Microsoft’s iPod Killer Emerges

Rumors have been coming fast and furious over the last month about Microsoft’s (MSFT) entry into the digital music player business. The NY Times broke the story today with multiple confirmed sources, turning rumors into fact.

Engadget has dug up some interesting rumors that go beyond what was reported in the New York Times today.
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PortalPlayer Preface Chipset Gaining Recognition

PortalPlayer (PLAY) continues to follow a trajectory of diversification from it’s core Apple (AAPL) iPod business. Portalplayer currently derives 90% of it’s revenue from Apple iPod and Nano hardware sales and is working on a new chip in partnership with Microsoft (MSFT) called Preface. Preface is the brain around which Microsoft Sideshow is built. We’ve written about the potential for the Preface chipset, and there are a few recent developments that reinforce our opinions here that I thought were worth sharing.

Most people saw the Sideshow announcement as constrained to laptop lids- we continue to maintain that Sideshow (and the Preface chips designed for it) is part of a larger strategy by Microsoft to enter the Personal Media Player (PMP) market. It would appear that Microsoft is now showcasing the Sideshow technology in some of these alternative applications, and that the mainstream press is picking up on this trend.

Windows CE Pro reports:

Well, SideShow isn’t just for laptops anymore. During the Media Center Boot Camp at the Electronic House Expo here in Orlando, Fla., Todd Rutherford, Microsoft Program Manager for eHome Control, demonstrated the technology implemented in a handheld remote. Just because it is a product of Microsoft’s mobility group doesn’t mean the solution must be tethered to a laptop.

SideShow can be implemented on virtually any piece of hardware capable of connecting, whether by WiFi, Bluetooth, Zigbee, Z-Wave, Ethernet, you name it. These auxiliary devices grab “gadgets” from the PC. Gadgets are mini applications that are sent, in an encrypted format, to the remote hardware by the computer.

In short, Preface is an ultraportable hardware platform for many devices and applications.

Also, If you’re interested in Sideshow and what applications Preface can enable, and can endure 20 minutes of amateur video, check out this clip from Robert Scoble (of Scobelizer fame). Just remember, Sideshow is a generic synchronization and consumer electronics technology, not just something that fits into the lid of a laptop.

Microsoft is clearly trying to drive hardware standardization of low-end consumer electronics hardware with Sideshow, much like it has been with Windows Mobile 5.0 for high end mobile devices. It isn’t clear to me that the valueship of a hardware partnership is factored into the value of Portalplayer. Microsoft, like Apple, can be an effective kingmaker in the hardware business. Check out HTC (2498.TW), a Taiwanese company that manufactures many of the Windows Mobile Smartphones and PDAs.

Hat Tip to Engadget for the links here and here.