RSSThe Chances of Zune's Success
By Scott M. Fulton, III | Published September 15, 2006, 9:53 PM
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"What Zune really provides for Microsoft," stated NPD's Ross Rubin, "is a chance for a portable media platform with which they can build their own kind of service architecture. They don't need to rely on third parties supporting it; they don't need to try to get it through carrier distribution, because they can distribute it through retail, and that allows them more flexibility in terms of pursuing their overall corporate entertainment strategy."
As both Rubin and Info-Tech's Carmi Levy pointed out, growth in the portable media market is slowing down, both worldwide and in North America. Although Apple blamed "seasonality" for declines in iPod growth over the last two consecutive quarters, they were the first such declines in the history of the product, dating back to 2001.
But there's a strong case to be made against concentrating portable media development for cell phones and handsets, which are dependent on carriers like Cingular, Sprint, and Verizon for their distribution. Although Zune's Wi-Fi connectivity doesn't make it a general-purpose communications device, that very fact means its wholesale buyer is the everyday retailer with whom Microsoft has already created a relationship via the Xbox.
"There's tremendous resources [for Microsoft] to bear on this - hundreds of millions of dollars over the course of the next several years," stated Rubin. The results of such an investment, he said, could parallel its situation with Xbox 360, "where they were chasing an established market leader, and in that market, they've invested millions. The relative amount of investment here is smaller, but it's still very significant, and still well beyond what a number of these smaller players would do."
This gives Microsoft time to develop accessories -- which any brand needs to survive, and which a brand like iRiver would need to develop in a pinch -- as well as the mind-space it needs to create a powerful advertising campaign, on a par with Apple's.
Apple's advantage is that its brand is now a fashion statement unto itself. Wearing a Creative brand onto the train to work, for many, could be as shameful as wearing (gasp!) Converse shoes instead of Nikes onto the basketball court. So imagine if the brand you chose to wear was Microsoft.
It's Apple's brand that is its best advantage today - in some analysts' eyes, more so than the iPod's current feature set. "If you look at it on a dollar-for-dollar, value-for-features basis, the iPod isn't that great of a deal," Levy believes.
"Creative, iRiver, and Samsung right now quite frankly offer models that, on a feature-for-feature basis, have more features and larger capacity, and cost the same or less money than a comparable Apple product. The Shuffle has no screen, no FM radio, no microphone, can't record, can't do voice dictation, whereas all the other devices in that price class do. Yet the Shuffle continues to outsell them all because it's got that brand, that cool factor...So if you have $200 to spend, it's compelling for people to go for an iPod as opposed to having to explain their decision to everybody who asks."
The potential crack in the proverbial dam, Levy pointed out, is the recent flattening of the iPod's growth curve. For the first time in years, players such as SanDisk and Creative have a chance to actually capture more than a point or two of market share. It's these players -- including the ones who are feeling stilted by Microsoft, having just been placed in Ross Rubin's "Better" column against Zune's "Best" -- who will be scrambling ahead of the holiday season, and who will crowd the field for Zune.
Levy believes this is where Microsoft has to rely on its inherent advantage: the obvious one, of course. It's Microsoft. Whereas Creative and its competitors may not have enough capital on hand to sustain a failed product launch, should one ever happen, Microsoft can afford to take its lumps.
In fact, Levy adds, this may actually be Microsoft's strategy: Produce a decent, though not spectacular, player the first or even the second time around. Build alliances with retailers, buy plenty of advertising space, and build up mindshare, if not market share, among the consumer. And then, for the third go-round, bat one out of the park.
"Microsoft is the kind of company that's willing to invest for the long term, and is willing to lose money up-front for awhile, until it establishes its foothold in a given market," he stated, reminding us that the company was willing to lose significant sums with each first-generation and even second-generation Xbox sold, so that it can now be considered a legitimate contender against Sony.
Ten years ago, Microsoft premiered Windows CE in the mobile space, and was panned for pathetically attempting to break into Palm's sacrosanct territory. Today, Windows Mobile 5.0 is running on what reviewers consider the market's most compelling handset: the Palm Treo.
"Microsoft isn't looking at how they're going to perform this holiday season with the Zune," explained Levy. "Certainly they would like it to be well-received, to have solid sales figures, to have an excellent presence and place in the media. But if it doesn't, then Microsoft already has its sights set on next holiday season, and years down the line about the roadmap for this device and the services that surround it."
Jupiter's Gartenberg echoed that sentiment. "Bear in mind that this is a marathon, not a sprint and how Zune does in Q4 doesn't really matter. The key will be how fast they can iterate, rev, and seize control of the message and the marketing," he said. "Or, cede control of digital media to Apple."
"Whereas most other companies view their devices as a chip-shot -- where every device that goes into the market needs to succeed now, otherwise there may not be a next device -- not so the case with Microsoft," concluded Levy. "I think it might be a case of Microsoft holding things back so that they can continue to send a stream of innovation into the market with subsequent releases...In order to accomplish that, they will spend whatever it takes. And let's face it, Microsoft can afford to outspend pretty much all of its competitors in the market, even Apple."
It's plastic, it's a little dumpy looking, it doesn't have a price yet, and it comes in brown. Its primary competitor owns three-fourths of its market. And yet the biggest surprise of all is that its best-case scenario could very well be within the realm of feasibility. Despite our temptations, we cannot yet write off the Zune.
Serious comment:
For those actually seriously interested in Zune, have a read of this article here. It makes VERY interesting reading indeed.
http://www.slyck.com/news.php?story=1293
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|I think a 'walkman' should cost me $99 tops with good headphones. And NO copyright hassle.
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|ZZZZZZZZZZZZZZZZZZZZZZZZZZ
This is the biggest snoozer piece of crap.
Micro-sux (and this time its even truer than ever)
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|>This is the biggest snoozer piece of crap.
Yes. I agree. Your post is very boring.
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|What your all bla bla about? Nowhere is said MS will drop PlaysForSure. What if? what if? what if? Just sit and relax, use your IPOD, Zune, Zen, PlayForSure device what ever. Watch your video play your music, or you all want to do that on 10 devices at once? Who cares how a file is tranfered to your device in which standard? Copy paste is still the most used method for people anyway. What if Apple goes bankrupt next year? It is so easy to guess, keep it by facts. All those companies are commercial and want to get your $$$ easy as that no difference between Apple or MS or any other brand. And the one who feels sorry for all those PlayForSure companies... Wake up please, you thinnk they stick to this format for years and years to come? All business is a momentum, they know precisely for how many years to go, really think there was no line in their contracts with MS stating that they would give it a certain amount of years before to drop the concept? Keep spending your dollars as you do anyway and all companies know that PlayForSure ;-)
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|Yeah, I especially like the comments I have read insinuating that MS intentionally misled its partners down the PlaysForSure path so it could swoop in an take the market. Let's not acknowledge that none of its partners could build the consumer confidence and recognition to compete with Apple. "Everything is MS' fault".
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|If a company comes up with a competitive OS to Microsoft, it's all good.
If Microsoft comes up competitive product to another company, they are evil.
Ummm. Does that attitude sound screwed up to anyone else?
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|if it were only so simple as that.
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|That's just what it may look like on the surface. There is so much more to it. I believe your thinking about this the wrong way.
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|I've read that their old DRM system won't be compatible with the Zune, only the newer DRM.
That's kind of unpleasant for people who bought into the whole "licencing music" downloads idea isn't it?
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|So I'm thinking about it wrong...
How?
Because I'm not jumping off the "I hate Microsoft" Lemming cliff?
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|>if it were only so simple as that.
I'm guessing it is exactly that simple or you would have offered an intelligent rebuff and not a trite dismissal.
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|I know I for one could care less about this thing. I'm getting the new iPod. (echoed by 100 million other consumers this and the following holiday season unless MS can come up with something that really matters. Zune is bulls***.)
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|How does it feel to be a Leming?
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|Everything is built round the iPod, all the plugins, all the software for converting video to the correct size, and all the accessories too.
It's not that it's the best product any more, it's that it's the best supported.
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|There is no point in this. This kind of device (especially from MS) is a waste. I can't legally own enough music to put on one of these things to make it worth having. Anything I do end up legally able to put on it would be so controlled by someone else that I would end up no better off than if I were to be listening to the radio.
Would this thing have wi-fi or sat linkup for MS updates or would I have to plug it into a router every night? How secure is this thing? How easy would it be to get hacked and lead to some guy in a car 10 blocks away being able to see and hear everything that is happening around me? What kind of net access would this thing have? would it require some insane version of IE? How often would I have to call MS tech support for a new product key if I decide to use it to it's potential? How much control would I actually have over this thing once I've actually paid real money for it?
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|good points,
"I can't legally own enough music to put on one of these things to make it worth having"
that one's my favorite
lol
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|Those are some great points. I have no doubt drm will own this thing. Being hacked with wifi, imagine that with an portable music player. Someone steals all your music, erases your hard drive and causes it to hard crash, requiring it be serviced by microsoft.
Then you have viruses, worms and everything else. This will all require updates, for years after its release. Gee doesn't that sound like windows?
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|Five stars to this post! Those are the main reasons why I am still sticking to vinyl.
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|Typical Microsoft. If you can't beat them, stick it to them, just like when we were in kindergarten. This is a step up from their insideous ways. Fanfaring the industry with Play For Sure, get people to come on board, then come out with your own inhouse solution and drop the ball on partners. That neatly takes care of the competition.
Frankly said, Zen is a better quality machine. iPods are nice and Zune has interesting functionalities added.
Watch Microsoft step down again to their common low level by underselling the competition. It's good to kick up the competition, I agree but hailing a system as THE solution, bringin on people and when finally there is enough movement, turning against these "allies" by bringing out your own system using your in-house software is not free-enterprise or capitalism... It's stupid especially in a market where the latest statisics clearly show the lack of confidence consumers have in Microsoft.
Piss off enough people and they will eventually get it. Good job Microsoft. No one can do it quite like that. The arrogance of yesteryear doesn't work anymore. You've lost the sympathy steam if you care to look around.
And please, cut the "free market/capitalism" crap out. It goes hand in hand with intelligence which there isn't much of these days, let alone finesse. Need examples? Look at Dell and their PDAs.
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|Do you think anyone will be joining or partnering up with them again? Probably will I have no doub the companies who joined up had a better chance then going at apple alone without play for sure.
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|Let's wait and see what Microsoft has to offer. As the review above clearly says any other player on the market is worth more than an iPOD, and looking at the features what Zune has to offer, it may turn out to be the dark horse this holiday season. Knowing MS, they probably price it $50-$70 less than a 30gb iPOD.
As for as the software, MS already has a stable code base in WMP11, so putting on a new skin for it for Zune would make it just about right unlike a hurried effort in ITunes 7 which has caused umpteen problems with "early adopters".
As far as the issue of right goes, in a "free market/capitalist" environment, Microsoft tomorrow can even sell Microwave ovens. It's their money to invest and if a product sells, why not ?
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|I am disappointed that Microsoft has abandoned the PlayForSure infrastructure.
I don't see why Microsoft and MTV can't just combine their marketing efforts and promote WMP11, URGE, and Zune as an ideal platform. Given enough effort, people will come to associate the three components together as a closed ecosystem without it actually having to be closed.
This would allow those of us who have already invested in PlayForSure hardware and music downloads to easily transition over to the Zune player and management software if we so choose. Instead, Microsoft has chosen to exclude its own established PlayForSure user base which included everyone out there that already has Windows Media Player installed.
WMA files downloaded from the new Zune music store will be incompatible with existing WMA portables. WMA files downloaded from existing music stores will be incompatible with the new Zune player.
Everything people have spouted about WMA files being evil has come true. As a format, if Microsoft cannot keep WMA files standard then what sort of future is there for WMA a few years down the line?
Should have listened to the anti-Microsofties and stuck to MP3s.
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|"Everything people have spouted about WMA files being evil has come true.
Should have listened to the anti-Microsofties and stuck to MP3s."
Yup
:-)
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|I didn't listen to either.... I use Ogg; with my iAudio X5 60gb.
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|How do they not have a right to develop hardware or software or anything they want. If their is a market for such product, they have a right to produce it.
I really hope you don't have an xbox 360, if you clearly cannot make up your mind, since Microsoft has as much business being in the console business as the portable mp3 player business.
You can take that for exactly what I said. Sure being able to control system for the other choices paid content, is perhaps dirty, you can't admit that its actually a good move.
If somebody wants to offer another choice for Creative then PlaysForSure, then I challenge people to develop a system, Microsoft took the challenge.
Is it their fault that nobody was else took the Challenge?
Original Challenge:
Develop a system compared to iTunes or Napster.
I would rather Microsoft provide us choices, then what they did 30 years ago by I admit, throwing dirt in companies faces if they didn't use their product.
But you could hardly say the samething about PlaysForSure and Zen Marketplace. Like I said perhaps they are in the sandbox, but they are playing nice and sharing their toys.
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|"How do they not have a right to develop hardware or software or anything they want. If their is a market for such product, they have a right to produce it."
I agree completely, but that's not how Microsoft do it, is it?
It's called leveraging a monopoly. Essentially, the use of an existing monopoly in one market to leverage their way into another.
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|Does MS have a monopoly?
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|Yeah well once again here is microsoft sticking their ugly head in a market it has no business going. Fine they rolled out play for sure, obviously that was just for fun. This is only around to do one thing, damage Apple's primary revenue stream. Just like windows live search is to damage google's stream. This is meant to provide customers with something new or cool. This is what makes them different then any other company. They are greedy, sneaky and just plain rediculous.
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|I believe it's called "Free Enterprise."
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|...
"I believe it's called 'Free Enterprise'."
...
Quite so !
...
The Computer Rodent
...
"Share a file /
Be deported to
Detroit"
...
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|Free Enterprise is simply another term for capitalism, so try and use the correct terms.
Whilst I don't believe there is anything inherently wrong with the core tenets of capitalism, I do believe it to be a naive approach to think that capitalism without checks is a good idea.
I also consider the idea that a corporation may now claim "human rights" to be abhorrent and we have already seen problems caused by that idea already.
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|Yeah... "different than any other company" Sorry but that is just naive if you think that's not what every single large company does. I notice you mention Apple, and Google. The companies that do the exact same thing... just like everyone else.
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|I'm getting too old for this ... starting to miss vinyl.
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|did you even read the article?
they aren't using the same technology that they have been developing for years - ie WM DRM, WindowsMedia Player, etc and are creating a completely new DRM solution & windows application (ie the zune itunes app) for this.
They have to if they are going to do the 'DRM on the fly' of your mp3's so they can be transfered via the wireless (which is what the Zune will do, infect your mp3's with DRM). The existing MS DRM code won't do this kind of on the fly encryption.
Think Windows Media Player version 1.0 - how 'stable' was this?
Microsoft has burnt alot of bridges with the Zune, and combined with the fact that pretty much everyone hates them these days (from wall street on down), the Zune is a non-starter.
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|Apparently, vinyl is "trendy" again... At least amongst some of the newer UK-based bandsand their fans. I don't know how long that will continue though. Until they get bored, I suppose.
It's nice to see cover art at a decent size though. :-)
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