Microsoft146;s player plans to take on Apple146;s iPod

Microsoft8217;s device would be equipped with at least one feature the iPod lacks: wireless Internet capability

Microsoft has been developing its own hand-held music and video player to challenge Apple Computer8217;s iPod and expects to have it in stores in time for the holiday season, entertainment industry executives briefed on the company8217;s plans said last night.

Microsoft8217;s digital device would be equipped with at least one feature the iPod lacks: wireless Internet capability that would allow users to download music without being connected to a PC.

Microsoft8217;s device, which is similar to an existing player that uses the company8217;s software, would also have a more advanced video screen, according to the executives, who did not want to be identified because they were not authorized to discuss the device.

The company has also held negotiations, the executives said, with major record companies and some major television networks in order to settle on terms that would allow it to sell music and video content online through a service similar to Apple8217;s iTunes Music Store.

The portable player would represent Microsoft8217;s most ambitious effort yet to compete with the iPod, which has generated billions of dollars in sales and turned Apple into the dominant retailer of digital players and music.

Until now, Microsoft has largely bet that hardware manufacturers like Samsung could come up with a device that would use Microsoft8217;s software and cut into Apple8217;s lead. But the company8217;s plans to develop its own device are an indication that it may no longer be satisfied with that strategy.

8216;8216;If this is true, then this is them trying to take more control over the situation,8217;8217; said Mike McGuire, vice president for research on mobile devices at Gartner, which tracks the electronics market. 8216;8216;In effect, they8217;re basically saying, 8216;We think we can do something better8217; 8217;8217; than the existing hardware makers.

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The shift is likely to anger Samsung, Sony, Creative Technology and other manufacturers that were persuaded to use Microsoft8217;s software in their devices, because a Microsoft player would compete with theirs. The Xbox video game console, Microsoft8217;s strongest move into consumer electronics, uses software that does not run on any other player.

A senior executive at a major TV network said Microsoft had not yet received commitments from the networks to supply programming to its online store. But the executive said that the networks would welcome competition for Apple in downloads.

Music industry executives in particular have complained about Apple8217;s control over the digital music market and its power to determine pricing of songs and albums.

JEFF LEEDS