We've seen this happen before. A smart, nimble company capitalizes on a new development in technology and dominates the market it created. Microsoft waits in the wings, watching how the nascent market develops, then suddenly throws its considerable weight behind its own version of that product, which it pours money into until it's number one in market share.

This time, it's Apple's high-flying music division that is about to find out what it's like to compete against no fewer than four of Microsoft's myriad arms at the same time: MSN Music, Microsoft's version of iTunes Music Store; Windows Media Player 10.0, which lets you buy music from multiple online stores; the Portable Media Center operating system, released in Creative's Zen Portable Media Center (PMC); and a DRM technology formerly code-named Janus, which will allow companies to rent secure digital media to paid subscribers for use on portable devices.

Before things get too confusing, let's run through each of these elements to see how they could affect Apple, Real, and the other online music stores that aren't (yet?) affiliated with Microsoft.

MSN Music
In this area, Microsoft is just another competitor--albeit one with a few key advantages. MSN Music is a Web-based music store similar to Wal-Mart Music Downloads. It will soon offer more than 1 million tracks, at the de facto standards of 99 cents per track and $9.99 per album, with identical usage rules to Apple iTunes. The store differentiates itself by offering music in the secure WMA format at 160Kbps VBR. In lay terms, this means that it sounds better than music purchased from iTunes, Napster, and all the other stores (with the notable exceptions of Real, which uses AAC VBR at 192Kbps, and eMusic, which offers many of its MP3 songs at 192Kbps VBR). But in typical Microsoft fashion, the company plans to use its other strengths to augment the store. For instance, it plans to integrate the store with MSN Messenger, allowing users to instant-message each other music information and possibly even the songs themselves. MSN Music will also feature lyrics searching through MSN search and potentially the ability to use purchased music to create custom soundtracks for Xbox games.

Windows Media Player 10.0
If you don't have Windows XP, skip to the next section, unless you're just curious; Windows Media Player (WMP) 10.0 works on XP only. For starters, the program's updated interface clearly borrows from iTunes' pane-based system. And for the first time ever, the program includes full MP3 encoding for free, at all bit rates. But the aspects that have me really impressed are the ways in which WMP 10.0 integrates with multiple online media stores, as well as multiple MP3 players. In contrast, Apple's iTunes works with only one of each--sure, they're both the most beloved right now, but nothing lasts forever. Handily located within WMP's Digital Media Mall area are Napster, Musicmatch, Wal-Mart, MusicNow, MSN Music, OD2 (international), Virgin (France only), and CinemaNow (for movies). You can mix and match songs from each, and WMP can handle them all. When it's time to transfer the music to a portable, you have a slew of choices.

Initially, Microsoft's bundling of its music store with WMP, which in turn is bundled with new PCs, looks a bit suspicious from an antitrust perspective, but the fact that the Digital Media Mall also includes other stores and that Apple bundles iTunes with OS X should help defend against potential antitrust allegations.

Janus (Windows Media DRM10)
Here, Microsoft sticks to its original digital music plan of licensing its technology to other companies to see what they do with it. Janus is the much-ballyhooed system for allowing music-service subscribers to listen to rented music on portable devices. Typically, you can expect to pay $15 to $20 per month to keep your MP3 player full of fresh music, although services are free to experiment with whatever usage rules they want, such as timing out free songs out after a day, offering free promotional tracks for a certain length of time, and so on. There's only one catch: Janus-compliant devices must have a secure clock inside so that the device knows when your days of listening to "Time After Time" have come to an end. This means that Janus files are not backward-compatible with MP3 players that currently support WMA music or even secure WMA music. As of today, the only device capable of playing Janus files is the Creative Zen PMC, which brings me to my next point.

Creative Zen PMC
In this area as well, Microsoft plans to build the platform and let other companies innovate on top of it. Creative's Zen Portable Media Center, as well as several other upcoming PMCs, runs a retooled version of Windows CE that plays music, images, and video through a pleasing color interface. We've seen video iPods before (such as the Archos AV420), but this is the first one that the average person could reasonably be expected to use, thanks to Microsoft's work on the interface and compatibility. I don't know whether consumers even want video iPods yet, but we'll find out this fall. If they're a hit, Microsoft wins big.

Whew, that's a lot of big Microsoft news for one day. Apple is sitting pretty for the moment, but now that Microsoft is on the attack, it might have to start letting other companies into its iPod/iTunes environment. Apple purists will most assuredly be against this, but it could be a matter of survival over the next few years. The company has already inked a deal with Motorola to put iTunes music on that company's headsets, and yesterday it announced an affiliate program that lets any entity, large or small, be paid for selling iTunes music. Those are steps in the right direction, but considering the number of allies Microsoft has already amassed (many of which are just other branches at Microsoft), more cooperation could be necessary.

On the other hand, people tend to associate music with coolness, and Apple is clearly perceived as cooler than Microsoft. Will consumers feel cool about buying music from Microsoft? We'll just have to wait and see.

What do you think about Microsoft's full-frontal assault on the multimedia market? TalkBack to me below!