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Making a Case For Zune

Friday, September 29th, 2006 at 2:40 PM - by

While many pundits don't expect Microsoft to make much of a dent in Apple's share of the MP3 player market -- rather, the company is expected to cannibalize sales of other competitors -- Computerworld's Mike Elgan believes that the Zune "scares Apple to the core." He offered five reasons why he thinks that: a consumer media "perfect storm" launched by Microsoft; Zune's social and viral aspects; the ultimate availability of more programming than iTunes; a better screen for movies; and the "cool factor."

Explaining the first one, Mr. Elgan said that Microsoft "will leverage the collective power of Windows XP, Windows Vista, Soapbox (Microsoft's new 'YouTube killer') and the Xbox 360" as part of the Zune's launch. He also claimed that "Apple once commanded 92 percent of music player market share, a number that has since fallen to around 70 percent," and sees Microsoft's 90%-plus share of the computer operating systems market as a key factor on its side.

However, that 92% figure was Apple's share only of hard drive-based MP3 players, not the entire market, which also includes flash-based devices. For example, an October 2004 CNET article noted that fact, which was before Apple entered the flash market. In May 2005, Apple CFO Peter Oppenheimer said that his company had 58% of the flash market, just four months after the launch of the iPod shuffle (then Apple's only flash-based music player), 90% of the hard drive-based market, and 40% of the overall market.

In February of this year, BusinessWeek reported that Apple had 69% of the overall market, and earlier this month, a pair of Gartner analysts pegged that number at 75.6%. Recent reports have dropped the distinction between Apple's share of the hard drive-based market versus its piece of the flash-based market, since the year-ago introduction of the iPod nano dramatically changed the industry's landscape. Apple also no longer breaks down its iPod sales into individual model units.

Mr. Elgan, however, saw a key advantage for Zune in its ability to plug into the Xbox. "The Zune Marketplace will be integrated with, and promoted by, the Xbox Live Marketplace," he wrote. "Apple faces the prospect of competing not with the Zune alone, but with a mighty Windows-Soapbox-Xbox-Zune industrial complex."

Regarding his second item, the writer pointed to the popularity of YouTube, MySpace, and other social networking sites as the reason why the Zune's peer-to-peer wireless music sharing "is both social and viral. Tweens, teens and twentysomethings have acquired the habit of feverishly sharing videos and songs. With the Zune, students will be free to share music, videos and photos right there in class. They'll be able to pass notes to one another. The Zune isn't just a solitary music player. Think of it as a portable, wireless, hardware version of MySpace."

While he acknowledged that Apple "deserves a lot of credit" for being at the forefront of digital media sales, Mr. Elgan said that "the value of iTunes, Marketplace and other music stores will be judged by the quantity, quality and price of available media -- not who got there first." While Microsoft won't be selling movies and TV shows until next year, he noted that the company has more movie studios lined up to offer content, compared to Apple's single offering, Disney. Of course, Disney was Apple's sole partner when it began selling TV shows, and today it offers a wide array of them from many networks.

And when it comes to watching that content, he said that "the Zune's screen is just as good -- and larger than the iPod's. More importantly, it can be turned sideways for a wide-screen movie experience, which is vastly superior to watching movies on an iPod."

As for the "cool factor," Mr. Elgan offered this: "The Zune is unlike any product Microsoft has ever shipped. It's actually very nicely designed, surprisingly minimalist and (dare I say it?) 'cool.' (Zune marketing looks cool, too. The user interface is fluid and appealing -- and, again, like MySpace -- customizable. Users will be able to personalize the Zune interface with photos, 'themes,' 'skins' and custom colors."

He concluded: "The iPod is the soul of Apple's entire business. Apple has been relatively successful at winning converts from Windows to Mac OS X, for example, in part because its whole product line basks in the glow of iPod's success, hipness and ubiquity. Apple has recently and preemptively lowered the price of iPods, announced an iTV set-top box -- which will ship later than Vista -- and is probably working feverishly on a bigger-screen, wirelessly enabled iPod.

"All these efforts may not be enough to save the iPod from the Microsoft consumer media juggernaut. Microsoft has the money, the clout, the partnerships, the mind share and the market share to drive Vista, Soapbox, Xbox and Zune into lives of hundreds of millions of consumers."

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A guest said: (hide)

Fri Sep 29, 2006 4:12 pm

I was hoping you would come back with a witty, biting rebuttal to the article, but instead, you shot back a witty, biting paraphrase. NOT!

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Brutno said:

member since 28 Aug 2002 with 198 posts, unranked, send him a message or view his profile

Fri Sep 29, 2006 4:14 pm

So, Vista is going to be part of the juggernaut - but Zune ships before Vista ships. Advantage lost. Soapbox was just released - so that's not exactly a plus. Connecting an XBox to a Zune does what? (I'm not a gamer and I really don't know.) So, we're left with a larger, less-battery-efficient device that can be skinned and comes complete with a set of song-sharing conditions only a lawyer or financial planner would understand.

Just the fact that Miscosoft has to mention viral marketing has most likely already doomed the Zune. Telling today's youth what's hot tells them it's not. Better to not mention it and let the kids discover it for themselves. I am not predicting failure for the Zune, but I don't think Microsoft has created the "Perfect Storm" either.

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nealg said:

member since 22 Mar 2006 with 123 posts, unranked, send him a message or view his profile

Fri Sep 29, 2006 4:19 pm

Interesting that someone needs to go to extremes in order to hype Zune(it is almost that Mr. Elgan needs to convince himself and decided to include us in his discussion). You could make a case for it without all the hype, it just wouldn't be as strong. I would also be more swayed by Mr. Elgan's comments if he had written the piece from a first person user standpoint instead of a purely hypothetical point of view. The tale of Zune will be told once consumers get it into their hands and decide if they are going to open their wallets to bring one home, no matter what the analysts and hypesters say.

One thing that I will take some issue with is that the sharing will be a big thing for people right now. The only way I see that happening is if Zune gets traction right away and you have many people available to share things with. I honestly don't think MSFT will sell that many Zunes to make this a very usable feature this quarter. Since this is a big point of differentiation for MSFT, I would have to agree with the camp that feels that wi-fi ability will be a non-issue for most mp3 purchasers.

Neal

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BradC said:

member since 29 Apr 2005 with 81 posts, TMO Staff, send him a message or view his profile

Fri Sep 29, 2006 4:43 pm

Quote:
I was hoping you would come back with a witty, biting rebuttal to the article, but instead, you shot back a witty, biting paraphrase. NOT!

I prefer that readers offer in-depth rebuttals since I'm merely reporting the news. In this case, however, I did rebut the writer on a few points where he was incorrect or was twisting things (iPod market share, movie and TV show availability, etc.). My hope in covering an article like this is that the readers will get into a lively debate about Mr. Elgan's column and thus provide the in-depth rebuttal that I don't think is appropriate for a news article.

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A guest said: (hide)

Fri Sep 29, 2006 5:06 pm

BradC - I applaud your integrity.

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A guest said: (hide)

Fri Sep 29, 2006 5:08 pm

It's the end of the world as we know it.

It's the end of the world as we know it.

.. I feel fine.

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Bosco said:

member since 03 Jun 2002 with 1002 posts, unranked, send him a message or view his profile

Fri Sep 29, 2006 5:17 pm

Look people. The reporters are paid to report. We are paid to comment. We don't do their reporting, they don't do our commenting. Together, we sell CPMs and Bryan gets rich, but let's not forget our places. Would the Raiders be 0-2 if Randy Moss was getting sacked and Aaron Brooks was running his mouth? I don't think so. Everyone has a specific roll to play. Now let's go out there and do our jobs to the best of our ability and win the division. iProng and iLounge don't stand a chance against us!

Victory!

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mrmgraphics said:

member since 05 Sep 2003 with 825 posts, unranked, send him a message or view his profile

Fri Sep 29, 2006 6:05 pm

+

Has anyone noticed what all of the pro-Zune arguments have in common? They tout the music-sharing features, the mythical integration-with-XBox-Vista features, the larger-screen-video features (despite the lack of video content of any kind initially available at Zune Marketplace), the leveraging of arguably the most simultaneously used-and-hated brand name in history (Microsoft), the FM tuner...in short, everything about this fugly brown so-called iPod killer except one minor and all-too-often overlooked detail:

Zune's worth as an MP3 player.

The beauty of the iPod/iTunes/iTS ecosystem is that it first and foremost comprises the easiest-to-use, most user-friendly way to enjoy digital music on the planet. Long before photos and TV shows and movies and games, Apple nailed it when they created the iPod as a digital music player. Period. Bar none, no player was then, or is now, better at being a digital music player than the iPod.

On the simplest terms of being a digital music player first and foremost, I've yet to hear any pundit or Redmong apologee stake the claim that Zune beats the iPod as a digital music player. Instead, in typical Microsoft fashion, the Zune is coming out with a gazillion features that most people will never use (prediction: wireless sharing will be a total bust), and that may very well interfere with the enjoyment of using said Zune for a digital music player.

(Plays for Sure won't play. That peer-networked song just quit playing. Is that song on the Zune from a subscription I forgot to pay, or one I bought, or one I ripped? Will it even play today??? Compare that to the iPod and iTunes and iTS, where even harsh critics of DRM in general admit that Apple's iTS DRM pretty much gets out of the way and lets people enjoy their music.)

Steve Jobs once paraphrased Bill Clinton by saying, "It's the music, stupid." Redmond has all but forgotten this, and stands poised to deliver the MS Word of MP3 players: A feature-bloated product that utterly fails to deliver an enjoyable end-user experience in regards to its primary functionality.

Apple got the primary functionality right and then started the value-added process. Microsoft is working in reverse, and no one is commenting on just how well the Zune experience will be for people who just want to listen to music.

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nealg said:

member since 22 Mar 2006 with 123 posts, unranked, send him a message or view his profile

Fri Sep 29, 2006 6:36 pm

A question. Could the Zune wi-fi feature be used on a network to disperse malware?

Neal

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A guest said: (hide)

Fri Sep 29, 2006 11:12 pm

nealg wrote:
A question. Could the Zune wi-fi feature be used on a network to disperse malware?

Neal

The Zune has everything required to qualify as malware all by itself.

-- Wolf

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jimothy said:

member since 04 Jun 2004 with 612 posts, unranked, send him a message or view his profile

Sat Sep 30, 2006 9:00 am

Windows viral aspects didn't do much to maintain it's popularity.

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A guest said: (hide)

Sat Sep 30, 2006 12:09 pm

The only thing Apple's got to fear from the Zune is temporary blindness, incase they stare directly into the explosion after the flaming nosedive.

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KitsuneStudios said:

member since 25 Oct 2001 with 2490 posts, unranked, send him a message or view his profile

Sat Sep 30, 2006 1:28 pm

Ok, he does have a bit of a point about XBOX connectivity. Live is pretty well respected as an online gaming community (I haven't used it, so I can't judge myself) so this potentially taps into a large group of people who would be likely to use those sharing features, but I'm not sure just how crippled that will be.

Let's face it, a lot of YouTube's advantage is the dissemination of copyrighted content, and Zune's trying to crack down on that HARD, by making shared music, even non DRM'd music, accessable only three times. Is that going to extend to video as well? How will that affect the sharing aspect of the MS Marketplace and Xbox live?

I think if Apple has anything to be concerned about, it's that: Zune adds functionality to an existing and established community, which gives it a substantial market right out of the gate. The question is whether that alone is enough to overcome the Zune's backwards steps compared to the iPod.

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A guest said: (hide)

Sun Oct 01, 2006 2:59 pm

I don't understand the comments about the wireless being a bad idea. Being able to connect makes everything more powerful. Look at how much more useful computers are with the internet.

Sure, there are technical problems such as battery life, but those are short-term issues. Sooner or later the ability to connect things together will be ubiquitous.

The good news is that Microsoft will almost certainly screw it up somehow, and then Apple will do it right, or at least better. But it's going to happen.

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JulesLt said:

member since 06 Jul 2005 with 136 posts, unranked, send him a message or view his profile

Mon Oct 02, 2006 2:46 pm

I think social networking is probably one of the most exaggerated memes out there at the moment - like the web homepage bubble (Geocities anyone??) it is a case of the IT literate mistaking their habits for something people want.

The majority of people I know with iPods have no interest in sharing music with people they meet - they're not college students, they have their iPod for going to the gym or commuting or other activities where the main thing they are doing is blocking people out - being more private.

The idea that people use p2p sites because they have some over-riding desire to share their tastes is ludicrous. The main reason is simply that you can get stuff for free (which Zune won't allow). There is a cute notion that p2p scales better than the iTunes/emusic central server proposition, and should therefore be more cost effective, but no one has made that work yet either.

In fact, my next pod is going to be one of the new Shuffles because it perfectly fulfils my immediate needs - like the Motorola RAZR I do not want the most feature rich device but one that fits in my pocket. A small minority want a lot of features, but look at which phones are the most successful (clue : not the ones that are mini-PDAs).

As someone says, Apple will almost certainly add wireless connectivity when the time is right, just as they added video capability when it was trivial to do so. The Nike collaboration and iTV will probably be the real drivers for this (Wirelessly send your photo slideshow to the iTV). I'd definitely buy a new Nano if there was a connection to a heart-rate monitor or bike computer rather than just a pedometer. But I'm not going to start sharing songs with the people on my commute.

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A guest said: (hide)

Sat Oct 14, 2006 2:57 pm

Some people think the ability to share songs is useless, i'm a high school student, and in most high schools 8 out of every ten kids have some kind of portable music player, whether it be an Ipod, a Sandisk, or even a Toshiba. A common sight among teens, is two guys/gals listening to one ipod, sharing a set of earbuds so one can "share" his music with the other. Which usually results in "Dude can you burn me that?". The ability to wirelessy transfer songs to a friend, would eliminate the need for huddling close to one another to hear the song in one ear, with a finger in the other blocking out external noise. While some people use an Mp3 player/Ipod to block out people, the majority of teens are sharing their music, even temporarily trading ipods to hear new sounds. The ability to wirelessly share will allow people to keep their buds in their own ear, and not having to huddle up to share. The Wifi may reduce battery life, but it doesn't need to be on constantly, turn it on, send your friend a song, then turn it off so you can get back to your tunes. The release of an ipod with wifi sharing capabilities is a ways off, seeing as Ipod just released the newest batch. So the ability to share their songs, will attract a lot of people who like to share their music with friends. It may not be better than Ipod, but it fills in some gaps the Ipod doesn't, just as the Ipod fills in some gaps the Zune doesn't. They both have their pros and cons. So an argument as to which is better is rather pointless, and is more a matter of personal preference.

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Intruder said:

member since 07 Jul 2004 with 3149 posts, TMO Mac Specialist, send him a message or view his profile

Sat Oct 14, 2006 8:55 pm

Fair point. But you 'd have to find other Zune users for this to be of any use at all. It's not like all of the other mp3 players will suddenly get this wifi capability and share with a Zune. Like you said, 8 out of 10 have a music player. They would have to trade these in for Zunes, which is not a cheap thing to do.

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A guest said: (hide)

Sun Oct 15, 2006 5:20 pm

It probably won't pick up instantly, but Mp3 player always end of breaking somehow, most likely they are built to die so they can get our money for a new one. So if my friends Ipod dies, he's seen the unique aspects of my Zune, and might pick up one himself, or someone looking to upgrade from their flash player, sure 8 0ut of 10 people have one, but Mp3 players and Ipod are bought everyday in unbelievable numbers. i've gone through two hard drive players, and i've got at least 3 flash players laying around. People are always buying something they already have just because it has a new feature, if people didn't buy newer devices with more features, we'd all still be using computers with a 100 kb hard drive.

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