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Microsoft (Nasdaq: MSFT) has tried to keep plans for its so-called iPod killer tightly under wraps, but the software giant is indeed developing a digital media player to compete with Apple's (Nasdaq: AAPL) best-selling product, The Seattle Times is reporting.
Music companies are apparently leaking some details about Microsoft's plans, according to a Times story that cites sources close to the project. As the story goes, Microsoft is not merely developing one product aimed at dethroning the iPod. It is developing a complete line of Xbox-branded digital media products, including a device that plays media, a software media player and an online media service.
Microsoft has code-named the project "Argo" in honor of the huge warship used by the Greek mythological hero named Jason, the Times reported. Microsoft executives were not immediately available for comment.
The Online Music Team
Microsoft traditionally has been leery of the device market. Xbox is the one successful exception. If Microsoft hopes to compete with iPod, it would require a full line of products, an enhanced media player and a back-end device for content, said Enderle Group Principal Analyst Rob Enderle."Part of the problem Microsoft has had in this space is that no one person controls the entire experience and so the experience does not compete well with Apple as a result," Enderle told TechNewsWorld.
Argo, however, is being developed within the Xbox group and under the leadership of Xbox co-founder J Allard, according to the Times report. That team of veterans also includes members who once worked on MSN Music, an online music service that debut in 2004 with plenty of fanfare, but silently faded away.
"Allard's involvement would indicate it's going to be a Microsoft branded product. He believes very strongly in doing it yourself if you want it done right instead of using a partner approach," Enderle noted. "Apple may have something to worry about."
Apple's Worries
Microsoft has reportedly committed to hundreds of millions of dollars to produce and market the so-called iPod killer. The device is expected to go on sale during the 2006 holiday season.
Of course, Apple has more than a lead in the market. It has sold millions of iPods, more than 1 billion songs, and its brand has become the generic name for the broader category of MP3 players in much the same way that Kleenex has become the generic for tissue.
"Microsoft's traditional weakness isn't so much on the hardware side and certainly not on the software side. It has been in two areas. One is a breakdown with partners and the other is their inability to market. This team solves the first problem. That same team launched the successful marketing 
program for the Xbox," Enderle said. "That combination of things should be pretty scary for Apple."
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