U.S. software giant Microsoft is aiming to get its audio and video software into mobile phones before it is beaten to the 650-million-handsets-a-year market by rivals like Apple.
Microsoft has quietly made preparations to make its media software available to chip and handset makers, enabling consumers to play music they have saved in the Windows Media format on their PCs on their handsets.
"We've been hush-hush about it, so far. But we understand this is a major market opportunity," Erik Huggers, director of Windows Digital Media division, told Reuters in an interview on the fringes of the annual International Broadcasting Conference.
With Microsoft's media technology built into cell phones, consumers could buy music at Internet stores which use Microsoft's Windows Media format to encrypt and protect tracks. "The sales numbers (of mobile phones) are staggering. It's obvious that it's our goal to sign up all major handset makers," Huggers said.
Analysts have said that handsets will eventually put the dedicated portable music players out of business, because bigger memory means consumers can store their music on their phone.
U.S.-based Motorola and Japan's NEC have Microsoft's media decoders integrated into their handsets for third-generation mobile networks, which is still a very small market. Microsoft is now looking at the entire market, and specifically at market leader Nokia from Finland, Germany's Siemens and Japanese-Swedish Sony Ericsson.
Microsoft will battle with Apple, which last month signed up Motorola to build in new cell phones a slimmed down version of the music player and piracy protection used in the iPod.
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Apple's Frank Casanova, senior director of product marketing at Interactive Media Group, declined to say if his company was aiming for similar deals with other handset vendors.
The company who gets the handset makers may also become the winner among the emerging Internet music stores.
Apple's iTunes Music Store, which was the first to market, is currently the most popular music download service, generating the majority of online music sales. Microsoft has just revamped its U.S. MSN Internet music store to boost disappointing sales.
If Apple's iTunes Music Store customers want to play their tracks on the move, they have to buy one of Apple's iPod portable music players, or burn their songs on a compact disc (CD) and play them on a portable CD player.
Apple has sold over four million iPods since the launch two years ago. That number which has helped triple Apple's share price, but it is dwarfed by the handset market. In the smartphone segment alone, more than 20 million units are expected to be sold this year.
Smartphones, whose sales are expected to rise to around 40 million units next year, are the top segment of the mobile phone market and feature slots for memory cards that can store up to 2 Gigabytes of songs -- good for some 2,000 minutes of music.
