The real reason Dell might get back into MP3 players

According to a report in The Wall Street Journal, PC maker Dell is considering making MP3 players again, along with its own software and music subscription service.

Dell gave up on MP3 players in 2006 , after three years of fighting the iPod juggernaut. Initially, Dell's players relied on Musicmatch software for library organization, content syncing, and online music purchases, although they synced with the Windows Media Player as well in case of problems with Musicmatch (which CNET reviewer John Frederick Moore encountered back in 2005 with the flash-based Dell DJ Ditty). The reviews were middling at best, and the players never got much above 3 percent market share.

The Dell DJ Ditty, discontinued in 2006. CNET reviews

According to a report in today's Wall Street Journal, Dell is considering re-entering the MP3 player market later this year. This time, the company is considering building its own software based on technology it gained in its acquisition of Zing , as well as a modified version of somebody else's subscription music service, most likely Rhapsody's.

Let's leave aside the question of whether the world needs yet another end-to-end hardware-software-services play in the MP3 player space. (Ask Microsoft how that's going with Zune.)

This is about something much bigger and more interesting: the shift of power in the PC market away from Microsoft and toward the hardware manufacturers. The process has been going on since the Department of Justice's antitrust settlement with Microsoft back in 2001--a lot of onlookers derided that settlement as toothless, but it actually made a difference with regard to Microsoft's relationships with OEMs (original equipment manufacturers--Microsoft parlance for the big PC makers like Dell and HP). Instead of being allowed to push them to include whatever software Microsoft bundled with Windows, the OEMs were free to choose their own bundling strategies. If Microsoft wanted placement, it would have to pay like everybody else.

Fast forward a few years. Vista launches to mostly bad reviews. Apple launches a series of brilliant advertisements slamming Vista. These advertisements, combined with the popularity of the iPod and a generally smoother experience on the Mac (even Ballmer admitted it last week) create a big spike in Macintosh sales . That hurts Microsoft a little bit, as Windows still has more than 90 percent of the market for personal computing operating systems. But it hurts the PC makers more: even the biggest ones, Dell and HP, have only about 30 percent share.

Instead of relying on Microsoft to fight back against Apple, Dell's taking matters into its own hands. The company's been focusing on better design for some time now--that's phase one, since Apple consistently wins praise for its hardware design. Phase two: create a differentiated consumer experience for digital media and entertainment, and make it available only on a Dell. The MP3 player's just a side note.

Which raises the question: how much marketing should Microsoft do for Windows anyway? Rumors have been flying about a $300 million rehabilitation campaign for Vista. Why bother if OEMs like Dell are going their own way anyway? Instead, Microsoft should focus on building the most reliable, secure, multipurpose operating system it can, one that the OEMs will be happy to put on their PCs and that end users will be happy to adopt. Forget the user interface bells and whistles. Scale back on the included apps, which Microsoft now has to pay OEMs to place anyway. Just build a great OS, let the OEMs figure out how to use it, then leave the sales, marketing, and user experience details to them.

 

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