Microsoft set to challenge the iPod

So the rumors were true.  Microsoft has been planning a hand-held media player The iPod has been a marketing success, becoming an icon of all that's hip and cooland expects to have it hit the stores in time for the holiday spending extravaganza.  On top of that, Microsoft has been negotiating with record companies and television networks in order to hammer out terms that will allow them to sell music and video content.

Details are sketchy on this player and nobody is confirming anything, but one feature that the Microsoft player will have that the iPod currently doesn't is wireless connectivity.  Is adding WiFi support to enough for Microsoft to even begin to erode the dominance that the iPod has in the digital player market?  It's a start, but it's not enough.  Not by a long shot.

So, what does Microsoft need to do better than Apple in order to get a good foothold in this market?  Well, let's take a look at why the iPod is such a success.

• A big factor that has contributed to the success of the iPod has been iTunes - a virtual place where people can visit, search for what they want, find it, pay a cut-down price and then download their purchased items onto their iPod.  The process is fast, simple and cheap. 
• To top that, the iPod has been a marketing success, becoming an icon of all that's hip and cool.  The iPod has also survived numerous challenges, ranging from battery issues, scratches, high prices, accusations that Apple used slave labor, and numerous lawsuits.  No matter what, people love the iPod. 
• The iPod has also killed off a lot of the competition and resulted in the remaining competitors fighting it out for an ever-decreasing market share. 
• Despite shipping a player that is both over-priced and has fewer features than the competition, more and more people are choosing the iPod.

So, if the Microsoft digital player has any chance of becoming an "iPod killer", Microsoft has a number of challenges to overcome:

• It has to build an "iTunes 2.0".  This will have to be better than iTunes in every way - cheaper, easier to use, better range of titles.  Everything.
• Marketing is key.  Microsoft is going to have to target the same market that currently buys an iPod.  Forget being cheap, that market is already dead.  Forget about packing every feature possible into the box, most users only want basic features.  The iPod market is made up of people who want to buy a lavish gift for themselves or others.  A market that says "yep, I know I paid over the odds for this, but I don't care because I'm/they're worth it".  Microsoft will need to turn the purchase into an experience - that means a great deal of attention to packaging, presentation and no expense spared in making the customer feel special. 
• Microsoft could learn a lot from Apple's mistakes and also Apple's successes.  Quality is going to be key.  Good, robust design, excellent battery life, easy to use interface.  Mess up on any of these and the idea goes down the tube. There's no room for mistakes (Microsoft - if you're looking for a beta tester ... :-).
• Microsoft's going to have to be committed to being in this for the long haul.  Displacing Apple's dominance could take years. 

Thoughts?  If you're an iPod user, what would make you shift sides?  If you're not an iPod user, what would make you want to buy a Microsoft device?

[Updated: July 6, 2006 @ 9:17 am]
Engadget have some more details on this new digital media player and the services that Microsoft are planning around it.  Most interesting is this:

"But it gets better. To attract current iPod users Microsoft is going to let you download for free any songs you've already bought from the iTunes Music Store. They'll actually scan iTunes for purchased tracks and then automatically add those to your account. Microsoft will still have to pay the rights-holders for the songs, but they believe it'll be worth it to acquire converts to their new player."

If that's true, that's really aggressive.