By Leander Kahney | Also by this reporter Page 1 of 2 next »

02:00 AM Feb. 02, 2005 PT

Microsoft`s leafy corporate campus in Redmond, Washington, is beginning to look like the streets of New York, London and just about everywhere else: Wherever you go, white headphones dangle from peoples` ears.

To the growing frustration and annoyance of Microsoft`s management, Apple Computer`s iPod is wildly popular among Microsoft`s workers.

``About 80 percent of Microsoft employees who have a portable music player have an iPod,`` said one source, a high-level manager who asked to remain anonymous. ``It`s pretty staggering.``

The source estimated 80 percent of Microsoft employees have a music player -- that translates to 16,000 iPod users among the 25,000 who work at or near Microsoft`s corporate campus. ``This irks the management team no end,`` said the source.

So popular is the iPod, executives are increasingly sending out memos frowning on its use.

Of course, Microsoft`s software is used by dozens of competing music players from manufacturers like Creative Technology, Rio and Sony. Its Windows Media Audio, or WMA, format is supported by several online music stores, including Napster, Musicmatch and Wal-Mart. Microsoft`s PlaysForSure program markets this choice as a boon for consumers.

Nonetheless, Apple`s iPod commands 65 percent of the portable player market, and its online iTunes Music Store 70 percent of online music sales, according to Apple.

``These guys are really quite scared,`` said the source of Microsoft`s management. ``It shows how their backs are against the wall.... Even though it`s Microsoft, no one is interested in what we have to offer, even our own employees.``

So concerned is management, owning an iPod at Microsoft is beginning to become impolitic, the manager said. Employees are hiding their iPods by swapping the telltale white headphones for a less conspicuous pair.

``Some people are a bit concerned about being traitors, not supporting the company,`` he said. ``They`re a bit stealth about it.``

How ``stealth`` varies from division to division. At the company`s Macintosh Business Unit, which publishes a wide range of software for the Mac, owning an iPod is almost de rigueur.

But at the Windows Digital Media Group, which is charged with software for portable players and the WMA format, using an iPod is not a good career move.

``In the media group they all smoke the company dope on that one,`` the manager said.

Mary Jo Foley, editor of Microsoft Watch, said she had no knowledge of the iPod`s popularity on Microsoft`s campus, but has noticed a lot of iPod chatter among Microsoft`s legions of bloggers.

``I have seen lots of Softies blog about it,`` she wrote in an e-mail.

Microsoftie Chris Anderson, for example, just blogged about buying himself an iPod, three days after buying his wife one.

``I couldn`t resist anymore,`` he wrote. ``The industrial design on the iPod is absolutely amazing. The usability of the device is light-years beyond anything else I`ve seen.``

Find local technology jobs. Robert Scoble, who calls himself the ``Microsoft Geek Blogger`` and is one of the company`s most widely read and vocal mouthpieces, sometimes appears obsessed with the iPod.

He recently penned an open letter to Bill Gates about how to build an iPod-killer (first thing: start a blog). ``Even I want an iPod,`` he confessed.

The Microsoft manager said he`s heard from several executives who dutifully bought Microsoft-powered players, tried them, failed to get them working, and returned them in favor of an iPod. He went through the same experience, he said.

He had no idea if Bill Gates or Steve Ballmer, Microsoft`s CEO, own iPods -- he`s never seen what gadgets they use. ``I`ve never seen either of them with any device, but I only see them in meetings,`` he said.

``There are frequent communications within the company about why it`s a bad choice,`` the manager said. ``So many people have chosen the iPod, executives feel they should send out memos about it.``

For example, an internal e-mail circular sent to several senior managers in mid-December talked about iPod shipments to Apple`s nearby store in Bellingham.

The e-mail said: ``FWIW, the gal at the Bellevue Square Apple Store said that they are getting in two shipments of 200 iPods every day to keep up with this week`s demand, and are nearly constantly selling out.``

The note prompted a curt reply from Dave Fester, general manager of the Windows Digital Media division, who wrote the group: ``I sure hope Microsoft employees are not buying iPods. We have great alternatives. Check out http://experiencemore.``

Fifteen minutes later, the manager responded: ``I don`t know what I was thinking. I`m sure that Microsoft employees are not buying iPods, or Macs or PlayStations.``

In 2003, Fester stirred up considerable controversy claiming Apple is locking in consumers with proprietary file formats, despite Microsoft`s long history of using the same tactic.

As for hiding his own iPod use, the manager said he flaunts his iPod, despite the constant comments -- and occasional arguments -- it prompts.

``I don`t really care if it pisses them off,`` he said. ``I`ll argue why they`re doing it wrong. If you want me to stop using it, give me a product that works and is as easy to use.``

Neither Apple nor Microsoft responded to requests for comment.