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It’s no secret that Microsoft’s erstwhile PlaysForSure partners are a trifle miffed that they were abandoned to to continue the losing battle against Apple’s iPod/iTunes juggernaut while Microsoft blithely went its own proprietary way with the upcoming Zune. As announced last month, number 2 player maker SanDisk and media service RealNetworks have left the PlaysForSure camp to provide their own competitive player/online music store structure and today RealNetworks buffed up their part of the deal:
RealNetworks launched twin salvos Thursday against Microsoft‘s forthcoming Zune portable music player and Apple Computer‘s iPod player and iTunes Store.
Real said it has joined with big-box retailer Best Buy to launch a new Best Buy-branded digital music store powered by Real’s Rhapsody digital subscription service. The new store, which will be launched Oct. 15, will be similar to Rhapsody but will also feature exclusive content acquired by Best Buy.
Separately, Real launched an updated version of Rhapsody that can review a subscriber’s Apple iTunes library of purchased and ripped tracks and recreate it in their Rhapsody library in the form of downloadable subscription tracks at no extra charge.
The latter sounds like the popular Zune rumor that didn’t pan out, although recreating the library in subscription form isn’t quite the same as providing the tracks for free. As for sidekick SanDisk:
The moves reinforce Real’s announcement last month of a partnership with portable music player manufacturer SanDisk to sell a Rhapsody-integrated line of Sansa e200 series MP3 players. Best Buy will sell and promote Rhapsody-integrated Sansa players. In addition, the updated Rhapsody software will allow subscribers to transfer downloaded music to Sansa e200 players at about twice the speed as is possible with other subscription-compatible MP3 players.
It looks like Microsoft has managed to create another competitor with clout before they even get Zune out the door.
Since last week’s Zune “almost announcement,” a variety of pesky details have come to light:
About that unique Wi-Fi media sharing feature:
Microsoft seems to be counting on the sharing feature to provide a boost for Zune, but it is seeming more like a boat anchor.
Then there’s the teensy problem that Zune doesn’t do PlaysForSure:
Microsoft says the device won’t play tracks or albums bought through existing music services affiliated with its own Windows Media “PlaysForSure” initiative. Those services — such as Napster, MTV’s Urge and Yahoo Music Unlimited — have been partnering with Microsoft and device makers to try to challenge Apple Computer’s iPod and iTunes juggernaut.
The PlaysForSure program and music services will continue even with the Zune’s launch, Microsoft says. But analysts say the rise of the Zune, and the device’s incompatibility with the PlaysForSure services, promise to further reduce the potential market for those Microsoft partners.
The situation could be “very, very disruptive” for the existing PlaysForSure services, said analyst Michael Gartenberg of Jupiter Research.
“While Microsoft says that PlaysForSure is still a viable strategy going forward, it’s hard to see how viable it is given their reluctance to put it in their own device,” Gartenberg said. “It would probably not appear that PlaysForSure has a very bright future.”
That’s putting it mildly. Zune’s rogue status has long been rumored, of course, and a number of partners have already left the foundering PlaysForSure ship or seem to be planning to and the latest is SanDisk (the number two player manufacturer) which just did a deal with RealNetworks to build their own closed ecosystem in competition with Apple and Microsoft.
Finally, there was the absence of Zune prices in the announcement:
At least one analyst suspects that Microsoft decided to forego announcing pricing of its Zune music player at the last minute due to the surprise announcement last Tuesday that Apple would drop the price of its smallest hard-drive based iPod to $249.
This seems to match information obtained by BetaNews over the weekend, which indicated that Apple’s announcement caught Microsoft by surprise. The issue created an awkward situation for the Redmond company where a product was announced, but without any kind of retail pricing or availability guidance.
Sources within Microsoft indicate that the company is taking a “we will not be undersold” approach in its pricing structure, and was likely to announce a price that was either the same or lower than that of a comparable iPod.
An interesting question is whether Microsoft (or Apple for that matter) is willing to sell the players at loss like the Xbox 360. Right now Apple seems to be leaving plenty of room for competitors in player pricing, but that might change and there doesn’t seem to be any question of making up losses on music sales:
However, the report into the habits of iPod users reveals that 83% of iPod owners do not buy digital music regularly. The minority, 17%, buy and download music, usually single tracks, at least once per month.
On average, the study reports, only 5% of the music on an iPod will be bought from online music stores. The rest will be from CDs the owner of an MP3 player already has or tracks they have downloaded from file-sharing sites.
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The importance of “free” to digital music fans should not be underestimated, warned the report…
I’m not shocked by that news, but once again I have to ask why this is a business in which Microsoft wants to dabble.
Some recent and (mostly) pertinent news of Microsoft competitors:
Google replaces MSN as 3rd most popular Web site according to Nielsen/NetRatings. Microsoft.com is still number 2 though – maybe they should consider some PPC ads!
RealNetworks, Google and Mozilla Announce New Agreement to Distribute Firefox Web Browser and Google Toolbar with the RealPlayer, Rhapsody music service, and RealArcade games. They had been distributing the toolbar for the past two years.
Google ads will stream out to XM listeners which I expect most folks will consider a questionable distraction. Google had already been playing in terrestrial radio.
Yahoo ties knot with Indian marriage portal. How much more social could networking get than marriage? Should Microsoft be working on Windows Live Matrimony?
Lycos revamps free Webmail service with 3GB mailboxes and no limit on file attachment sizes. This puts them one up on Yahoo Mail, Google GMail, and Microsoft’s Hotmail.
AOL to Give Services Away to Broadband Users, Hoping for a Fortune in Ads. It seems like everyone’s doing it, although it may not have been an option for AOL since they were leaking users anyhow as they moved to broadband. Could it be the Last Chance For AOL? Biggest shocker: AOL will no longer actively market dial-up accounts which likely means the end of the ubiquitous promotional CDs.
McAfee unleashes the Falcon which is their answer to Windows Live OneCare.
Germany hopes to establish ‘Linux Valley’. It’s centered around Nuremberg, the home of SuSE Linux.
A selection of “small” Microsoft stories from last week:
Vista’s voice recognition feature provided the comedic relief at last week’s Financial Analyst Meeting, but the claim is that it was a known beta bug. Speaking of Vista, Developers cry foul over Windows kernel security which makes things harder for both hackers and legitimate security software from third parties. Microsoft released Vista upgrade information, but take it with a grain of salt. Finally, a frequent refrain: “No one outside of the 98052 ZIP code seems to believe that Windows Vista is really going to ship when Microsoft says it will.”
What RealNetworks thinks about Microsoft’s Zune – Rob Glaser would like Microsoft’s spurned partners to call.
Shocking news: Lehman Bros. thinks Microsoft Poses Long-Term Web Threat To Google, Yahoo. The NY Times had more on the same competition from a Yahoo perspective.
Californians to Soon Get $1.1B from Microsoft. It’s another state antitrust settlement.
Microsoft plans to charge $1.50 for the next Office 2007 beta to help pay for the bandwidth and hosting required by the unprecedented demand. Starts next Wednesday at 6PM PDT, but only applies to new testers.
The Microsoft Developer Network Library is now a free download. It used to be only available to MSDN subscribers although there is an online version.
Microsoft recalled Small Business Server 2003 R2 due to a manufacturing defect.
Microsoft Sets Sights on iSCSI: “Microsoft on Friday will release the iSCSI target technology it acquired from String Bean Software earlier this year.”
Microsoft Releases Free Commerce Server 2007 Developer Edition . This used to be Commerce Server 2006 but has undergone a name change. The full version is supposed to be available on August 1.
Windows Live Mail Desktop starts an open beta – also sometimes called Windows Live Mail Center.
Microsoft Defends WGA, Plans Similar Tool to Validate Office
