, Apple will have throngs of attendees handing on its every word, and the full attention of the media, which is something it can't get at CES.