Microsoft Allegedly Planning 'Argo' MP3 Player - 11 Jul 2006

Reports on the Web suggest that Microsoft is moving a secret internal project--which I've been briefed on--into the product development stage. If true--and I have no reliable information to suggest it is--Microsoft will go head-to-head with Apple's iPod in the portable MP3 player market as early as the upcoming holiday season.

A report in the "The Seattle Times" says that Microsoft's MP3 player is code-named Argo after the ship that Jason and the Argonauts used to pursue the Golden Fleece. Microsoft's MP3 player is being developed by members of the Xbox team led by J Allard, an Xbox team cofounder. According to "The Seattle Times" reporter Brier Dudley, Microsoft is firmly behind the new player and has committed "hundreds of millions" of dollars to its development and marketing.

Various reports say that the Argo player could be on the market as early as the upcoming holiday season, which would be an amazingly aggressive schedule. The Argo player will allegedly include a large wide-screen display, an iPod-like UI, Wi-Fi capabilities (so that users can download content from the MTV URGE online service without having to be connected to a computer), and possibly even video game features.

The most alluring aspect of Argo is a new service that Microsoft is reportedly going to offer with the device. Essentially, Microsoft will scan your computer for any songs purchased from the iTunes Music Store and make those songs available to you from URGE for free, and in higher-quality Windows Media Audio (WMA) format. Microsoft will pay the record companies fees that are owed on the songs, so the net effect is that you've purchased the songs again, but Microsoft has paid for them. Although these costs are expected to be extravagant, Microsoft feels it's the only way it can overcome the final hurdle of moving people from the iPod: If users can't bring their music collections with them, many won't abandon Apple's device.

If these reports are true and Microsoft can pull off a late-2006 release, it could be just enough for the company to overcome some of the negative momentum created in the wake of massive delays in Windows Vista, Longhorn Server, and the 2007 Microsoft Office system. And as Dudley points out in his report, the new player could help boost Microsoft's earnings in the crucial end-of-year quarter.

Microsoft officially dismissed reports about Argo as "rumors and speculation" and hasn't further discussed the player in public. But various recording industry sources say they've been briefed on the player, lending credence to the rumors. Stay tuned.