Microsoft Links With Orange in iPod Wars

The Business has learned that Microsoft chairman Bill Gates has persuaded Orange to develop a mobile phone, the SPV C550, which will double as a Microsoft music player. Consumers will keep their music on a computer and transfer it to their mobiles. The music phone will go on sale in HMV’s flagship stores next month. HMV is using Microsoft software to run its digital music internet download service, HMV Digital Jukebox, which can be accessed by the phones.

Microsoft spokesman Jason Langridge said: “The mobile digital music market is about to take off. Porting digital music on to mobile phones represents a massive opportunity for Microsoft. While Apple has sold about 10m iPods worldwide to date, a quarter of the world’s population own mobile phones, which Microsoft software can turn into digital music players.”

Gates has timed the launch to coincide with his arch-rival Apple founder and chief executive Steve Jobs’ long-awaited unveiling of an iTunes phone, expected this week. Jobs is expected to launch the Motorola iTunes phone, which incorporates the technology of the world’s most successful digital music player, the iPod, into a mobile, at Apple’s annual product show in San Francisco. According to industry sources, the phone will run on the Cingular mobile network in the US and on O2’s UK mobile network.

According to Roger Entner, a US analyst working for telecoms research company Ovum: “Despite their secretive approach to product strategy, it is known that Apple, Motorola and Cingular are planning to announce the new iTunes phone at Macworld in San Francisco this week.”

Despite Apple’s refusal to comment on the existence of an iTunes phone, Motorola has won US FCC approval for the device, the E970. The phone is designed to function in all big markets and will work across any of the world’s main cellular bandwidths.

Microsoft plans to topple Apple’s iTunes from its position as the world’s best-selling digital music service and make Windows Media Audio the industry standard. The Microsoft-powered phone will do everything that an iPod can but will be incompatible with Apple’s products.

In Silicon Valley, the fight between Gates and Jobs for digital music dominance is seen at the latest battle in a war that has been raging between the two businessmen for 25 years.

But while Gates and Jobs go toe-to-toe next week, UK entrepreneur Richard Branson, head of Virgin Group, is in the wings. Virgin plans to release music phones, but only when it is certain Gates and Jobs have ironed out the bugs. Sources within the company say there will not be a sufficient range of reliable handsets until the middle of 2006. Last week Virgin unveiled its own internet music service, Virgin Digital.