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Microsoft: Beating iPod Will Take Years

By Nate Mook, BetaNews

July 27, 2006, 4:15 PM

In its financial analysts meeting Thursday, Microsoft acknowledged that competing with Apple's ubiquitous iPod and iTunes combination will be no easy task, but said it was prepared for the long road ahead. The Redmond company plans to spend "hundreds of millions of dollars" on its new music efforts.

Microsoft will release one player under the "Zune" brand name this year, with another to follow in 2007. "This is not a six-month investment time horizon," said Robbie Bach, president of Microsoft's entertainment division. "This is something that is going to be a three-, four-, five-year investment." Unlike past efforts, the company plans to control the entire ecosystem, from the music software to the hardware device.

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By gman222

edited Jul 29, 2006 - 7:30 AM

Success with MP3 players(as with most products)depends on 1)Major innovation, 2)simplicity of design & integration 3)affordability,4)timeliness. Apple leaves a market with little to no maneuverability for MS.

Control of the hardware is unlikely to yield a victory in any of these areas(MS should ask it's existing MP3 making partners or Sony). Small innovations will be copied(wireless) if successful. If Marketing and MS's superior software engineering were the key we would all be using MSN's search engine(say "Google").

Why would any company enter a market such as this?.... What is MS afraid of? What does MS know that we don't? They are likely afraid that exposure to ipod may produce conversions to apple OS. Apples changes to Intel plus Bootcamp may highlight the mediocrity of their OS Software.

I'm not sure free Zune hardware and music/video would spell a cut in market share for Apple but it would certainly spell financial disaster for MS. ......

The Ipod killer is most likely to be .........an Ipod(i.e phone integration, etc.)

Score: 0

By speedmeister

posted Jul 29, 2006 - 10:44 PM

While I would agree on points 2 and 3. I think that some of your other points are debatable. I don't think that major innovation is that big of factor in success. There have been all sorts of good digital audio players that failed. Look at the Rio brand which started the whole market when they were owned by Diamond Multimedia and was passed through several companies before Digital Networks shut down production last year. There are enthusiasts that still prefer the Rio Karma over the current players even though the Karma hasn't been made in 2-3 years.

Your point on timeliness seems lost on me. Are you referring to the speed to market, the frequency of product releases, quickly reacting to pricing of rivals? Apple is good about keeping their products secret from the public and rivals. While it keeps their competitors on their toes it really cuts both ways because there are basically no accessories when news lines have been released which is frustrating to potential customers. I think you would be hard pressed to convince anyone that the other two possibilities are true since Apple has usually tried to limit the numbers of lines and has been largely unresponsive to their competitors pricing. The iPod Nano hasn't seen a reduction in price since it's launch despite significant reduction in the cost of flash memory.

Score: 0

By rla0001

posted Jul 28, 2006 - 4:40 PM

As long as they use DRM or protection schemes, prohibit fair use or use proprietay concepts which wont allow me to use a player or hardware of my choice....I refuse to go there. I'm just not going to reward them by stuffing more money into products that are unacceptable.

Score: 0

By 33Nick

posted Jul 28, 2006 - 3:04 PM

Sure with enough money anyone can be made to think they like a product better. Can you recall why VHS won over the superior BetaMax? Marketing dollars.

Now if MS actually gets smart about this and puts most of that money into reserach than it might give competition a boost instead of locking yet another market.

Haven't we had enough with Microsoft locking every market it sets its eyes on? Do we need yet another lock down music market?

Urgh, Microsoft. Grow up and really innovate instead of throwing money at problems. Concentrate on Vista and getting WinFS into it like you promised 10 years ago!

Score: 0

By simonchretien

posted Jul 28, 2006 - 4:32 PM

Marketing is the same reason the iPod became what it is. Dont' fool yourself.
And betamax support dropped because it was too expensive compared to VHS.

Score: 0

By ds0934

posted Jul 28, 2006 - 2:11 PM

First MS goes for Apples throat. Then they invest $150 Mil in them. Now they're after their throat again. WTF? Apple should nullify their contract with MS to sell MS-Office on the Mac. Switch to OO and tell MS to pound sand. I seriously doubt any US court will side with MS if Apple did that (even though it might violate some contract terms)

Score: 0

By Grazer

posted Jul 28, 2006 - 5:35 PM

Why is that if someone has to compete with MS it automatically means MS is after them?

Score: 0

By simonchretien

posted Jul 28, 2006 - 4:31 PM

MS needs Apple to survive, that's why they put some cash into Apple and offer Office.
OO alone isnt enough, besides, businesses generally want Office, not OO.

Score: 0

By dhjdhj

posted Jul 30, 2006 - 12:16 PM

Your statement is ambiguous. Do you mean MS needs Apple for Apple to survive or MS needs Apple for MS to survive?

Score: 0

By wincement

posted Jul 28, 2006 - 10:58 AM

Can anyone say:

Duh?

Score: 0

By PC_Tool

posted Jul 28, 2006 - 12:38 PM

I already did below. Fat lot of good it did me.

Score: 0

By M1M2Z1

edited Jul 28, 2006 - 7:51 AM

Let's distract the fools with talk about an "iPod Killer" that way we won't have to answer anymore questions about Vista shipping in 2010 and security features to come much later than that :)

Score: 0

By isaac1234567123

posted Jul 27, 2006 - 11:22 PM

Microsoft has a real chance with the zune, because it shares the same target audience as the xbox

http://www.zunescene.com

Score: 0

By shy_one

posted Jul 27, 2006 - 7:08 PM

If the Zune has wireless capablities as i've heard Microsoft will have the advantage if done right since they have the msn messenger/spaces crowd just tie those in with the Zune and market correctly to make it not just an mp3 player but an mp3/social tool might not overtake the ipod but a considerable chunk of market share.

Apple would have a hard time competing against something tied into a social network because they have none unless maybe they partner up with aol or yahoo.

Score: 0

By bobthegoat2001

posted Jul 27, 2006 - 10:11 PM

Actually I heard somewhere (maybe here, but I can't remember for sure) that Microsoft is thinking of partnering (or buying out) Yahoo.

Although this is all speculation.

Score: 0

By shy_one

edited Jul 28, 2006 - 5:52 AM

They are partnering with Yahoo with the msn and yahoo messengers but it would be nice if they partner up with yahoo for music cause isn't Yahoo experimenting with how much people will pay for non DRMed music.

I do remember reading there was one non DRMed song that Yahoo was charging 2 bucks for it but i can't remember the song but the article caught my eye not too long ago.

Edit found link http://news.com.com/Yaho...100-1025_3-6096350.html

Score: 0

By ledjani

posted Jul 27, 2006 - 5:53 PM

If microsoft is somehow able to beat itunes and promote their software a lot, thats the only way they will beat the ipod, because in my opinion I never had any issues with hardware from microsoft.

Score: 0

By speedmeister

posted Jul 27, 2006 - 6:30 PM

Hardware? Other from an Xbox, a keyboard, or a mouse what hardware does Microsoft even make? The Xbox is a bit of a niche product in that many people don't play console games. MS market share amongst keyboards and mice probably isn't very high because they tend to be more expensive than most other aftermarket mice and keyboards. I would bet most people don't have any Microsoft hardware on their desk and have probably never had any.

Score: 0

By simonchretien

posted Jul 28, 2006 - 4:44 PM

I don't know about now but in 2002 MS had 31% of the mouse/keyboard market, 25% for Logitech (from cnet).

Score: 0

By wincement

edited Jul 28, 2006 - 12:57 PM

You're probably right. I have a Microsoft wireless keyboard and mouse that I have been more than satisfied with.

It's a pity most people stick with the stock wired ball-mouse and flat keyboard that come with their OEM systems.

That said, Microsoft hardware (however little you think there may be) *is* high-quality stuff.

Score: 0

By speedmeister

posted Jul 29, 2006 - 10:17 PM

They definitely are pretty good. My father had one of the early Microsoft Intellimouse model that he kept for 7-8 years. While Microsoft is definitely one of the biggest players in aftermarket mice market their numbers just aren't that signicant in comparison to the OEM market. There may be tens of millions of MS mice out there but they pale in comparison to the hundreds of millions if not billions out there.

Score: 0

By xyzcb1

posted Jul 27, 2006 - 11:43 PM

your bet is wrong. everyone i know use intellimouse. their mouse is the base.

Score: 0

By PC_Tool

posted Jul 28, 2006 - 2:00 PM

I've used logitech since the first MouseMan+.

Everyone I know uses Logitech mice.

Of course, I built most of their systems, but...

Either way, just because everyone *you* know does something, doesn't mean it is the *world's* standard.

Thinking that way tends to make one look like an imbecile.

Score: 0

By wincement

posted Jul 28, 2006 - 12:55 PM

And I suppose you know ALL PC users? Nice try.

Score: 0

By jesusfreak88

posted Jul 27, 2006 - 5:10 PM

Audio sensory surpases visual sensory.
Apple has beat Microsoft to the punch on portable audio. I'd say I have no issues with microsoft but that sounds sketchy. I love Microsoft and think they have done a great job at making customizable operating systems. I love Apple in that they can mass produce something that is appealing to many. :)

Microsoft needs to start their game in another realm. Gaming? Organization? Connection? something other than creating music players. Don't spend millions of dollars of Bill's hard earned money.

Score: 0

By Desides

posted Jul 27, 2006 - 7:29 PM

They've already entered all three of those markets; Xbox, Office, MSN.

Score: 0

By Das mod

edited Jul 27, 2006 - 4:49 PM

"We have to drive people who think about iPod as the brand to think about other things."

so does he want people to think about their iPods as they think about their cars ?

or

does he want people who think about their iPods think about their cars while looking at their iPods ... ???

this would mean that iPod owners will have to think about MS while holding the iPod ...
but isnt this a bit misleading .... taking credit for something you didn't do ...
very ODD concept i should say ...

Score: 0

By speedmeister

posted Jul 27, 2006 - 6:17 PM

They meant that they have to convince people buying digital audio players to consider options other from the iPod which has been a real challenge for Apple's competitor's. As someone who has sold mp3 players at one of those evil big box stores I have to say it's real tough to get some people to consider anything but an iPod. A lot of people are convinced that they 'need' but don't really know why. It's nice when you find somebody that somewhat naive about technology but is interested in staying away from marketing hype.

Score: 0

By PC_Tool

posted Jul 27, 2006 - 4:40 PM

Considering that the Zune would have to be purchased by well over a billion people in order to capture the lead in market share, I believe this article quite well deserves a resounding,

DUH!!!

File this one under, 'Gee, if I actually cared to think about it, I'd have figured it out on my own.'.

Must be a slow news day.

Score: 0

By speedmeister

posted Jul 27, 2006 - 6:01 PM

'A billion people'? That's hyperbole to the nth degree. It was just 3-4 months that Apple sold their 50 millionth iPod since the first generation was released in 2001. They are probably ~60 million by now. Between clumsy users dropping their iPods, manufacturing defects, dead batteries, and people that just want a new one I would be surprised if the majority of those sold are still in use. A lot of people

This is still a maturing market. There is ~300 million people in the US alone. Add in the Europe and Asia and you have a large untapped market for an iPod competitor. 100 million users would be a conservative goal. If the price is right you have 100s of millions of potential customers who have never owned an iPod.

What is newsworthy here is the MS doesn't have grandiose expectations although I don't think the task is as difficult as you are making it out to be.

Score: 0

By PC_Tool

posted Jul 28, 2006 - 4:04 PM

That's hyperbole to the nth degree.

Actually, it's exageration to the .05th degree (did I get my math right? It's been a while...)

Score: 0

By nate

posted Jul 27, 2006 - 4:59 PM

The point is that Microsoft is willing to spend the money and time to make it happen, after a number of failed half-assed attempts. Obviously it's not going to unseat Apple overnight, that's not the issue.

Lighten up a little.

Score: 0

By PC_Tool

edited Jul 27, 2006 - 5:34 PM

Obviously it's not going to unseat Apple overnight, that's not the issue.

Actually, it is.

If it's obvious, why is it news?

And if the point of the article is the money they are spending on it, why does the headline focus on the *time*? Shouldn't the headline capture the "point" of the article?

As for lightening up, heh... This *is* lightened up. *grin*

You *do* remember rijp, right? ;) (I still have his email addy...I could tell him ya miss him, if ya want... )

*evil grin*

Score: 0

By crashoverride

posted Jul 27, 2006 - 4:31 PM

Translation.....it will never happen.

Score: 0

By XBox?

edited Jul 27, 2006 - 5:08 PM

When XBox was released people laughed. "It will never happen."

It happened. I am not crazy about MS either, but if that company decides to really make a run of this they can and will hurt the Ipod dramatically.

Score: 0

By koobcam

edited Jul 27, 2006 - 10:04 PM

One could make the comparison to the XBox, but look at how long it has taken sony to get PS3 out. They let MS get the advantage by allowing them to get to market first. Apple does not seem to have problems get new ideas to market. And since it seems that MS has to wait around to copy what apple does anyway, I think it will be difficult for them any take significant market share from apple.

Score: 0

By JayP

posted Jul 27, 2006 - 5:33 PM

My words exactly....However, the videogame battle is not over. Even after about 5 years, Playstation is still the leading game console. Xbox certainly got some market share but it is not the leading console. I am not a fanboy, yet I can predict as well as any videogame industry follower that there is a high probability for PS3 to outsell Xbox360.
In another words, Zune can capture some of the market share from iPod but it will be an improbable feat for it to lead the mp3 market.

Score: 0

By speedmeister

posted Jul 27, 2006 - 6:41 PM

Not a big follower of video games but anybody who saw the crowds waiting for Xbox 360 would have to conclude that they have a pretty healthy share of the console game market. Given the high initial price I wouldn't be so certain that the PS3 will outsell the Xbox360. Unless the price comes down I think that you are going to see a lot of people that are unwilling or unable to justify spending $500-600 on a gaming console. PS3 migh outsell the Xbox 360 but even if it does they will definitely have enough market share to fight another day. Nintendo may not be able to stay competitive.

Score: 0

By CronicHazel

posted Jul 28, 2006 - 8:16 AM

AS a follower of the video games scene, I'd have to say you were wrong. :p

Although the PS3 is outrageously priced, people WILL buy it. Why? Cause of the PS2. One reason why the PS2 did so well upon the initial release was because of the highly successful PS1. :p PS3, even though many people are skeptical about it already, i still predict it'll do well. Even I think i'll be saving up money for all due to the fact that I'm in love with my PS2.

And Nintendo will definitely stay competitive. It's Wii is pretty much half the price of competing systems, and its more highly anticipated than the PS3. :)

Score: 0

By Grazer

posted Jul 28, 2006 - 5:42 PM

Even I think i'll be saving up money for all due to the fact that I'm in love with my PS2.

You need a PS3 to play your PS2 games?
But really, why not wait and see? You know, reserve your decision about buying one until you see if there are any games you want to play bad enough that you can only play on the PS3? It isn't like your PS2 games will look/play better is it? I liked Win98, but WinME sucked. It is always best to reserve judgement.

Score: 0

By CronicHazel

edited Jul 29, 2006 - 5:48 AM

Of course I'm going to wait and see. :)
The point i'm trying to make is that even without much thought about it, i'm already considering a PS3, mainly due to my happy experience with my PS2. :3

And all this just rounds back to the original topic, which I believe Microsoft's player will have a hard time beating down the iPod. >.> Much like what koobcam and JayP said.

Score: 0

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