Wi-Fi seen limiting battery life on MS iPod rival

Microsoft's plot to use Wi-Fi capabilities in order to advantage its upcoming digital media player over the iPod could have an adverse effect on the player's battery life, one Wall Street analyst says.

"We believe the biggest issue [...] is that Wi-Fi power requirements are still quite steep and so we are skeptical that battery life will be strong on these Microsoft portable media players," American Technology Research analyst Shaw Wu wrote in a note to clients on Monday.

Just before the weekend, Microsoft in a statement confirmed months of speculation by revealing that it plans a suite of hardware and software products, called "Zune," which will be positioned against Apple's iPod + iTunes franchise later this year.

While Microsoft declined to offer specifics of the products, some analysts claim to have confirmed with the company that its media player device would pack Wi-Fi capabilities, allowing it to download content wirelessly.

Similar portable devices of slightly larger proportions have recently hit the market with Wi-Fi capabilities, but at the expense of battery life. "In our analysis, a Sony PSP lasts only about 45 minutes when Wi-Fi is turned on," Wu told clients.

Wu also believes Microsoft's Zune products could tarnish its reputation amongst several partners already battling Apple's iPod dominance.

"We believe the biggest issue with Microsoft's entrance into the portable media space is that [it] puts it direct competition with its partners, all of whom support Microsoft's Windows Media format," he said. "While the focus is on Apple, we believe this move will likely have a much larger competitive impact on Creative, SanDisk, Sony, Samsung, iRiver, Archos, and others."

It also remains to be seen whether Microsoft can create a pleasant, seamless user experience like that of Apple's iPod and whether it can do so profitably. In his note to clients, Wu pointed out that while most view Microsoft's Xbox gaming effort as a success, it has been a financial failure that has cost the company and its shareholders billions in losses.

"If it were any company other than Microsoft — who can afford to lose billions and price below cost — we believe the Xbox would have been shuttered due to its high unprofitability," the analyst said. "We believe Microsoft's effort in portable media will likely result in similar economics."