Microsoft mulled Apple partnership, iPod rival in 2003

Evidence from Microsoft antitrust trial in Iowa reveals gripes that 'Apple is just so far ahead'

As far back as 2003, Microsoft considered introducing its own rival to the iPod or seeking a partnership with Apple, according to evidence introduced Friday at a Microsoft antitrust trial in Iowa.

Microsoft was extremely unhappy with the Windows-based digital music players built by partners such as Dell and Creative Technology, according to an e-mail exchange between Windows Vista development chief Jim Allchin and Amir Majidmehr, a Microsoft consumer media executive in charge of development for the Windows Media Player software.

"I have to tell you my experience with our software and this device Creative's Nomad Jukebox Zen Xtra is really terrible," Allchin wrote in a Nov. 13, 2003, e-mail. "Apple is just so far ahead. How can we get the [independent hardware vendors] to create something that is competitive with the iPod? I looked at the Dell system and that is not close either."

Microsoft had worked with partners on MP3 players as early as 2000. But Apple released the iPod in 2001 and immediately jumped to the top of the market.

Majidmehr, now corporate vice president for Microsoft's consumer media technology group, replied, "Now you feel our pain. ... Of course, some are better than others but none are a match for Apple."

Majidmehr wrote that Microsoft planned to offer incentives to partners to improve their products, including "cash, technical support, direct interface to developers" and more. "In other words, we are going all out and hoping that at least a few will listen," Majidmehr wrote. "If none do, then it is time for us to roll up our sleeves and do our own hardware."

Allchin replied: "I think I should talk with [Apple CEO Steve] Jobs. Right now, I think I should open up a dialog (sic) for support of the iPod. Unless something changes, the iPod will drive people away from [Windows Media Player]."

Last July, Microsoft announced it would build and sell its own media player, called the Zune. Since mid-November, when it released the Zune, Microsoft has sold "hundreds of thousands" of the devices, according to Bloomberg. Apple, by contrast, sold 21.1 million iPods last quarter.

Due to proprietary technologies on both sides, Microsoft's popular Windows Media Player can't synchronize with Apple's iPod, though there are third-party work-arounds available online.

The Allchin e-mail was part of a cache of 3,186 exhibits made public online late last week by the plaintiffs in the ongoing Comes v. Microsoft antitrust trial.

Asked for comment, a Microsoft spokesman said: "While we are not in a position to comment on each and every one of these exhibits, we believe that very few if any address the central question in this case: Did consumers get their money's worth from Microsoft products? We believe the evidence clearly will show that consumers get great value from Microsoft products at a fair and reasonable price."

Apple did not immediately return phone calls and e-mails seeking comment.

This is the second noteworthy e-mail from Allchin to surface in the antitrust since the trial began in December. In a 2004 message he sent to Microsoft CEO Steve Ballmer and Chairman Bill Gates, Allchin -- who is retiring after the launch of Windows Vista -- complained that Microsoft had "lost sight" of customers' needs and that he would buy a Mac if he wasn't working for Microsoft.

Allchin later said that he was "ranting" and being "purposefully dramatic" in his e-mail.

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Eric Lai

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