Microsoft Zune Doomed Already? Wired's Van Buskirk Thinks So

[Jason Dunn]

<div class='os_post_top_link'><a href='http://www.wired.com/news/columns/0,71435-0.html?tw=wn_technology_1' target='_blank'>http://www.wired.com/news/columns/0,71435-0.html?tw=wn_technology_1</a><br /><br /></div><i>"Details are still light about Microsoft's "Zune" iPod killer but if the rumor mill is right, the device will have some or all of the following features: Wi-Fi connectivity, video playback, Xbox integration and some sort of community feature for letting music lovers interact with each other...Microsoft's track record with hardware isn't all bad. The Xbox and Xbox 360 are the company's biggest hardware success stories -- probably the reason the Xbox team is reportedly developing the upcoming music player. But hardware is definitely not its forte. The MSN TV experiment was a bust, Microsoft was quickly forced out of the wireless base station business, and its webcam line isn't anywhere near as popular as offerings from Apple, Creative, Logitech and others. Microsoft's entry into music-player manufacturing is obviously a last resort, undertaken kicking and screaming."</i><br /><br />Whenever Microsoft sneezes, there's someone waiting in the wings to hold up a points card and grade it. Being one of the biggest companies in the computing world brings with it intense scrutiny, so it's not surprising that the pundits are out in full-force already declaring the Zune a failure and the iPod an unstoppable juggernaut. I will say this much: Microsoft does not enter markets lightly, and while they've certainly had their share of failures, they've also had their successes: the Xbox 360 is still selling strong and gaining momentum, Windows Mobile is now dominating over Palm devices, and Windows Media Center is making significant in-roads in the modern connected home (with essentially no mainstream product that matches it in features). <br /><br />Given that the Zune team is made up of Xbox 360 people, I have high hopes for this project - because anyone that has used an Xbox 360 knows how superb the interface is, how easy it is to use, and how fun and interactive the process is. Sometimes I don't even play games on my Xbox, I just explore the downloads, watch videos, demos, etc. That's an immersive experience that I believe can translate well to a portable device if executed properly. Will Zune sink or swim? I for one think it's far too early to tell. <br /><br />[as a humorous side note, I was going to flame Van Buskirk for claiming that Microsoft that a line of Web cams, because I had never heard of such a thing...<a href="http://www.microsoft.com/hardware/digitalcommunication/default.mspx">and it turns out they do</a>. Whoops! :oops: I've really gotta' talk to the PR people that promote this stuff, you'd think they'd send us a press release or something. ;-)]

[idawgik]

I find it really interesting that one of the big things he's complaining about on the second page of the article is the massive amount of iTunes songs that people already have and saying the Microsoft likely wouldn't include some way to play it.

In fact, one of the big things I've been reading about the Zune platform over on Engadget has been that Microsoft WILL let you re-download your iTunes library in a Zune compatible format, for free.

[Jason Eaton]

In fact, one of the big things I've been reading about the Zune platform over on Engadget has been that Microsoft WILL let you re-download your iTunes library in a Zune compatible format, for free.

Has that been confirmed by MS? I thought it was just a rumor at this point.

[Jason Dunn]

Indeed, many rumours about Zune, not many facts yet - I think the next 30 days will be very telling...

[idawgik]

Yeah, it's still one of the rumors going around. At this point, I think except for the Zune name and the fact it'll play music, not much else is confirmed at this point.

It will be very interesting though to see what happens with it, especially around the whole WMP11/URGE partnership they've been heavily promoting.

[James Fee]

Indeed, many rumours about Zune, not many facts yet - I think the next 30 days will be very telling...
Do you know if PlaysForSure is dead now?

[sojourner753]

I think one of the biggest fears is that it may be anti-climatic. Even it MS' plans are not for a long term prescence, I think that if there is enough success, it will be enough to get the other Vendors on the ball.

I agree with Jason, its definitely to early to tell. I remember, the weeks preceding the initial announcement of the original iPod. A lot of the enthusiats rumored that they were going to unveil a PDA or something. And lot of people were disappointed that it turned out to be a music player. Well, look at them now.

I'm not sure I would even count piddly efforts like Wifi modules and webcams. They are complete different than gaming consoles, mobile devices, and music players. These are non-commodity markets. They're still considered premium devices. The real (and perceived) add value to people's lives are much higher.

IMHO

[Jason Dunn]

Do you know if PlaysForSure is dead now?

I don't think it's "dead", because I believe vendors such as Creative and iRiver enjoy the lack of customer support calls related to drivers, but it certainly never had the marketing momentum that Microsoft said it would have (there's no damn PlaysForSure logo on my Zen Vision:M box for instance).

[Felix Torres]

Indeed, many rumours about Zune, not many facts yet - I think the next 30 days will be very telling...

The truth is nobody knows a darn thing about Zune; not what it will do, not what it will cost, not what software services it will link to.
Nothing.
But already its being declared a failure, just because it's got the MS name attached.
Part of it is ABM, of course.
Part of it is fear that MS will actually suceed.
(Zero-sum thinking, that.)
But part of it is the irrational belief that the future will be exactly like the past and that what worked last year will work forever and ever until the end of time.

I don't expect MS will have much impact on Apple's market share this year or next. The market is still growing so there is room for new players and, more importantly, new business models that haven't yet been tried. These models could conceivably fail, but they might surprise some of us by actually succeeding.

Me, I think it is usually best to see what a product looks like before declaring it dead. And it occurs to me that there are at least three ways MS can make money off Zune that are totally independent of what anybody else (read:Apple) does or doesn't do.

The interesting thing here is seeing just which path MS takes.

Just in case they surprise us by doing something nobody else has done. And, apparently, shock a lot of people if they end up with a product that somebody somewhere might want to buy.

[sojourner753]

The truth is nobody knows a darn thing about Zune; not what it will do, not what it will cost, not what software services it will link to.
Nothing.
But already its being declared a failure, just because it's got the MS name attached.


I don't know if MS will put out a winner or not, just as you said. Its in fact those people who feel so confident that it fail that I'm also compelled to challenge.

Sure MS has some market failures out there, but they've also got some succeses out there. (read: Xbox, Windows Mobile, Internet Explorer). And when I say success, I dont necessarily mean they're number one.


Lets say that Apple has 90% of the market and te remaining 10% is made up of Creative et al.
What if MS's offering is able to capture 30% of the marketshare in 2 years. I'd call that a success.


Anyone making definitive statements that MS can't be successful is not making a logical or reasonable assesment. IMO you have to atleast concede that MS has an underdog (marketshare and momentum wise) track record.

Sure they could blow it with Zune. But we don't know enough to dismiss them. Plus, if Microsoft is successful, then that means the competition game is finally afoot! And the consumers will benefit. No more dot upgrades from the iPod line then.

[James Fee]

So if it isn't PlaysForSure, then will it work with Napster?

[jeffd]

Huh? Why wouldnt it support playforsure?

Anyways.. I am a fan of daps, and so far zune interest me not. Of course no actual information has been given about it, nore a price, but so far nothing new has been said. it plays music? got that. movies? done that. Music communities? been there. Xbox intigration? for what? I talked with a buddy of mine with a 360, he says I cant send him mp3s, his xbox wont play em or something. ^^

Anyways.. oh hum.

[James Fee]

Huh? Why wouldnt it support playforsure?
Everything I've read says it won't. They PlaysForSure team is different from this one.

[Phoenix]

I'm really excited to see what MS does with Zune.

But doomed to failure? Please.

I understand that there are some products out there where a person can see won't amount to much before their release, or where one or more components in the necessary triumvirate recipe might be missing (hardware/software/online service). But this is different. There is a LOT going on with the whole Zune enterprise and much we don't know yet.

I'd tell anyone, let's wait until all of it is actually released before we start making judgements.

Sheesh. Patience, Buskirk!

[alese]

Both Apple and Microsoft have their share of past failures, but I doubt that this could have any bearing on Zune vs iPod.

I'm pretty sure that Zune in it's first iteration will not "destroy" the iPod, it may even fail... But, Microsoft will keep coming back, and probably (nothing is sure) prevail at the end. Why?
If you look at past situations like this (Netscape, Palm, Word...) Microsoft always won because the other company did not innovate or adapt quickly enough, and it looks like Apple is doing the same, they are milking iPod without doing much in terms of innovation. The other thing is what Microsoft used as a leverage when competing as underdog, that's integration with it's core business (Windows) - call it monopolistic tactic, it can even be dirty, but it is effective.
Then there is the reason why Microsoft will keep comming back and why it can't afford not to compete. It's because, what's at stake. It's not HW (iPod) it's not just music, it's the domination over distribution of pretty much all digital multimedia content to hundreds of millions of users, and that's huge even for Microsoft. They just have to be there.

Oh, and another thing, history has showed us that nothing is forever, empires and companies fall, market shares dimminish and saying that Apple has this locked down against probably the richest most persistent and ruthless company it the world is probably shortsighted.

[jeffd]

Everything I've read says it won't. They PlaysForSure team is different from this one.

Err, who says it needs the original team? Plenty of devices support playsforsure owned by many different companies. Its pretty successfull in that its supported on all the new DMR supported players.

[Felix Torres]

On top of all that, there are "failures" and there are failures.
Everybody has this idea of success based on the desktop OS business, where MS has 95% market share and think anything less is a "failure".
Which is of course wrong.
MS is a for profit venture.
They define success in the same terms as any other business:
1- Does it bring in more money than it cost to get involved
2- Does it bring anything valuable besides money?

The second category is very often neglected.
Case in point: nine years ago, MS paid $425 million for WebTV, which according to many proved to be a "failure" for MS.
The main reason for this is that WebTV (or its successor, MSNTV) peaked at about a million subscribers and stayed flat. Haven't seen recent numbers but the service is still running and it got a hardware refresh just last year so the subscriber totals are probably still running around 1 million.
That's one million people paying $25 a month. Or about $300 million a year. Times 9 years. $2.7 billion.
Is MS making a profit out of this business? Dunno, but they're not rushing out of it, either.
More importantly, they got a lot of other kinds of value from that deal.
The WebTV hardware designers moved to MS and became the core of the inhouse hardware design group. They helped put out reference designs for PocketPCs, SmartPhones, TabletPC, UMPCs, and Zune itself.
Oh, and they helped define and design the Xboxes.
Other benefits?
IP: Patents and the like. WebTV did a lot of original work on digital set-top boxes on both the data and media side.
Positioning: when MS bought WebTV, the feds greenlighted the deal because there were plenty of ther competitors poised to deliver the same kind of internet-via-TV services. AOL, SONY, 3COM, etc.
All vanished quickly, but WebTV outlived them all.
And yet, WebTV is considered a failure.

So, what kind of failure will Zune be?
Well, Apple owns 50% of the worldwide digital music player market, with sales of some 10 million units a year, I think.
The market is growing reasonably fast and is only now approaching 20% market penetration, which is the point where consumer electronics explode into the mainstream.
Analysts see MS getting something like 10% market share while Apple grows its shipments and the existing players (Creative, RCA, iRiver, Sandisk, etc) do the same.
Expanding markets are not zero-sum games; MS can win without Creative et al losing.
So, if MS gets 10% of a 20+ million unit market, that's about 2 million units. At an average price of $300 for the first incarnations, that would add up to $600 million. Add in accessories and content (whether subscription or buck-a-pop dl's) and you can get pretty close to $1 billion in the first year.
Dunno, but to me that's a heck of a "failure".

Never mind the strategic need to have a presence in the digital music business; we're talking a $500 million a year business, even as a "failure".

There's money to be made here, folks.
And the way to make the money is to offer customers something similar yet different from what's on the market. Of course, the pundits and naysayers will focus on the similarities and dismiss Zune as a me-too product. And if that is all it offers, they'd be right. But the few official reports and admissions that have come out make it clear that Zune is in fact different. If nothing else, because of the WiFi and community aspects that are being built into it.

Which means that, success or not, Zune is bringing something new to the game. And, in consumer electronics, even true failures leave a positive imprint on the market.

http://www.next-gen.biz/index.php?option=com_content&amp;task=view&amp;id=3471&amp;Itemid=2

Whether MS wins or loses is irrelevant; we the consumers win anyway.

[James Fee]

Err, who says it needs the original team? Plenty of devices support playsforsure owned by many different companies. Its pretty successfull in that its supported on all the new DMR supported players.
Right, but those devices won't work with Zune.

OK, here is some more on PlaysForSure and Zune (http://blog.seanalexander.com/CommentView,guid,d1d8382b-ad66-4b5a-b9a1-57af31a02290.aspx).

[whydidnt]

Hmm, from the links provided, I can't tell if there is any connection to Plays for Sure or not. I've had too many issues with Yahoo! Music and Plays for Sure to have any confidence in it being a good solution anyway. I'm tired of having to Re-download hundreds of songs because the DRM solution has gotten confused again. After three times, I've given up and converted all the downloads to non-DRM'd MP3's. DRM isn't worth the hassle, at least at this stage of the game.

However, if you look at the two Blogs the softies are producing, it almost seems to me like Zune isn't really a traditional music player to compete with the iPod as much as it is a YouTube for music and videos to go. The bloggers spend a lot of time talking about independent music, not so much about commercial. Pure speculation on my part, but I wouldn't be surprised if this isn't meant as more of a way to attract the MySpace crowd and less of a way to compete with Apple for iPod sales-- though these two items aren't mutually exclusive.

[Felix Torres]

Pure speculation on my part, but I wouldn't be surprised if this isn't meant as more of a way to attract the MySpace crowd and less of a way to compete with Apple for iPod sales-- though these two items aren't mutually exclusive.

A good speculation at that.
The key developments of the 360 (beyond raw gaming power) so far seem to be the community-gaming aspects of both Live and the Achievements paradigm.
With the talk of WiFi sharing between Zune boxes and the fact that the Xbox guys are behind Zune, it may be that the focus is going to be on sharing songs and playlists and viral distribution of music.

MS seems to have a better than average understanding of viral marketing ("I love Bees", anyone?) as well as of discoverability of software and GUIs. A lot of the same techniques are applicable to databases and especially to content libraries (like the other currently trendy site; Pandora) so I'd say that your guess is probably pretty good.

It may be that the music turns out to be secondary to the communications.

[Jason Dunn]

So if it isn't PlaysForSure, then will it work with Napster?

Speculation is that it will only work with it's own desktop software application - not Napster, MSN Music, or any other current service (even URGE).

[Jason Dunn]

By the way, nice to see there's so much interest in Zune - I think it's a very significant development in the industry and worth following closely.