Hoping to take a bite out of Apple's dominant iPod, Microsoft launched Zune, a new $250 media player that allows users to easily swap songs between devices.
Bill Gates unveiled the device at a Seattle launch concert, in which he swapped songs on stage with a local DJ and then gave away the device to an audience member.
Zune represents the software giant's most ambitious attempt till date to challenge Apple's iPod, which accounts for more than 75 per cent of digital music players and legally purchased downloaded songs.
Microsoft is hoping to catch Apple with features not currently available on the iPod, including a slightly larger screen, an FM radio tuner and new technology that allows the device to locate other nearby Zunes and wirelessly exchange music and pictures with a few touches of the button.
However, early reviews have knocked the slightly larger size of the Zune, as well as its clunky navigation buttons and the quality of its colour screen.
Developed at a cost of hundreds of millions of dollars, the Zune goes on sale on Tuesday and hopes to replicate the collaborative features that powered Microsoft's Xbox and Xbox 360 gaming consoles to challenge industry leader Sony for the video game market lead.
The wireless sharing ability of the Zune is meant to overcome what Microsoft sees as the biggest drawback of portable players: the inability of users to share music and listen with others.
"People don't think of music as a solitary experience," said Robbie Bach, Microsoft's chief entertainment executive. "People want a social experience, whether it's video games, watching a movie or listening to music. This is part of building that social community."
The technology allows Zunes to wirelessly transmit songs, entire albums (with album art and other information) and whole playlists.