iPod rivals ready for prime time at last?

Clones look to undermine Apple's long-standing, overwhelming lead in the market for MP3 players. This year's would-be iPod rivals

A shadow shaped like an apple is looming behind many of the star-studded speeches and product announcements at the Consumer Electronics Show in Las Vegas this week.

Even though Apple Computer is likely saving its biggest news for its own Macworld conference in San Francisco next week, there's little doubt that the Silicon Valley tech pioneer is on the minds of many at CES.

Apple's iPod has dominated the portable audio market so completely over the past few years that giants like Sony and Microsoft have been reduced to also-rans. Now, four years since the first iPod was introduced, the question remains: With new product lineups and services, can the iPod's rivals finally start reeling in the market leader?

"We've got a lot of work to do. On the PC, our stuff is still the most popular stuff out there. It's not true in the portable device space, and I think we have to do some stuff to simplify the experience."
--Steve Ballmer
CEO, Microsoft

Optimistic iPod competitors dot the Vegas convention halls this week. But even the biggest companies concede they've got a long way to go to catch the most successful consumer electronics product of the past decade.

"We've got a lot of work to do," Microsoft CEO Steve Ballmer said in an interview with CNET News.com. "On the PC, our stuff is still the most popular stuff out there. It's not true in the portable device space, and I think we have to do some stuff to ."

If there is hope for Apple's rivals, it may lie in the swiftly changing nature of the digital-media market. As consumers warm to online music, they're beginning to look for more choices, and different kinds of devices, Apple's rivals argue.

Part of the iPod's success, of course, is due to its seamless links to Apple's iTunes music store and software. Apple CEO Steve Jobs' bet that consumers would respond to a simple offer of 99 cent songs that can be easily downloaded to his iPod device has paid off handsomely.

Digital song sales remain only about 5 percent of the overall music market, but Apple's overwhelming dominance of that business has helped keep iPod's share of the MP3 player market near 70 percent, with more than 6.4 million sold last quarter alone.

Apple rivals are increasingly betting that subscription services, which let consumers listen to an unlimited amount of music for a monthly fee, can undermine that lead. This year, most of the major iPod rivals are expected to support Microsoft software that will allow such vast amounts of music to be transferred onto portable devices from a PC. The iPod does not support subscription services.

In the past, however, this all-you-can-eat model has been confusing for device owners. Virtually all devices that use Microsoft technology carry the company's "Plays For Sure" logo, intended to show compatibility among all the devices and online services that Microsoft's products mesh with. But there's been a catch: Not all the devices have actually been fully compatible with subscription services.

Most new Microsoft-based MP3 players now have a subscription capability. Microsoft also plans to market music subscription plans from MTV and other companies as it gears up for the launch of Windows Vista operating system later this year, potentially giving the model new momentum.

But analysts note that Apple rivals still lack a simple link between online services and devices. The extra work of matching different companies' devices and services may well keep consumers coming back to Apple, some say.

"There are promising alternatives," said Yankee Group analyst Nitin Gupta. "But there need to be integrated marketing efforts, (instead of) requiring the customer to put the package together."

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