Zune too little, too late say analysts

Stan Beer
Wednesday, 15 November 2006 18:09

Opinion and Analysis

Ovum analysts Michele Mackenzie and Jonathan Arber believe that Microsoft has not only missed the boat to break into the music player business with Zune but also missed an opportunity to score points against Apple.

The UK based analysts can afford to look at the Zune launch with a measure of dispassion, as the hype of Zune will not reach Europe until late 2007.

Their comments reflects no small amount of scepticism: "So will Zune be that most mythical of creatures, the iPod killer? Frankly, we'd be surprised. You have to wonder if anyone at Microsoft reads the news - after all the flak Apple has taken in Europe for a lack of interoperability, Microsoft could have seen an opportunity to score points for its new service. But no, it is pushing a vertically-integrated 'closed ecosystem' similar to the iTunes/iPod model, meaning that Zune users can only use the Zune marketplace to buy their digital music, and that Zune Marketplace downloads will only work on the Zune device. Microsoft claims that this increases simplicity for users, but all it really does is limit consumer choice further, and reduce potential sales in the long run."

Mackenzie and Arber believe the time for vertically integrated services in the music and video downloads business has now passed.

They say: "Two years ago, when the digital music market was still nascent, a vertically-integrated service may well have been necessary in order to attract consumers who were new to the concept of digital music and wanted things to be as simple as possible. But consumer awareness of digital media and its possibilities is currently higher than ever, and users are becoming increasingly aware of the limitations that a closed ecosystem imposes. Microsoft was fairly well positioned here, as its PlaysForSure DRM system is used by pretty much every music service and player aside from the iPod/iTunes. Unfortunately it seems that music using PlaysForSure won't play on the Zune. Although Microsoft has stated that it will continue to support PlaysForSure, the launch of Zune is bound to cause uncertainty in the market, and we wouldn't be surprised to see its competitors also going down the vertically-integrated route, thus fragmenting the market even further."