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November 12, 2006
The eve of the end for iPod? Hmm....
Microsoft has sat back, not by choice, and watched Apple dominate the digital media market. Microsoft has made feeble attempts here and there to compete, but primarly as a platform, attempting to put an equally big name behind what hardware manufacturers are doing to make consumers feel more confident in purchasing something other than the proven iPod.
As a business that develops platforms, more or less, Microsoft didn't have much of an interest in what Apple was doing... until Apple raked in 7.5 billion in iPod sales, revitalized, then rebirthed it's company, and assumed a hip image all off of one product. Microsoft, who's attempted a similiar feet with the Xbox took note. Microsoft had been taking a loss on every single Xbox sold to get their name out as a solid player in the gaming world. That segwayed into the Xbox 360 which, if not devastated by the PS3 and Wii, will stand a possibility of profit for the software giant.
Apple on the other hand, lost nothing on the iPod, or it's accompanying music store, and has successfully garnered over 80% of the legal digital music market and a slick 70+% of the MP3 player market. All while maintaining a profit margin on both the player, and content sales.
Microsoft is tired of sitting back watching a one time drop in the bucket compete again.
Thus, the Microsoft Zune, and Zune Music store will launch in less than 48 hours. Some stores have already begun selling the Zune. The iPod faces it's first true competitor. The Zune is a recipe of all the things that made the iPod successful that other device manufacturers failed to implement. Style, Simplicity, and all with a Flexible Platform, and the sole unique feature of Wi-Fi.
Where the Zune fails is timining. Microsoft may have been a more solid competitor 2 years ago, but they are going to have to rape and pillage to get marketshare away from Apple at this point. Is the Zune superior? Yes. Is it the better player? Perhaps, Does it stand a chance? Not yet.
There are a few elements to Apple's success that Microsoft fails to have in place. 1) Apple had an established and proprietary niche on a media store with iTunes. iTunes is also leveraged in every possible way across everything that Apple does with it's OS, with it's Accessories, and with it's Hardware. The iPod was also the first of it's kind. Though MP3 players existed before, the combination of a download store and hardware designed side by side with an operating system... had never occured, and still haven't. The interface was unique. The spacious hard drive was unique... The iPod was successful from inception.
The Zune's first battle will be amongst it's siblings. If you are a nerd like me, you probably recall that Microsoft already has a platform to do exactly what the Zune is doing that is leveraged by other players... all of which have failed. In fact, one of those players is also manufactured by Toshiba who is building the Zune. Microsoft's Portable Media Centers are competitors to it's own device. Then we have the Video store they are launching for the Xbox 360 which does not allow for direct transfer to the Zune... Uhm... that was a brilliant marketing plan. I wonder if the two were even aware of one another. Then we have the existing Windows Media Player platform and music store which allow for purchase from the anticipated flop known as Urge from MTV. Urge of course freshly launched and promoted by Microsoft just 2 months ago, has dropped off the face of the planet for Microsoft's competitor the Zune download store.
Talk about a lack of focus. Furthermore, it makes me wonder why Microsoft wasn't confident enough in the Zune to extend it's Xbox branding to it. The two are obviously targeting similiar audiences... what gives? Did they not want the Zune to muddy the 360's success if it failed?
Microsoft typically has the bugs ironed out by their 3rd attempt. That's when they typically start to dominate markets. I'll hold off for the time being. Especially because I know that Apple won't give up it's successful new market and image without one hell of a fight. Steve Jobs is obviously not afraid of the Zune as he is not rushing out the door with a suped up iPod (or as the iPod community calls it, a true video iPod) on Tuesday.
Of course, the Zune has no established market, and iTunes has established THE market.
Its interesting to see these two competitors go at it. I think Microsoft would have won this without a fight had Apple not opened their eyes and offered iTunes unchained on Windows. Or if Apple wasn't the current must have Windows PC. It's possible that Microsoft is starting to sweat a little. It starts when Apple steals the home user market by gently easing them into a new Apple since they now run windows and the Intel chips that people are familiar with. It got bloodier when Apple was the only PC manufacturer to make a clear marginal gain in sales over the past year. It should come to a boil if Apple manages to topple Microsoft on the digital media front, and finally the deal will be closed when Apple manages to swoon the business user. I guess I'd be sweating if I were Microsoft as well. But it's difficult to fear a man in turtlenecks, so they've still got ground to stand on.
Posted by Decemberice at November 12, 2006 11:25 PM
Comments
Some insightful comments! I agree. I have read about Zune in technology magazines, and I think it is very likely to fail. Apple simply has too much of a stranglehold on the market; Microsoft, thankfully, will not make much of an impact on the market. Most people are complacent and satisfied with iPod's...what incentive do they have to go over to Microsoft? Nothing so earth shattering that I can detect. So I predict the release of Zune will go by without much fanfare.
The only possible way I see Zune doing anything is if their download store is able to offer a lot more content in terms of downloads, some really awesome exclusives, or downloads at a seriously reduced cost and/or for free. I doubt any of this will happen, at least not to the extent that it would make any difference!
Slightly OT -- The Windows platform is becoming less and less viable. It is far less secure (virus, trojan risks, etc) and useful than Linux operating systems. Businesses will not want to keep paying ridiculous licensing fees to run Windows or Microsoft products when they can get superior products for free or at greatly reduced costs by using Linux products. People also get pissed off that Microsoft charges so much for their products and then basically uses the public to do troubleshooting for them. I see Microsoft losing its prominence in the tech world. Twenty years from now most non-Apple operating systems will be Linux-based. I am sure Microsoft will still be around, of course, that is a given, but I think their role in the technology world will be *greatly* reduced.
Posted by: #1 London Fan at November 13, 2006 01:36 AM
Being in Seattle this is big news. As is all things MS. They're even giving them away on the radio already.
I don't think they're aiming to get people with Ipods to give them up, so much as getting people who don't have MP3s to buy a Zune instead. I've observed that a lot of people don't use Ipods, however, there doesn't seem to be a comparable alternative to people who want videos, etcs.
What does seem to be a problem (which I am surprised no one mentioned) is the fact it appears to ONLY play music purchased through Zune and absolutely nothing else. Not ripped CDs, not music purchased legally elsewhere, or pirated music (I know it's BAD, but we all know everyone does it).
In the end, it is MS' hardcore, anti-piracy stance (and its effort to thwart anything that MIGHT be piracy) that will kill this product for savvy buyers.
However, the sales timing seems prime for making some dough off less savvy buyers looking to pick up the "newest" trend for the holidays.
It will be interesting to see how it does.
Posted by: Sarah at November 13, 2006 10:47 AM
It actually does support music not purchased through the Zune store. It supports MP3s and AAC (CD ripping). But the Wi-Fi gimmick is pretty fickle on what you can and can't share. It would be difficult for Microsoft to swoon new MP3 buyers with this particular device because the price point is too high to break the momentum the iPod has going for it. Essentially, if they cost the same are you going to purchase tried and true, or the newbie supported by a new store that hardly anyone has seen? The Zune obviously has a market in people who are adamantly anti-iPod, anti-Apple, but it doesn't stand a chance at leading the market because it's too little too late.
Posted by: decemberice at November 13, 2006 11:46 PM
It seems you're right about the CD ripping, but the reviews I have seen all indicated it won't allow you to use anything downloaded anywhere but Zune.
The PI noted that it won't even play selections bought from MS' own partner companies (MTV, Napster, etc), let alone Itunes, or anything else.
Perhaps I am missing a piece of the puzzle.
Posted by: Sarah at November 14, 2006 08:31 AM