Microsoft Jumps Into Music With the XBox

Microsoft wants to turn XBox into an entertainment brand — one powerful enough to sway consumers picking a phone or video game console. To do that, it's launching its biggest bet on music yet — XBox Music.

After first announcing that it's getting into music — with 30 million songs in its global music library — at the E3 video game convention in June, the tech giant is finally revealing details about four different music services.

What's most notable, said Gartner analyst Michael Gartenberg, is the fact that Microsoft isn't just offering one service to compete with Apple's iTunes, but is going all in, with a range of music services to compete with pretty much every digital music offering out there. Not only is Microsoft going broad, but perhaps most important, it's offering free streaming music of any song in its library on any Windows 8-based device. (Read More: Can Microsoft's Xbox Dethrone Apple's iTunes? )

The idea, Gartenberg says, is to lure people in with free streaming, and then up-sell them with several paid options: XBox Music Pass is unlimited ad-free songs for $9.99 a month. And unlike the free streaming option, which requires an internet connection, users can download music and listen when they're offline.

And of course Microsoft is launching a Music store, selling single downloads or albums, just like Apple's iTunes, or Amazon.com or Google's music store. Plus there's a fourth service, called 'Smart DJ", which creates customized play lists "around the artists you love." It sounds an awful lot like Pandora Media . These services are first available on Windows 8 devices and then within the next year will be available as apps on Apple and Android platforms.

Remember the Zune? Microsoft certainly remembers, and it seems has learned from that debacle. Instead of betting on a device, it's introducing a host of services that will work across devices. And it's aligning itself with the popular XBox brand, rather than trying to create a brand from scratch.

Microsoft wants to turn XBox into a cross-platform entertainment brand, because the box is increasingly used for things other than video games. In fact, just half of the time people spend on XBox, is gaming. The rest of the time they're watching videos through services like Netflix or listening to music, through apps like Pandora's. With the video game retail sales continuing to decline, Microsoft wants to capitalize on the shift away from packaged games, and position itself at the center of consumers living rooms. (Read More: Kashkari: Microsoft a Defensive and Growth Play .)

Can Microsoft succeed? It depends what the measure of success is. No doubt, XBox music is entering an incredibly crowded and competitive marketplace. And it certainly doesn't help that people already have their music libraries in iTunes and their listening habits already established. But if it's more important for Microsoft to give consumers more incentive to think seriously about a Microsoft device, than to generate much incremental revenue, this should help.

—By CNBC's Julia Boorstin; Follow Her on Twitter @JBoorstin

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