How Microsoft -- yes, Microsoft -- cracked online music

October 16, 2012: 3:11 PM ET

The company's new Xbox music service is better than Spotify or Apple's iTunes. Except for one thing.

FORTUNE – If at first you don't succeed, try again. Then, try another time. And then once more.

That seems to have been the driving force behind Microsoft's (MSFT) Xbox Music, a music service rolling out to Xbox 360 consoles today, Windows 8 users on Oct. 26, and Windows Phone 8 owners on Oct. 29. It replaces "Zune Marketplace," likely an effort on the company's part to swap branding from its failed music player to the uber-successful home videogame console. Given the Xbox 360 domestic success -- it remains the bestselling console in the U.S. for 21 consecutive months and counting -- it's not a horrible idea, even if the capability to use Xbox Music on different devices means the name doesn't make much sense.

Still, Xbox Music is more than just about rebranding. Microsoft clearly intends it to be an all-encompassing effort. Users can download music a la carte like Apple (AAPL) iTunes, stream music a la Spotify, and listen to customized playlists in the same vein as Pandora (P). Early impressions cast the Xbox Music experience as "wonderful," even.

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But Microsoft may have clipped its wings before the service even launched. Android and iOS users won't be able sign up until next year at earliest, which means in the near-term, users should be pretty happy living in Microsoft's ecosystem. For instance, Xbox Music will only be available to Windows 8 users. (Windows 7 users are out of luck unless they upgrade.) Gamers must have an Xbox 360. Want that music on the go? Learn to love -- or at least live with -- a Windows Phone 8 device, which, with a middling 3.5% market share of the smartphone market, there aren't many of. Or, become an early adopter of Microsoft's unproven Surface Tablet, due out later this month.

Criticizing a music service just rolling out might seem premature, but given the already-crowded digital music market, Microsoft needed to bring its A-game if it wants to take on the likes of Apple, Spotify, and Pandora. (After all, iTunes alone claims 435 million users.) That includes making Xbox Music platform agnostic from Day One. Now, it may never achieve the traction needed to be a lasting presence, and when compatibility with Android and Apple devices finally does comes, it could be too late: "Xbox Music" may already be synonymous with "Zune Marketplace." Or not.

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About This Author
JP Mangalindan
JP Mangalindan
Writer, Fortune

JP Mangalindan is a San Francisco-based writer at Fortune, covering Silicon Valley. Since joining in 2010, he has written on a wide array of topics, from the turnaround of eBay to the evolution of net neutrality. A graduate of Fordham University, Mangalindan has also written for GQ, Popular Science, and Entertainment Weekly.

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