Will Zune bring Microsoft riches or ruin?

Stan Beer
Thursday, 13 July 2006 16:04

Your IT - Home IT

We have all seen the pictures and we have all heard the name. Now the billion dollar question is can Microsoft's Zune really take a serious bite out of Apple's stupendous iPod marketshare?

Microsoft obviously believes it can but the odds are against it. This is just not Microsoft's space and the incumbent is too powerful and too tuned in (no pun intended) to this particular market.

To provide an example of what some geek blogs are saying about Zune: "...the ugliest MP3 player I've seen in a long while....say hello to 5% marketshare...my country makes better iPod killers at 1/8 the price....."

Needless to say general consensus does not paint a picture of a rosy future in which Zune reigns supreme while iPod withers away and crumbles to dust.

To be sure there are pundits who will argue that Microsoft has come from behind to ground Apple into the dirt in years gone by. However, back then, Microsoft offered the world a different paradigm to that of Apple. In those days, Microsoft was the champion of open standards in the hardware space, while of course it sneakily hooked everyone on to its proprietary software. With Apple everything was closed, proprietary and expensive.

The portable music player business of today bears no relationship to the desktop computing business of yesteryear. The phenomenal success of iPod and iTunes shows that there is no great longing for open standards in the music downloads space. In fact, that's what existed before iTunes showed up and still exists today.

So with Zune, Microsoft is not going to introduce a new paradigm in music downloads and music players. Wireless capabilities? Apple is already working on that one too. Will Xbox branding and gaming capabilities give Zune the edge on iPod? Maybe but probably not. My teenage son says that he and his iPod owning friends are not really into portable games. When they play games, they want the graphics and interactivity of the big screen gaming consoles.

What about the relationship between Zune, Windows Media Player 11 and the Microsoft-MTV music store Urge? It's a direct copy of iPod and iTunes, except there is the complication of having MTV involved. Apple doesn't make much money out of iTunes. The store exists mainly to drive iPod sales, which is the real money spinner for Apple.

In essence then, Zune is simply a Microsoft branded knock-off of iPod which hopes to capture market share in the same space using the same business model.

Does Microsoft have anything going for it with Zune? There is one thing - marketing. Microsoft has proven itself to be very good at marketing pretty average products and convincing everyone that they're exceptional. Branding Zune as an Xbox product is clever. Microsoft is banking on there being enough Xbox fanboys in the marketplace that come holiday season they'll be lining up outside stores at midnight when Zune is released to great fanfare. It's so predictable.

What happens after that, however, will tell the true story. My son has an iPod Nano and an Xbox. He loves his iPod but lately he's been asking me questions about the PS3.