Friday, June 23, 2006

Microsoft Not Likely To Dethrone IPod writes that "fears a Microsoft (MSFT) digital music player and service could imperil Apple's (AAPL) iPod market dominance are overblown." According to a rececent research note from Shaw Wu at American Technology Research, "such a scenario is unlikely, because Apple’s vertical model is tough to execute with not many companies (if any) succeeding.”

Wu wrote, “Apple has a large installed base of about 50 million iPods and 300 million iTunes users. [Their] competitive advantages are largely defendable including its familiar and easy-to-use user interface, industrial design, brand name and world-class supply chain.”

Wu believed "Apple is pursuing a longer term broader strategy beyond iPods, which means that Microsoft may need to enter other hardware segments, such as PCs, cell phones and home entertainment."

According to the article, "Microsoft is more likely to compete with companies it has partnered with for the past three to four years including Creative Technology (CREAF), Sony (SNE), Samsung, Archos, Toshiba, iRiver, Philips, MTV Networks and others."

Wu added, "The portable entertainment space is a highly competitive business. Profits have been meager to non-existent with Dell and Rio [and] it is yet to be seen if Microsoft can be profitable in making a portable device."