Zune Undoomed

by Chris Seibold Nov 16, 2006

Chances are you’ve seen the coverage of the Zune. The device has earned a lot press, most of the press has not been favorable. The reviews usually roll in as follows: It is trying really hard to be an iPod but it’s not there yet. On the other hand, all press is good press right? Put differently, indifference never sold a product but reviews, even bad ones, move things off the shelf.

As a device, the Zune is a decent competitor to the iPod, better than offerings by Sony. But the Zune isn’t just a device, the Zune is Microsoft’s attempt at a vertical market. The Zune, apparently, wants to be everything the iPod already is and the way the Zune is planning to do it is through blatant copying of the iPod model. The near naked aping of the iPod model draws a lot of ire from iPod fans but imitation is the sincerest form of flattery and only a fool would expect a company not to attempt to copy a competitor that had a successful business model. Microsoft is in it for the cash, not for warm fuzzies generated by not implementing the ideas of other companies.

The most upsetting, to Apple fans, part of the Zune thing noted and dismissed we can move on to legitimate complaints about the Zune. The list isn’t short and, on the surface, some of Microsoft’s decisions don’t make any sense at all. Yet, by carefully looking at issues with the Zune, we’ll soon see the Zune isn’t meant to be an iPod killer or even a legitimate placeholder. The Zune is there to get Microsoft’s presence in the market for the “Next Big Thing.”

Zune’s absurd song pricing

James Stoup recently covered the pricing of downloads for the Zune admirably. For the link averse, the gist of the article goes something like this: To buy a song from Microsoft you have to use points which are sold only in $5 and up denominations. Getting every thing to even out is like trying to buy the same number of hot dogs and buns, you can do it but the math would give Einstein a nosebleed. Apple allows you to purchase just the song without the annoying points system. In more concrete terms, buying music for the Zune is as if you could only pay at McDonalds with gift certificates.

Since Zune is supposedly trying to be an iPod and the Zune store is trying to be iTunes one has to wonder about the discrepancy. As long as one is copying the iPod why not get the pricing the same? The answer is pretty simple and it isn’t as nefarious as Microsoft wants to make money off the float (though we can be certain the company won’t miss that trick). Microsoft is basing the Zune pricing system off the Xbox pricing system. Further, Microsoft doesn’t want to sell individual songs, it wants to sell subscriptions. Selling songs might be profitable, but subscription money rolling in every month is something the accounting department has a mad passionate love affair with.

The Zune isn’t as sleek as an iPod

The Zune is a repackaged Toshiba Gigabeat. Microsoft can put together some decent hardware when they want to but they chose not to with the Zune. The quick conclusion that the company couldn’t have made something as slick as the iPod smacks of smug superiority on the part of Microsoft bashers, Microsoft could have made something every bit as sleek as the iPod. The reality is that the Zune was hurried to the market, sleekness and such can be put off until rev 2, 3 and 4. If you doubt that the Zune was rushed remember what Steve Ballmer said a few days ago: In the future the Zune would be able to transfer videos as well as photos and songs. If telling customers that a product that hasn’t officially shipped is already due for feature upgrades isn’t an admission that it was rushed to the market it is hard to imagine how Ballmer could say “We just wanted something on the shelves in time for Christmas” any clearer.

The Zune doesn’t play “Plays for Sure” music

Many see this as the ultimate slap against other DAP manufacturers and the eight people who use Plays for Sure. Both parties put their trust in Microsoft and were rewarded by a stomping of epic proportions. Of course, there is a reason or Microsoft gave the digital equivalent of the bastinado to those who opted for Plays for Sure technology and it doesn’t have a thing to do with immediate profits.

Microsoft’s usual plan of controlling the software while vendors made the hardware was obviously failing. If Microsoft did the obvious thing and made the Zune backwards compatible with the hundred or so songs sold with Plays for sure Technology Apple could license FairPlay to all comers. Suddenly the market for the Zune is no better than the market for the Sony Bean. By controlling the DRM and the source of the music the user experience is assured (one way or another) and it forces Zune users to familiarize themselves with the machinations of the Xbox points system.

The Social, squirting and no Microsoft logo to be found

Microsoft seems to be trying very hard to make the Zune achingly hip. “The social” “Squirting” and the lack of a Microsoft logo all point to this fact. Thing is, when a company of Microsoft’s size tries to be cool it usually doesn’t work out. It is a lot like the over tanned 45 year old with a beer gut hanging over his speedo standing on the prow of a massively over powered speed boat with a ropey gold chain hanging around his neck. Restated in Zune speak: Microsoft is not anyone. Welcome to “the goofy”.

In the end, all the Zune’s flaws add up to one thing: it is not there to take out the iPod, yet. We see a strong attachment to the Xbox, a concerted effort to appeal the young, and an absolute abandonment of the old ways of Microsoft. What the Zune is there to do is be a place holder until the next big thing rolls around. Watch as the Zune slowly morphs from a Music movie player into a handle held version of the Xbox, witness the Zune become a virtual hub for the digital lifestyle that Steve Jobs had been promoting for years. Gaze in awe as more and more computing features are added to the Zune. Or perhaps none of these things will come to pass, sooner or later there will be a next big thing and Microsoft will be ready to pounce with the Zune.

Comments

  • “We just wanted something n the shelves in time for Christmas”
    says it all. So the fruit of all the r&d dollars is yet to surface - trouble is, will anybody care? Despite MS keeping it’s distance namewise from the zunebrick, you can be sure no-one will let them or joe public forget it…if you’re part of the ipod army that is.
    And all these ‘future promises’ ..(read - real features) play into Apples hands. Being ahead of the game already, they can trump each forward step by MS, one at a time. MS promotes then Apple delivers. This is gonna be fun to watch

    'nuffsaid had this to say on Nov 16, 2006 Posts: 7
  • Being a poor man’s version of the real thing isn’t that bad.

    Detlef Schrempf still fashioned a decent career as the poor man’s Larry Bird.

    The Zune, because of MS’s decision to aim for a less lofty design aesthetic (clunkier, heavier, brown), seems to be vying for the title of dominant poor man’s iPod.

    The only problem is the poor man’s version cannot be priced the same as the real McCoy.

    Zune might yet succeed but not if it is seen as the inferior, less appealing product but is priced the same.

    tundraboy had this to say on Nov 16, 2006 Posts: 132
  • A placeholder perhaps, but only in the US market.  Zune is not available internationally.  If it bombs in the US then it probably never will be available internationally.

    It is hard to see how Microsoft can make this work, but then they managed to buy a lot of marketshare for Xbox despite the success of Playstation.

    Perhaps the difference here is that the iPod is evolving rapidly - Apple are doing well to maintain excitement and interest and many, like me, are buying their second iPod (I just ordered a new shuffle) or third (and I want a Nano for the car).

    With Zune, MS have a lot of infrastructure to maintain.  Although they have deep pockets, it will be hard to justify development of the whole Zune “experience” to catch up with iTunes & iPod, if they only sell a trickle of players.

    I think Apple will have to badly misjudge things before Microsoft find an opening in a market Apple have just about sewn up.  And I don’t see Apple messing this up…

    sydneystephen had this to say on Nov 16, 2006 Posts: 124
  • +10 AM style points for pulling out the Detlef Schrempf comparison. There’s a name I hadn’t thought of for some time!

    Chris Seibold had this to say on Nov 16, 2006 Posts: 354
  • For ONCE, I agree with tundraboy (I’m having my head examined tomorrow).

    MS has to price the Zune cheaper to compete.  I’ve said this repeatedly in other threads (and for some unfathomable reason, MS hasn’t listened to me).  On balance, it’s better in some ways and worse in others compared to the iPod, but it’s not just competing with the iPod.  It’s competing with the iPod monopoly.  And all things being equal, the monopoly wins (Mac vs Windows anyone?).

    MS has made a series of inexplicable missteps for a company with its resources, but nothing that can’t be overcome.  The starting point has to be a cheaper price than the iPod.

    Beeblebrox had this to say on Nov 16, 2006 Posts: 2220
  • Its all a Bill Gates error.

    He said “its phenomenal, unbelievable, fantastic” when he was asked about ... iPod!!!

    http://www.zune-online.com/news/zune/bill-gates-on-technet-summit.html

    And now AppleMatters has this article.

    OK, have you people been out of your mind? Where are the old good MS vs Apple flames ???

    I’ll just go to sleep.

    Zune-Online.com had this to say on Nov 16, 2006 Posts: 6
  • I just couldn’t sleep, so I wrote an article:
    http://www.zune-online.com/news/zune/applematters-zune-undoomed.html

    Zune-Online.com had this to say on Nov 16, 2006 Posts: 6
  • Just bare in mind that it was only a few months ago that the iPod cost 299, which would’ve made the Zune the cheaper product.  It’s hard to hit a moving target you know.  And besides, the Xbox didn’t come to market for less money than the PS2, as that would be silly.  If you underprice your competition, people will assume that your product is inferior, be that the case or not.  There’s a lot about economics to be learned from The Wire, I tells ya what.

    And the Zune just got a decent review from IGN which seemed to be unbiased.  They made several points in it’s favor not the least of which: rubberized plastic makes it hard to scratch, easier to turn it onto shuffle mode (with my mini I have to work my way all the way back to the settings, then manually work my way through the file system to get back to where I was) and also it allows you to sync your zune to a friend’s account to check out his music (I’m sure it’s the sort of self destructing files that you get with the squirting, but still it makes it easier not to break the law).

    Chicken2nite had this to say on Nov 17, 2006 Posts: 79
  • damn, I should’ve refered to the IGN review as “fair and balanced” since they’re owned by NewsCorp.  Ah well…

    Chicken2nite had this to say on Nov 17, 2006 Posts: 79
  • I think Apple dropped the price of the iPod because of the Zune.  Already we see the fruits of competition (or perceived competition as the case may be).

    And whether or not underpricing leads to perceived inferior quality is largely dependent on the product and the person.  Mac fans like to argue that the Mac Pro is now cheaper than a comparable Dell.  Assuming this is true, do you think ANY Mac fan would argue then that people will assume the Mac Pro is inferior?

    Beeblebrox had this to say on Nov 17, 2006 Posts: 2220
  • Still, to say that 249 is too expensive, that in order to be successful Microsoft has to undercut the iPod on price, that to me is silly.  It’s price competitive and for a first gen product that’s good enough for now.  If they were to set the bar lower than 249, then all of a sudden they’re stuck with that base price going forward.  No baseline Zune could be more than 249 now.  If they made it 199, then that would be the baseline price they’d be stuck with in the future.  Of course with a future Zune they could lower the price, but if they’re not selling it at a loss for now, then MS is laughing. 

    And as for the percieved lack of quality, look at the GameCube.  It was in some ways better than the PS2 on a technical hardware level, but because of the low price and the toy-like perception of the machine, people thought it wasn’t worth owning. 

    Of course, this argument ignores the software side of the console wars, which tended to reinforce this perception with the lack of M rated titles (at least ones that sold well) and the fact that the mascots were all cartoons, with the exception of Metroid which arrived too late to make much of a change in the ongoing trends.

    Chicken2nite had this to say on Nov 17, 2006 Posts: 79
  • Still, to say that 249 is too expensive, that in order to be successful Microsoft has to undercut the iPod on price, that to me is silly.

    So by your supposedly non-silly rationale, if MS priced the Zune at $50 MORE than the iPod, then the public would regard the iPod as LESS quality and would switch to the Zune.  Uh huh. 

    Again, the perceived lack of quality based based on cheaper price as a general rule is absurd.  It depends on the product, the public’s experience with the product, etc.

    MS isn’t just competing with the iPod as a product.  It is competing with the iPod monopoly.  MS can’t just give consumers a choice between two very comparable products at the same price.  The public will almost always choose ubiquity and familiarity. 

    MS can only compete by making the Zune a no-brainer, or at the very least a tough choice.  The only way it can do that is with every feature the iPod has PLUS killer features of its own (FM and wireless are a good start).  Or it can lower the price.  So far it hasn’t really done either to the degree it needs to.

    Beeblebrox had this to say on Nov 17, 2006 Posts: 2220
  • Well again, it’s a first generation product in an industry that is still very new.  I would think that the real test would be in the next year when the iTV comes out and the competition will move on to who can integrate their systems to form a cohesive whole for consumers.  For Microsoft this will mean (to me) making the Zune play nice with the Xbox when it comes to both music and video content.  The one thing that makes me think that MS has dropped the ball already is the way in which the Windows Media Center PC thing works.  Creating all of these various versions of Windows, limiting what you can do with their convoluted software. 

    I mean, on paper the Xbox 360 should be the natural choice, as it can function as a Media Center Extender as well as a Game Console whereas the iTV is only going to be Front Row for your itunes account.  Considering the price of both devices are so close, and with a third party program you can fool the Xbox into thinking your Mac is a Windows Media Center PC and thus can access your content, the choice for the power user should be obvious in terms of what the best deal is.  But of course to your average user, the lack of simplicity would be a barrier to entry.

    Obviously the Zune needs to be price competitive, but if they were to try to undercut the iPod on that point then it would make it harder for them to put more extras in there without cutting into their profits.  This is the sort of problem which Creative ran into when the tried dropping the price down to nothing in order to increase sales, which just made people think that it was an inferior product despite it having features built in like a voice recorder (something I would love have even if I didn’t end up using it much).

    If the Zune had these things built in and cost the same as a baseline iPod, then people who might be sick of paying an extra 50-100 dollars worth of accessories for each new model in order to have the features they like, they would at least give the Zune a lookover. 

    Ok, back to The 25th Hour…

    Chicken2nite had this to say on Nov 18, 2006 Posts: 79
  • ...if they were to try to undercut the iPod on that point then it would make it harder for them to put more extras in there without cutting into their profits.

    But that’s not what you said.  You said that, “If you underprice your competition, people will assume that your product is inferior,” and that arguing otherwise was “silly.”

    Does that mean that if the iPod were cheaper than the Zune, which it is at Amazon, that people would assume it’s inferior or that the heftier price on the Zune makes it better?  Of course not.  That’s absurd.

    $50 less for the Zune, and Apple has a real fight on its hands.  Rather than assume it’s inferior, people are more likely to pick one up and check it out.  And it just might be good enough for them to switch.

    Beeblebrox had this to say on Nov 18, 2006 Posts: 2220
  • Who gives a rat’s ass about iPods and Zunes?? I just want a Wii!

    Chris Howard had this to say on Nov 19, 2006 Posts: 1209
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