WinInfo Daily UPDATE, December 21, 2004

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In the News - Microsoft-Based Subscription Music Services to Expand - Hotmail Drops McAfee for Trend Micro

==== In the News ====

by Paul Thurrott, [email protected]

Microsoft-Based Subscription Music Services to Expand

While Apple Computer's iPod garners all the publicity this holiday season, Microsoft and its partners are planning to expand the Plays For Sure campaign in early 2005, hoping that the campaign will tilt consumer favor in their direction. Currently, only Napster and a few hardware makers are taking advantage of Microsoft's Digital Rights Management (DRM) technology, which lets users copy subscription-based content onto portable devices. But in early 2005, the ranks of compatible services and devices are expected to swell dramatically. Compatibility is the key to the success of this strategy. Although the best-selling iPod represents about 43 percent of all portable audio player sales, it's incompatible with the wide range of online services available to Windows Media Audio (WMA)-based players. These online services include Napster, MusicNow, Wal-Mart Music Downloads, MSN Music, XM Radio, Court TV Extra, FYE Download Zone, Puretracks, Live365 Internet Radio, and others. Meanwhile, all WMA-based players can play purchased content from the stores listed above that provide such content. The missing piece is a way to play subscription content.
Today, that choice is limited to Napster and a handful of portable devices. Napster offers a $15-per-month Napster-To-Go subscription, which gives subscribers access to any of Napster's tracks, at any time, while sitting at a computer. But if you have a compatible portable player--including the Creative, iRiver, and Samsung Portable Media Players, or the Gateway MP3 Photo Jukebox--you can copy any of this music to your device and listen to it on the go for as long as your subscription is active.
Most companies in the industry--with the notable exception of Apple--believe that subscription-based offerings are far more viable, financially, than a la carte 99-cent downloads. That's because the download market is constructed in such a way that it can't make money (indeed, Apple is barely breaking even on its iTunes Music Store), thanks to one-sided contracts with the recording industry. Furthermore, subscription plans offer a better deal for consumers. You'd have to spend almost $1000 at iTunes to purchase 1000 songs, but you can subscribe to any number of songs for a full year at Napster for just $180. That means the price of your music collection won't go up as you buy larger-capacity portable devices. And as your musical tastes change, you can simply swap out older, less-listened-to songs for fresh tracks without paying more.
To make this plan viable, however, more compatible devices must be available. And sure enough, Microsoft's hardware partners are stepping up to the plate, offering consumers software upgrades for their players that will make them compatible with subscription content. Creative will update its Zen Micro to support subscription technology; Dell will ship software updates for its Dell DJ and Dell Pocket DJ; Rio will update its Rio Carbon and Forge devices; and Virgin will update its Virgin Electronics Player 5GB.
As for services, you can expect others to join Napster in the WMA-based subscription game. Yahoo!'s Musicmatch already offers a lucrative subscription plan that sits outside of Plays For Sure, and RealNetworks' proprietary Rhapsody Service has already attracted 650,000 paying subscribers. In the meantime, Apple is grabbing all the headlines, from the deserved (the company has sold hundreds of millions of tracks from iTunes) to the dubious (despite frequent stories about iPods being "sold out," that obviously isn't the case). But then, that's what happened when the company shipped the first Macintosh computer in 1984 and the iMac in 1998. Like the iPod and iTunes, both devices were trendsetting in their day, but both were trampled under the collective stampede of Microsoft's hardware partners.

Hotmail Drops McAfee for Trend Micro

Microsoft this week dropped McAfee virus-protection technology from its MSN Hotmail Web-based email service and replaced it with a solution from McAfee competitor Trend Micro. With 187 million active users, Hotmail is a huge coup for Trend Micro, which is already touting the deal in online and periodical-based advertisements. Neither Microsoft nor McAfee has issued an explanation for the change. Terms of the deal with Trend Micro haven't been revealed.
"MSN is focused on providing a safer online experience for consumers, and we continue to make investments in this area," Microsoft Director of MSN Communication Services Phil Holden said. "We're pleased to work with Trend Micro, with its deep antivirus expertise, to expand the email protection of our Hotmail customers. Today MSN Hotmail is the only free global email service that provides antivirus scanning and cleaning for its customers. We see this offering as important in helping protect our Hotmail customers while also guarding members of the overall Hotmail community and the friends and family they email." Microsoft will use Trend Micro's antivirus technology to scan both inbound and outbound email messages and attachments that travel through Hotmail's massive email system. The software will run on Microsoft's MSN servers and will link to back-end Trend Micro virus definition servers. Previously, that service had been provided by McAfee, which first signed up with the software giant in 1998. According to Trend Micro, its retail package, PC-cillin Internet Security 2005, includes the same antivirus technology that Hotmail is now using.
Trend Micro is currently the world's third-largest supplier of antivirus solutions, behind Symantec and McAfee, both of whom remain large Microsoft partners. Trend Micro hopes that the Hotmail alliance will help spur further sales of its consumer-oriented products.

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