According to Microsoft, five years ago, less than 13 percent of Internet users had a digital-music file on their computer. Now, 70 percent of computer users listen to music on their PCs. Last year, more than 100 million digital photos were taken. More and more people are using PCs to view videos. By the end of this year, 9.5 million TV tuner cards will have shipped.

The company has announced a series of new products and services, along with services and devices from partners. The release today of Windows Media Player 10, Portable Media Center devices, and MSN Music preview will place Microsoft in direct competition with other companies betting on individual content, like Apple and HP with their iPod devices.

The company says the new Windows Media Player 10 is central to Microsoft's digital-media strategy. The new Media Player 10 offers a built-in online Digital Media Mall, which provides access to online stores and services, including the newly announced MSN Music, and others like CinemaNow, MusicMatch, MusicNow, Napster and Wal-Mart. Windows Media Player 10 also includes support for more than 70 portable devices, and it enables users to automatically copy music, video, pictures, and recorded TV to portable devices. The new version will be available 2 September 6AM PDT.

The Portable Media Center is an entirely new category of handheld devices to make digital music, TV, movies, and pictures stored on a PCs to be available on a mobile device.

The first Portable Media Center, built by Creative Labs (Creative Labs 20GB Zen pictured), includes a 3.75-inch screen (9.5 centimeters) and 20GB hard drive, enough storage for 80 hours of video, 5,000 songs, and tens of thousands of pictures. Samsung is also working to put its own Portable Media Center in the market.

The new Portable Media Center are compatible with a variety of files formats, including .wmv and .asf (at a resolution of 320x240 pixels and at a bit rate less than 800 Kbps), Windows Media Audio files (.wma), MP3 audio files (.mp3) and JPEG image files (.jpg, .jpg, .jpe, .jfif). Compatible files also include the Microsoft Recorded TV Show file (.dvr-ms), MPEG movie file (.mpeg, .mpg, .mpe, .m1v, .mp2v, .mpeg2), Windows Video file (.avi) and Windows Audio file (.wav).

It is expect that on average, the transfer from the PC to the Portable Media Center using Auto Sync, a new feature of Windows Media Player 10, will take less than 60 seconds for a 30-minute clip and less than three minutes for a two-hour movie. The content from these online services is protected by Windows Media Digital Rights Management (DRM) 10.

Consumers using Windows XP Media Center Edition PCs can record TV shows using the built-in personal video recorder (PVR) directly through a television signal connected to the PC and transfer the recorded show to Portable Media Center devices, again using Auto Sync. Users who don't have a Media Center PC can record TV directly onto a PC using a TV tuner card and third-party software.

CinemaNow will make up to 200 titles available for Portable Media Center playback on its website, with more to follow later in the fall and on an ongoing basis. The pricing will be US$2.99 to US$3.99 for a pay-per-view rental and US$9.99 to US$14.99 for download-to-own titles. When a movie is rented or purchased for playback on a PC, the Portable Media Center version, if available, will also be available to rent or buy for only 99 cents.

The MSN Music is the new music download store from Microsoft, and the company thinks it will play a key role in making it easier for consumers to find and purchase their favorite music. MSN Music offers access to more than 1 million tracks from nearly 3,000 record labels, including including EMI Music North America, Sony BMG Music Entertainment, Universal Music Group and Warner Music Group.

In addition to the new U.S.-only service, MSN is also working with industry partners in several international markets to offer music services that meet the specific needs and desires of the consumers in those regions. Through these relationships, an MSN Music offering, built on industry partner technology, is currently available in the United Kingdom, France, Germany, Italy, Belgium, Brazil, Korea and Australia.