Microsoft is to launch a music download service next year, even though chairman and chief Software architect Bill Gates claimed earlier this year that he did not see a music service as a money-spinner.
Despite the few details Microsoft has given, it is clear that its entry will have an influence on the nascent online music market, said Mike McGuire, research director at GartnerG2, the business strategy research arm of Gartner.
However, Microsoft's size does not guarantee it success, he added.
"This certainly is going to have an influence on the market. Whether or not this is going to be an extreme success for them remains to be seen. I would not say anybody has got a lock on this market at all, the market for online music distribution is very immature."
Microsoft offers a music service in partnership with Pressplay, which could be replaced by the new service, for which it has started hiring staff. The company is looking for a lead product manager whose first duty will be to finalise the business plan for the music download service, including branding, positioning and budgeting, according to a job listing on Microsoft's website.
Rival RealNetworks, which offers online music subscription service Rhapsody, welcomed the news.
"If you have the best product, you welcome competition because it brings attention to the place," said Dan Sheeran, senior vice president of marketing at RealNetworks in Seattle.
Joris Evers writes for IDG News Service