Microsoft Music Plan May Work

It is easy to dismiss the new Microsoft Corp. (NASDAQ: MSFT) challenge to Apple Inc.’s (NASDAQ: AAPL) iTunes. The world’s largest software company will bundle a music service with the Xbox 360 and the new Windows 8 launch. The new product is dubbed Xbox Music.

Press reports claim the new service will have 30 million songs that will be free to listeners with Xbox and Windows 8 products. The plan is a challenge to Apple because of the distribution size of Microsoft products. There are tens of millions of Xbox units around the world. And the number grows as Xbox products are upgraded.

The more powerful distribution network is Windows itself. The new Windows 8, which launches later this month, eventually will end up on as many as a billion PCs and portable devices. This is an extraordinary platform for any service, particularly if the service is free.

The Microsoft decision shows just how badly it wants to challenge Apple, as well as the lengths to which the company will go. The news Surface tablet is meant to challenge the iPad. Windows 8 will lift sales of PCs and may cut into sales of Macs, at least for a brief while. And Microsoft has made a billion dollar bet that its Windows mobile software will do well on the new smartphones offered by troubled Nokia Corp. (NYSE: NOK).

It is easy to decide that Microsoft has done so poorly challenging companies like Apple and Google Inc. (NASDAQ: GOOG) in the past that the trend will never end. But because of Microsoft’s size and what appears to be a new-found ingenuity, perhaps born of a need to reinvent the company or watch it drop to the second tier of tech firms, it has made a series of huge gambles. Xbox Music is one of those.

And Xbox Music may be a winner, just because the Microsoft distribution network is so very big.

Douglas A. McIntyre