Microsoft is aiming to hit the must-have gadgets market with a two-pronged attack. The software giant will target the youth market with a range of "iPod killers" to be released over the next two years and go after high-flying executives with a revamped rival to BlackBerry, the mobile e-mail service.

After legions of business reporters failed to extract a frank answer from Bill Gates, the Microsoft founder, on how he views the iPod – and just how he intends to tackle its massive popularity – the breakthrough was made by an inquisitive schoolchild.

"Is Microsoft going to develop a hand-held, you know, MP3 player, to combat iPod?" Schyler Mishra, of John Marshall High School in Seattle, asked Mr Gates, the world’s richest man, at a questions-and-answers session that was beamed to classrooms around America.

Mr Gates admitted that "Apple has done a fantastic job with the iPod" before asking the group of assembled students how many of them owned one of the music players.

Surveying a sea of raised hands, there was evidently only one answer he could give.

"We are talking with partners about how we … can make even better music players," Mr Gates said.

"We've got some in the market today. I'd say in total they have about 20 per cent market share, which is lower than we like, and so we're seeing where we can come together to make a device that's less expensive and connects in better ways, does photos and videos in better ways.

"Between us and our partners, you can expect to see some pretty hot products coming out over the next couple of years."

In the more conventional surroundings of the 3GSM conference in Barcelona Microsoft today announced a e-mail joint venture with Vodafone, the London-listed mobile telecoms giant.

Windows Mobile Email will offer Vodafone’s corporate customers e-mails direct to their phone, which are synchronised with office-based Microsoft Outlook or Excel software packages. The service will rival BlackBerry, the mobile e-mail leader which has been tangled in a protracted legal row in the United States.

The company is expected to use the Barcelona event to announce a partenership with BT and Virgin, to enter the British mobile television market tomorrow.

Bill Gates's comments on the iPod, made at an event organised by the Blacks @ Microsoft group, came amid heightened speculation over how the online music market will develop as more major players wade in.

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