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Microsoft Dances Closer to the Set-Top With Xbox Music

Microsoft Dances Closer to the Set-Top With Xbox Music

Microsoft's new Xbox Music service represents one component of the company's effort to fortify its ecosystem. Cable and satellite TV providers -- not just online music service services -- should worry about Xbox Music's debut, noted tech analyst Rob Enderle. Like Apple TV, the Xbox could one day replace traditional cable boxes with alternatives tied to a parent technology.

By Erika Morphy
10/16/12 5:00 AM PT

Microsoft is taking another stab at the digital music industry with the Tuesday launch of Xbox Music, a streaming music service that will be an update to the Xbox. It will also be released as a built-in feature on Windows 8 PCs and tablets later this month.

Xbox Music
Xbox Music lets users listen to music in whatever way -- and on whatever device -- they choose.

Users will be able to stream the service's 30 million tracks for free in an ad-supported version or purchase it at the now ubiquitous price point of 99 US cents per song.

There's also an option to pay $9.99 per month for unlimited cloud-based streaming of music purchases and playlists to any device.

A Microsoft spokesperson was not immediately available to provide further details.

The Post-Zune Era

This, of course, is not Microsoft's first stab at entering the digital music market. There was the Zune brand, now retired after failing to gain much traction.

There are some similarities between Xbox Music and Zune -- both are multichannel services that incorporate the use of other Microsoft products.

Zune included a line of portable media players, digital media player software for Windows, a music subscription service, music and video streaming services for the Xbox 360 game console and the media software for Windows Phone, among other features. It was all discontinued a year ago.

Xbox as Set-Top Box

Xbox Music is clearly different from Zune in some important respects -- and it can be expected to change the Xbox dynamic, Rob Enderle of the Enderle Group told TechNewsWorld.

The Xbox is being positioned as more of a set-top box going forward, he said. Microsoft carved out its identity at first with games and then movies -- and now it is incorporating music into the mix.

In fact, cable providers should be just as worried as other online music providers about Xbox Music. Like Apple TV, it is trying to replace traditional cable boxes with alternatives tied to a parent technology.

"Music has proven relatively easy, and Microsoft leads with games; it is video that remains the bridge too far and both firms are struggling here," said Enderle.

Digital Music Nation

Microsoft has another factor in its favor now with Xbox Music. Digital music has become mainstream, and consumers expect easy access and a smooth experience, said Patrick Reynolds, EVP of marketing for Triton Digital.

"There has never been more interest in or listening to online music," he told TechNewsWorld. The market has become a very big pool, and "there's room for more than one player."

The growing reliance on smartphones for everything is also changing how music is consumed, Enderle noted. "We may find that media services and access will define battles ranging from set-top boxes to smartphones over the next decade."

Table Stakes

In fact, a good music service has become table stakes for both Apple and Microsoft, Enderle said. It will be a critical issue for Google as well, if it is not already.

Google still relies mostly on third parties, he noted. However, "their music service, while not as well known, is actually rather good, being a bit more consumer-focused and a bit less record-label friendly."

In this rapidly shifting environment, can Microsoft make a dent? How the user experience syncs up with the broader environment could be crucial.

"It depends on how baked-in it is to the other aspects of the Xbox environment," said Reynolds. "If the experience is great and seamless and additive to the overall consumer experience, it will work."


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