Microsoft may release iPod competitor

Microsoft may be planning to release an iPod competitor, most likely under the Xbox brand, according to a new report. Microsoft Chairman Bill Gates has been quoted as saying that consumers would like a more varied choice of devices rather than the "limited" selection from Apple. In December, Microsoft placed its digital media software unit and MSN Music service in the Entertainment and Devices division under Robert J. Bach. Business Week has apparently learned that Microsoft has yet to decide whether or not to go ahead with the project, but that it has "put together a team that's considering the business end of such an initiative."

Sixty-seven percent of all digital music players are now iPods, with the majority of those owners using Apple's iTunes, as well as purchase iPod accessories to use the iPod in the house. In order to compete, Microsoft would need to offer something new, according to Business Week. The most likely option would be for its device to include games.

Business Week notes that "if the new device comes with the Xbox brand, most consumers will view it as a game player, like Sony's PlayStation Portable [which]might limit its appeal, since the portable gaming market is much smaller than the one for digital media."

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