Microsoft plans music service
It will offer streaming as well as downloads and may be integrated with most Microsoft offerings.
Microsoft now has more than 40 million Xbox Live subscribers, which gives it a potentially large user base to have some bargaining power with the record labels. Microsoft's new music service will compete not only with Apple's and Google's offerings but also with other Internet music giants like Pandora (P) and Spotify.
Microsoft has been trying to emulate Apple to create and offer an entire ecosystem of software and hardware powered completely by its offerings -- Windows, Windows Phone and Xbox. This digital music service is just one of the new initiatives by Microsoft to push its ecosystem forward. There is no clarity on what Microsoft plans to do with Zune Music Pass, its existing music service used by Xbox users. This new music service may be just an upgraded version of the Zune Music Pass targeted at all Microsoft powered devices.
Apple recently launched iTunes Match, a streaming music service that has yet to see significant traction. Google Music, too, has been unable to live up to its hype.
The Entertainment and Devices business, which consists of the Xbox, Windows Phone and Kinect, accounts for nearly 6% of Microsoft's $32 Trefis price estimate, which stands just above the current market price. The new digital music service will likely be clubbed with this business. (Microsoft owns and publishes Top Stocks, and MSN Money site.)
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