Unstoppable? The Microsoft media juggernaut

Three weeks ago, when I penned my third piece on how Microsoft is very much poised to dominate the media player and authoring landscape (the other two posts are here, and here, and there's also a video of my whiteboard session on the topic), I had no idea what Microsoft had waiting in the wings.  First, its announcement with Philips and second, the launch of the next version of its mobile operating platform (code-named Magneto, but officially Windows Mobile 5.

Three weeks ago, when I penned my third piece on how Microsoft is very much poised to dominate the media player and authoring landscape (the other two posts are here, and here, and there's also a video of my whiteboard session on the topic), I had no idea what Microsoft had waiting in the wings.  First, its announcement with Philips and second, the launch of the next version of its mobile operating platform (code-named Magneto, but officially Windows Mobile 5.0). Not to mention that Microsoft Chairman Bill Gates served notice to Apple and the Podderati (Dan Gillmor agrees that the iPod's runaway success is unsustainable).  After you add it all up -- how deeply entrenched into the global infrastructure (computers, other devices,  telecommunications networks, content providers, etc.) Windows Media already is, what will happen as a result of the Philips announcement, and the Magneto news -- is there any doubt that  Microsoft is not only poised to repeat its successful Windows formula, but that that success will, over the long run,  actually dwarf the company's success with Windows? 

[Update 5/24/2005: In response to a comment on this blog saying the Microsoft is full of FUD on this front, I've compiled a list of deals that shows the reach of Microsoft's influence into the most important gears of the global digital media infrastructure. Also, at the time I updated this, Microsoft's Web site listed 54 PlaysForSure-certified mobile devices (including phones) and eight separate PlaysForSure-certified online content sources (eg: Napster-to-Go).  A PlaysForSure-certified content source assures end users of the sort of seemless integration between the service and Windows Media Player 10 that customers of Apple's Music Store get with iTunes, including application of Digital Rights Management (which in turn provides certain assurances to artists and other content producers)].

OK, you're a doubter. The Podderati will surely eviscerate me for being a Microsoft sycophant. If you want to go into denial,  that's your business.  The facts speak for themselves.  No single company has circled its technology wagons around the digital media universe the way Microsoft has.  It's just a question of when the world finally realizes that Microsoft has already gone in for the kill. This week's announcement from Philips wasn't just a stake in the ground.  It was just another part of a foundation on which Microsoft's media skyscraper will rest.  Philips, in case you hadn't noticed, is a consumer electronics giant. Here, to give you an example of the company's largesse, is Philips standard company description:

Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is one of the world’s biggest electronics companies and Europe’s largest, with sales of EUR 30.3 billion in 2004. With activities in the three interlocking domains of healthcare, lifestyle and technology and 160,900 employees in more than 60 countries, it has market leadership positions in medical diagnostic imaging and patient monitoring, color television sets, electric shavers, lighting and silicon system solutions.

If some of your consumer electronics devices don't have the Philips brand emblazoned on them, then the chances are still pretty good that  Philips' technology is inside of them. As I've written many times before, if somewhere in the future we find ourselves thrust into new digital monoculture, then the Digital Rights Management (DRM) monoculture won't be far behind. Think of it as a Marvin Hagler one-two combination.  It'll happen so fast in sequence that you won't realize that it was two shots instead of one. From Microsoft and Philips joint press release:


"Philips plans to support Microsoft Windows Media Audio and Video and Windows Media Digital Rights Management 10 (DRM) technology in its Nexperia family of multimedia semiconductors.."

But it isn't until the second half of the announcement that the gravity of the deal really sinks in:

"...for use in digital media receivers, personal video recorders, portable audio players, IP set-top boxes and video phones. Support of Windows Media in Nexperia solutions for in-car entertainment as well as next-generation digital TV systems will follow later in the year."

So, what consumer electronics won't Windows' digital media and DRM platforms be included in? To be fair, the agreement is non-exclusive.  I think this means that if Apple is so inclined, and Philips is amenable to the idea, Philips could include support for Apple's digital media and DRM platforms into its Nexperia semiconductors. I wouldn't hold your breath.  To try to project  how many total physical Windows Media/DRM devices will be shipping into the market annually as a result of this deal, I asked Philips how many such enabled devices would be in the market today, had the announcement been made one year ago.

As it turns out, the different divisions of Philips are so independent and distributed that they couldn't calculate the total in a reasonable amount of time (by my deadline to publish this blog).  Either it's a number so big that it they don't trust  themselves to come up with an accurate calculation, or it's close to zero because there's some sort of apples-to-oranges problem since Nexperia isn't yet embedded into everything it could be. Philips didn't offer any clarity.  But does it matter? Looking at how big the company is and how many different types of devices it makes that are candidates to include digital media and DRM technology (should we include razors?), my sense is that because of the Philips deal alone (forget everywhere else  Microsoft's media and DRM technologies have already turned up), Microsoft just ate Apple for lunch.

The Podderati will say "No way. The iPod/iTunes juggernaut has too much momentum to be overcome."  Or, the Mac cognescenti will tell me not to quit my day job citing all those years that Apple was supposedly waiting for the last nails to be driven into its coffin, only to rise to greatness. Tell that to my 14-year-old son who only four months ago was begging me for an iPod Photo for Christmas. He got one. It was a total image buy.  Now he looks at the iRiver H320 that I'm testing (photo-capable) and tells me "That thing is so sick!"  Sick, in case you haven't gathered by now, is 15 on a scale of 1-10 with 1 being "I wouldn't be caught dead with that."

Although it isn't perfect, Microsoft's PlaysForSure program was really a defining moment in Microsoft's Media/DRM history. The secret sauce that turned the iPod/iTunes combination into a drug was how easy it was and the fact that finally, we could all buy one song at a time.  But now, not only do PlaysForSure-based devices do the synchronization thing as well as the iPod and iTunes do, but Microsoft has created an ecosystem where device manufacturers like iRiver and Creative are competing over how sick a device they can make at the same time that that online music stores can compete to deliver Microsoft DRM-managed
audio into those devices. Now, with the Philips deal, the number of devices are going to shoot into the stratosphere.  On top of that, the days of buying one song at a time for 99 cents are over.  At first Napster and Real appeared on to something with their $15 per month all-you-can eat programs.  But now, at $7 per month for the same thing, Yahoo saw to it and we haven't seen bottom yet.  

Still not convinced? Although the news wasn't nearly as important as the Philips announcement, the Magneto release is pretty significant too. Magneto -- aka Windows Mobile 5.0 -- will go out the door fully enabled with PlaysForSure technology. In addition, in support of its media ambitions, the operating system is much better equipped to support hard drives.  Translation: An operating system that's optimized to support a device that has both a hard drive and a wide area network connection (ie: something that can connect to a 3G EDGE or EV-DO network like those from T-Mobile, Cingular, Verizon Wireless, or Sprint) built into it.   In other words, a device with gobs of storage that can connect to the Net for voice, streaming or downloaded audio, and streaming or downloaded video.  Invariably, I hear "Video on a handheld?  Who on Earth would want to do that?"  Answer: Plenty of people. 

Example: At IDG World Expo's Syndicate conference in NYC last week, after I mentioned the monoculture issue while sitting on a panel, a woman from a very prominent scientific periodical came up to me and  said, "we need to make video available on handhelds.  What platform do you recommend?"  In my head, the technology choices are MPEG-4 [the authoring tools are lacking], Macromedia's Flash [mobile version exists, but that's about it], Quicktime [not in iPods yet], Real [same predicament as Flash], and Windows Media.  I shot back with the question "What's most important? Hitting the biggest possible audience target or support for a specific technology?"  (Maybe everyone in her target is on the Mac.) Her answer: Biggest target.   My answer: Windows Media.  Unlike the other four, where the question in the back of your mind will always be "How can I go right?," the question with Windows Media (if you're a content producer looking to hit the biggest target) is "How can I go wrong?"