Zune too little, too late say analysts

Stan Beer
Wednesday, 15 November 2006 19:09

Opinion and Analysis

Like other pundits, the Ovum analysts have panned the Microsoft online payments system for purchasing downloads.

They say: "Microsoft has made the decision to tie the Zune Marketplace music store in with its Xbox Live online services through the use of the 'Microsoft points' payment system. This means that users have to first charge their account with points using their credit card, and then use these points to buy music downloads. This effectively removes any transparency in terms of cost and raises yet another barrier to users purchasing digital music in the first place."

Unlike Microsoft CEO Steve Ballmer, the Ovum analysts don't believe that Wi-Fi is quite the killer application which will rocket Zune into contention as an iPod killer and they wonder at the restrictions Microsoft has placed on the feature.

They say: "While the WiFi sharing is an interesting add-on, it relies on there being a decent-sized installed base of Zune devices, so is not much of an initial sales driver. In addition, it is currently very restrictive, allowing users to play a song three times before they are prompted to purchase it. It would have made more sense to offer full WiFi connectivity at launch, allowing users to wirelessly download music on the move."

To cap things off a rather negative review of Microsoft's marketing strategy for Zune, Mackenzie and Arber see a worrying trend of me-too vertically integrated portable music player and digital download services developing.

"Recently, it was announced that MP3 manufacturer Sandisk and RealMedia, operator of the popular US music subscription digital music service Rhapsody, have formed a partnership with the intention of launching yet another vertically-integrated service. We see this as a worrying trend - it seems that these offerings are overly focused on making things simple for users, and in doing so underestimating consumer desire of interoperability, which if exploited properly could be used as a key driver for new music service or devices."

The sentiments expressed by the two Ovum analysts echo similar views by a number of market watchers in both the media and analyst community. It is indeed puzzling to see Microsoft take this path. If it had launched Zune and Zune marketplace with Windows Media Player compatibility and the PlaysForSure DRM, it would have had a ready made network of online music outlets for its player, including its own store.

With its profile, Microsoft could have claimed the interoperability high ground for its own player. Virtually all the legally downloaded music on the net except iTunes could have been Zune compatible if Microsoft had stuck with PlaysForSure and Windows Media Player. Eventually, Zune to the iPod could have become like a PC is to a Mac. Unfortunately, it's not to be. As Ovum says, too little, too late.