Microsoft: "iPod has captured the imagination"

Microsoft has admitted that Apple has stolen a march on rivals with the stylish design of its iPod music player, but warned there is still a big market to play for.

In an interview with silicon.com, Microsoft UK boss Alistair Baker said: "The iPod is a good product and something that has captured the imagination of the market but the real game is going to be played later on."

Apple has already established a strong early lead in the music player and download market with the trendsetting iPod and its iTunes music store but Baker reaffirmed Microsoft's commitment to its own media roadmap.

"Microsoft has a very strong heritage in media, whether it is around audio, digital rights management or video handling," he said. "Apple's iPod is in the early adopter stage but there is a big market to play for. It will evolve dramatically and broadband is one of the catalysts."

Baker cited the latest release of Windows Media Player along with the likes of Creative's Zen multi-purpose audio and video portable media device as the way Microsoft sees the market going, although he admitted they will have to come down in size to rival the compactness and usability of the iPod and other MP3 players.

"We'd anticipate the hardware manufacturers will look at the design. There's a lot of money in consumer electronics going into building high-capacity, high-fidelity devices," he said.

A report out this week from IDC predicts the worldwide market for MP3 players will hit $58bn by 2008 as Apple faces increasing competition from other vendors.