Yesterday, Wal-Mart launched its on-line music store. Offering songs for download at $.88, below the $.99 price of iTunes, Wal-Mart is hoping to lure customers by offering cutomers "Value. Selection. Simplicity." When the world's largest retailer enters a market, you have to take notice.

Some quick comparisons lead me to call the Wal-Mart store the "budget" store for on-line music purchases. Lacking a user interfce as slick as Apples, Wal-Mart instead relies on customers having Microsoft Windows Media Player, instead. You access the Wal-Mart music store from their main webpage, download the songs in WMA format and you are then able to play them back from your PC or burn them to CD. It should be noted that Wal-Mart has stated that this is a test phase, intended to gather customer feedback, with a full launch scheduled for sometime in 2004.

I tried it last night and the search engine and downloads were acceptably fast. The selection was fine as far as I am concerned. Not impressive, but not so bad that I wouldn't consider using it.

Looking at it from a business point of view, Wal-Mart has the advantage of a huge potential customer base and certainly has the capital to outlast the competition. Unlike Apple, there is no integration with hardware, like the iPod. But if you are motivated to buy a CD or MP3/WMA player, you can just drive to the nearest Wal-Mart store or order on-line. It remains to be seen how many customers Wal-Mart will actually attract.

With Microsoft, SONY, HP and Dell poised to enter the market, will prices continue to fall? As the market becomes more competitive, will these businesses be profitable? Dell commoditized the PC market. Will the same thing happen to on-line music?