"We were smoked." That was the blunt email sent to four colleagues by Jim Allchin, the Microsoft executive in charge of Windows development,
at 5 p.m. the day he saw the iTunes Store.
It had only one other line: "How did they get the music companies to go along?"
Later that evening a reply came from David Cole, who was running Microsoft's online business group.
"When Apple brings this to Windows (I assume they won't make the mistake of not bringing it to Windows), we will really be smoked."
He said that the Windows team needed "to bring this kind of solution to market,"
adding, "That will require focus and goal alignment around an end-to-end service
which delivers direct user value, something we don't have today."
Even though Microsoft had its own Internet service (MSN),
it was not used to providing end-to-end service the way Apple was.