Now we know why reports surfaced last month indicating that Apple (NAS: AAPL) was in talks with the major record labels to introduce a streaming music service.

It wasn't that the world's most valuable tech company was gunning for Pandora (NYS: P) or Spotify. The class act of Cupertino had a much bigger and familiar fish to fry: Microsoft (NAS: MSFT) .

Xbox Music was introduced this morning. Microsoft's full-featured digital music platform hopes to bridge the elements of Pandora, Spotify, and iTunes to create a one-stop hub for music discovery, playlist streaming, and MP3 purchases.

The service will roll out to Xbox Live console gamers tomorrow. It will also be made available to buyers of Windows 8 PCs and tablets -- as well as mobile handsets powered by Windows Phone 8 -- later this month.

In a nutshell, Xbox Music will come preinstalled as the default music player when Windows 8 rolls out during the final week of this month. It will feature ad-supported streaming of a 30 million song catalog at no cost. Users can discover new music (like Pandora), make playlists of individual tracks that they want to hear (like Spotify), and purchase MP3 downloads (like Apple's iTunes).

An Xbox Music Pass will be available for $9.99 a month for users that want greater cloud-based portability and enhanced features.

It's true that Microsoft hasn't had a lot of luck with digital music (Zune, anyone?). It's also true that services are quickly evolving into jack of all trades. Spotify recently rolled out a Pandora-like music discovery platform. Even Sirius XM Radio (NAS: SIRI) has fortified its digital offerings. The satellite radio monopoly rolled out on-demand streams of some of its more popular proprietary content this summer and will roll out its own Pandora-like service by the end of the year.

You still have to like Microsoft's aggressive move here. If the service proves popular -- and admittedly that's a big if, given the company's history with consumer products and services outside of Xbox's success -- it will encourage PC owners to upgrade to Windows 8 and entice smartphone and tablet buyers to consider Microsoft's operating system in lieu of Android or Apple's iOS.

We'll begin getting the first wave of critical reviews when the service rolls out to diehard gamers tomorrow. Microsoft know what's at stake, and Apple has to be ready in case in actually needs to respond here.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

The article Does Apple Need to Catch Up to Microsoft This Time? originally appeared on

Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Lola Grace

Microsoft Music Making AppleSauce?

The online music wars are definitely providing fodder for the media juggernaut. We're witnesses to a seismic shift in how music is both perceived and delivered ever since the Napster reared its (some might say) ugly head. I actually thought it was kinda cute.

If XBOX enjoys just some of the organic traction it achieved in the gaming arena with XBLA then Apple minus Steve Jobs might actually start to feel some tremors if they haven't already.

For my part I'm getting 99% of my music fix from recently launched fuhshniZZle
[ ] which has integrated YouTube music videos in a myriad of ways from playlists to actually turning any album into its music video equivalent.

No commercials, no registration, incredible playlists, every album available courtesy of Discogs, and they just added a Pandora Radio like feature that lets you take any music video in your playlists and immediately turn it into a custom channel.

Best of all I can share any video or even entire mixes from fuhshniZZle to my facebook wall with just a click. I love making mixes for my friends...

October 15 2012 at 10:07 PM Report abuse rate up rate down Reply