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Microsoft Corp.

Microsoft's Ambitious Plan to Dominate Digital Lifestyle

Strategic Insights

— 2 min read

Bill Gates, Microsoft's chairman, outlined the company's plan to provide consumers with the digital lifestyle they want, but many industry watchers question whether the company can seize a dominant role in the rapidly changing digital entertainment market. Despite being the software giant, Microsoft has struggled in areas such as portable media players, handheld gaming devices, and cell phones, where companies like Apple, Sony, and Nintendo have flourished.

Key Takeaways:

  • Microsoft's reach extends across PCs, handheld computers, and cell phones, gaming consoles, and the Internet, making it uniquely positioned to help consumers get movies, music, games, and other entertainment at home and on the go.
  • Gates emphasized that Microsoft is the only company that can truly give consumers the digital lifestyle they really want, but many industry watchers wonder if the company can seize the same dominant role in the digital entertainment market that it holds with personal computers.
  • Tim Bajarin, president of Creative Strategies Inc., noted that Microsoft doesn't control its own destiny anymore, as consumer electronics like TVs, portable players, and cell phones don't necessarily need Microsoft to operate.
  • Microsoft has struggled in areas such as portable media players, handheld gaming devices, and cell phones, while companies like Apple, Sony, and Nintendo have flourished.
  • To improve its position, Microsoft is reaching out to entertainment industry players for support, such as a new $10 monthly service with Starz Entertainment Group and a partnership with Palm Inc. for a new Treo mobile phone.
  • Microsoft's forthcoming PC operating system update, Vista, and its Windows Live initiative for Internet-based services are designed with home entertainment in mind.
  • Microsoft's new Xbox 360 game console can double as a DVD and music player, and its media center PCs are starting to gain traction.

Statistics:

  • Sony is the market leader in gaming consoles, while Nintendo claims to control about 90 percent of the market for portable games.
  • Apple dominates the portable music and video business and already has deals for content with all the major record labels and big TV networks such as ABC, NBC, and Disney.
  • Microsoft's market share in the portable media player market is relatively low compared to Apple and Sony.
  • The number of users of Microsoft-enabled devices is growing, but it still lags behind its competitors in the consumer electronics market.

Sources:

  • Cox News Service, "Microsoft's Gates thinks PC software can dominate digital home", BOB KEEFE, January 10 (exact date not specified)
  • Blog: Digital Domain, PalmBeachPost.com/business, "Share your thoughts, ideas and insight about personal technology and where it's headed."

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