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July 22, 2006

Microsoft admits to Zune

Posted by David Hunter at 4:45 PM ET.

It wasn’t an announcement. It wasn’t a demo. It wasn’t even a preview. But via an interview in Billboard magazine and a plethora of press statements, Microsoft confirmed the gist of the rumors and ‘fessed up to be working on a family of personal media players and an associated online media purchasing service under the brand name Zune. The best roundup of all of the press sources (official and unofficial) I have seen is from Ryan Block at Engadget. The net: Zune is coming this year and not only targeting Apple’s iPod and iTunes, but also emulating Apple’s business plan:

-The Zune brand is intended to be an entirely vertically integrated end-to-end solution, not unlike the iPod / iTunes / iTunes Music Store triumvirate.

- The service and device will not be PlaysForSure compliant, meaning you will not be able to use your Zune player with Napster or Vongo, for example. This will be an entirely new system. Microsoft will continue to support and develop for their PlaysForSure initiative, but all things PlaysForSure are handled by two (sic) entirely separate division that will not have any crossover.

The latter point – that Microsoft’s erstwhile PlaysForSure partners are left out in the cold by the Zune – is one nail that I can never resist hammering (e.g. [1], [2]) and it seems to be quite a popular target:

Om Malik:

More on that some other day, but the real and perhaps the only story in the news is that Microsoft’s partners – from device makers to music services – just got double crossed by the company they choose to believe in.

Let me break this down: Zune – the devices, the platform, and the store/service – will compete with everyone from Apple (of course) to Creative Technologies, iRiver, Samsung, Archos, Rhapsody, Napster, Yahoo Music and anyone dumb enough to buy into Microsoft’s visions of Urge, Media Player, PlaysForSure etc.

Microsoft could argue that Zune would be unique and those others can still do business. But it is also a classic example of why Microsoft is lumbering bureaucratic morass wrapped in a can of conflicts. A modern day version of medieval fiefdoms, perhaps? Take for instance, Urge which is built into Windows Vista, and is what I guess you could call an almost integrated experience. What happens to consumers when faced with the choice of Zune or Urge!!! Answer – iPod.

Jupiter Research’s Michael Gartenberg:

Early market share, however, isn’t likely to come from disgruntled iPod users looking to switch. The real losers in the short term are likely to be the likes of Creative, iRiver and other former partners that have failed to deliver to market share from Apple and will now find themselves not only competing with Apple but with their former partners from Redmond.

As uncomfortable as the position in which Microsoft finds itself is (and perhaps also dangerous to other future partnership ambitions as well), going it alone on personal media players is also likely the only way to succeed in that market as Nicholas Carr succinctly explains:

The Windows way worked for PCs because PCs are general purpose devices that become more attractive as more software and peripheral devices become available. An open architecture encouraged the development of lots of software and devices that expanded what a PC could do in ways that customers valued. They were even willing to put up with crashes and reboots and driver conflicts and all the other annoyances inherent in managing complex, heterogeneous systems. A special-purpose device, like a music or media player, is a different beast altogether. Customers want it to do what it’s supposed to do, and do it really well – and look good while it’s doing it. It’s fine – and in fact valuable – to have a lot of compatible accessories, as long as those accessories don’t mess up the internal workings of the core system itself. That’s been the Apple way with iPod, and now it’s the Microsoft way with Zune.

Some folks would argue that the Apple way is pretty good for consumer PCs too, but I digress.

After the startup turmoil gets cleared away and assuming Microsoft can deliver product on time, the question remains whether even Microsoft all by itself can make a credible play in consumer electronics where cool is just as important as functionality. Looking at the bizarre “viral marketing” video at Microsoft’s promotional site, comingzune.com, suggests that they have a long way to go. Who do music fans want to identify with: some weird guy with a rabbit or the folks rocking out in the iconic white earphones ads?

Finally, speaking of Web sites, Microsoft has two employees “Zune blogging” at Madison and Pine and Zune Insider; and spending a few minutes nosing around the web shows that a Zune ecosystem has already started with sites of varying quality like Zune Nation, Zune Owners, Zune News Site, Zune Zone, Zune Info, and Zune MP3 Player Deals jumping aboard for the ride.



Filed under Apple, Argo, Coopetition, Creative, MTV, Microsoft, PlaysForSure, Portable Media Center, Portable Media Center, Samsung, Technologies, Yahoo, Zune, iriver

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11 Responses to “Microsoft admits to Zune”

  1. Spending on the agenda for Microsoft analysts meeting -- Microsoft News Tracker Says:

    [...] Also during the fiscal year, Microsoft expects to spend about $450 million more on marketing, in part because of the launch of new versions of Windows and Office. Not to mention Zune which will supposedly duplicate the Xbox 360 marketing expense. Another $450 million will be spent on boosting its sales efforts. [...]

  2. Apple settles with Creative on personal media player patent -- Microsoft News Tracker Says:

    [...] That’s a nice touch, since Apple in some sense has just validated the patent. I bet the Apple legal staff is just itching to help Creative work on the letters to all the player manufacturers right now. But wait, there’s more: As part of the agreement, Creative will also enter Apple’s Made for iPod program as an authorized seller of iPod accessories. Creative will be able to affix the “Made for iPod” logo to its speakers, headphones and other related products, O’Shaughnessy said. You think maybe Creative decided that there wasn’t much future in being a Microsoft PlaysforSure partner in view of the Zune and decided to diversify a little? Filed under Coopetition, Windows Mobile, Hardware, Apple, Portable Media Center, Creative, Portable Media Center, Microsoft, Argo, Zune   [Permalink] [TrackBack] [...]

  3. Apple dazzles the crowd with a move on the living room -- Microsoft News Tracker Says:

    [...] For the next round, Microsoft has been talking tough with its Zune personal media player, but Apple came storming out of its corner yesterday and went right for the living room with a new appliance to bridge the PC to entertainment center gap: But then Apple made what can only be called a highly unusual move for a company that forbids employees from even speculating publicly about forthcoming products. Jobs unveiled the iTV, a product he’s hoping will bridge the chasm between those movie downloads and the TV set in the living room. Thing is, it won’t be available until early 2007. When released, it will sell for $299. [...]

  4. Microsoft unveils Zune -- Microsoft News Tracker Says:

    [...] Microsoft’s comingzune.com viral marketing website has augmented the rabbit petters with flaming birds. Filed under Executives, Microsoft, J Allard, Argo, Zune   [Permalink] [TrackBack] [...]

  5. Microsoft marketing strikes again -- Microsoft News Tracker Says:

    [...] Oh yeah, this kind of viral marketing will have folks running right out to snag a copy of Vista. I guess it goes in the scrapbook along with the Zune rabbit petting and the Origami disaster, but it makes you wonder if Microsoft marketing could actually sell any software that wasn’t guaranteed to be on 97% of all PCs sold. [...]

  6. MS. DEWEY JUST TELL ME it’s a joke -- Microsoft News Tracker Says:

    [...] Well, the “more cash than clues” part was right. It’s the Microsoft viral marketers again, fresh from their “triumphs” with Clearification, Zune rabbit petting, and misleading Origami customers. [...]

  7. Lipstick for the pigs -- Microsoft News Tracker Says:

    [...] “We’ll obviously keep a close eye and, if we need to or want to, we’ll shift focus,” Reindorp said. Here’s a modest suggestion for a shifted focus: lose the agencies that dreamed up the rabbit petters, flaming birds, scratching dog, and endless cookie and just advertise the darn product. If the Wi-Fi sharing is so cool, why not actually show some regular folks doing it and saying “Oooo!” and “Ah!” Just a thought. [...]

  8. Portable Media Center RIP -- Microsoft News Tracker Says:

    [...] At which point their health was shaky because of the iPod surge.  The final demise was sealed by Microsoft’s decision last year to cut out its Portable Media Center and PlaysForSure partners and build its own incompatible portable media player, the Zune. Filed under Coopetition, Technologies, Windows Mobile, Hardware, Apple, Portable Media Center, Portable Media Center, Microsoft, Argo, Zune, PlaysForSure [...]

  9. Nokia signs up for Microsoft’s PlayReady DRM -- Microsoft News Tracker Says:

    [...] Hmm, no word about the Zune which continues to have its own little DRM walled garden, but DRM 10 was marketed as the PlaysForSure program. I’m sure Nokia is aware of what happened to Microsoft’s erstwhile PlaysForSure partners since Nokia was one of them, but they likely don’t care since they aren’t betting the ranch on it, but merely adding support. If a proprietary Zune phone comes along, so be it, but in the meantime why not sell some music on whatever platforms are convenient?   Filed under Coopetition, Technologies, Windows Mobile, DRM, Windows Mobile 6, Nokia, Microsoft, Argo, Zune, PlayReady, PlaysForSure   [Permalink] [TrackBack] [...]

  10. PlaysForSure goes out with a whimper | Microsoft News Tracker Says:

    [...] Microsoft’s portable media center partners knew the game was over long ago as did MSN Music users and what few subscribers there were for the Microsoft-MTV Urge music service so I guess we have to chalk this up as merely herding the remaining stragglers to the exit. It’s also a way to obscure the way that Microsoft left PlaysForSure partners and customers out in the cold when they went their own way with the Zune.   Filed under Alliances, Technologies, MSN, Windows Mobile, DRM, Media Player, Portable Media Center, MTV, MSN Music, Microsoft, Argo, Zune, PlaysForSure   [Permalink] [TrackBack] [...]

  11. Microsoft anticipates a tidal wave of Exchange outsourcing | Microsoft News Tracker Says:

    [...] Spoken like a good outsourcer, but the question remains why Microsoft felt the need to get into this low margin business and squeeze out their partners who were already providing an equivalent service. The answer has to be fear of the Web apps vendors like Google with whom they are already in competition and Microsoft’s inclination to do things themselves that they consider important instead of leaving them to partners. The canonical example of this is the tossing of the PlaysForSure partners under the Zune train. [...]

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