Balmer: Zune's DRM is Microsoft's Future

"Until now, Microsoft has tried to downplay the fact that the Zune digital-rights-management system nixes the Windows Media PlaysForSure one that the company was championing until late last year. However, in an interview this week with Knowledge@Wharton, Microsoft CEO Steve Ballmer finally admits on the record that the Zune DRM system is the one in which Microsoft's putting its future eggs. "We thought that (PlaysForSure) was a brilliant strategy — [develop] an open ecosystem, get a lot of people [to support it]." What happened? As Ballmer puts it, "In this particular case, the whole was not bigger than the sum of the parts." And, as a result, "Apple — with one model that was simple and consistent — wound up taking 75%-80% of the market.".. "Some of our partners will say 'This wasn't partner-friendly.' But having our partners only have 20% of a market share between them is also not very partner-friendly. One of the key things … that I have learned about business partners is that business partners are your partners because they make money with you, they succeed with you. And if you don't succeed, eventually you don't have any partners.""

A very good point, and kind of one we were expecting: The PlaysForSure program just didn't work they way they wanted it to. So they looked at Apple's program and said "Hey, they're making a profit from it, so should we." So they orphaned a promising system in favor of a more restrictive one. Gee, thanks guys. Really, what they should have done (IMO) is change PFS slightly so that the existing players can still use it in the future, but the Zune also uses it. There really wasn't a reason why they needed to dump one in favor of the other. In any case, they can still pull it out of the gutter if they just change the Marketplace slightly so any PFS player can use it. Then they wouldn't be alienating any existing customers. Oh wait, this is Microsoft we're talking about... Nevermind.