Sunday, December 9, 2007

The Microsoft-Zune Conundrum

This was going to be a posting about the Zune2, about it's utter awesomeness, and how - after 3 weeks of Zuning, I picked up my iPod Video (sorry "classic") and thought " lifeless, how dull, how clunky." Really, I thought those things.

Then the professional reviewers chimed, all ranging from "Hey, we're surprised this thing is so good" to 5 star ratings.... and then I thought. "Eh, why write another me-too posting?" (The best of the lot, btw, was this interesting 3-way comparison review by the CNET folks.)

So - yeah, quick synopsis of my (now deleted) Me Too review: the Zune Marketplace / Zune2 combination blows past the iTunes/iPod Classic combination in almost every dimension. There - you can argue with me about that if you like, but I got 'em both. I use 'em both.

Why then, am I going to add the following to the conclusion:

Microsoft is going to lose in the marketplace.

Because, as is true of most things in this world, its not the better man (machine) that wins, necessarily.

Apple's iPod has - deservedly so - captured the lion's share of the marketplace. With over 100M iPods of various versions, shapes and capacities in the marketplace, the word "iPod" has become synonymous with digital music.

Apple's legendary marketing campaign (which has continued non-stop since the thing came out 6 years ago) is partially responsible, but so is their coordination and grudging cooperation with accessories manufacturers. The shapes, forms, functions and - in some cases - ludicrousness of iPod accessories (seriously, an iPod toilet paper dispenser? Really?) is shocking in the depths of its penetration into vertical markets. Auto manufactures have even jumped on the bandwagon, designing their internal sound systems around the ubiquitous little device.

It was the shear force of the accessories marketplace that caused me to abandon my beloved iRiver years ago in favor of the iPod. I travel a great deal, and when I am stuck at the airport and need a power cable, or a new case...anything, really, the iRiver and I were sadly out of luck. And, honestly, I've been very happy with the iPod - it's served me well.

When I started to get disenchanted with it was during the last Jobsian round of iPod releases this past summer. I didn't really care about the iPod Touch...the interface was cute, but I sneeze things bigger than 16Gig, Steve-o...would it have killed you to make a model with a hard drive on it? Sheesh. Anyway, I digress... So the iPod "classics" (whatever) had larger storage capacities. My music and video consumption is pretty huge, and my iPod Video 60 Gig is bursting at the seams... so I set my sites on the high capacity "classics." More storage, basically the same design, and...uh, wait a minute. The pinouts changed? I need new A/V adapters to make my already existing accessories run? What the hell is the point of that?

...the answer, of course, is - sell more accessories. There is no technical reason the iPod pinouts changed, they just did so Logitech and Connectix and the rest of the iPod coattail companies could get additional revenue boosts from the new iPod family.

Then I turned my head to the right slightly and saw the new Zunes coming out:
  • hardware redesigned from the ground up
  • Zune marketplace redesigned from ground up - including DRM-free music and podcasts
  • WiFi synching enabled
  • high capacity drives
  • thinner machines
  • new navigation widget (The "squirkle." Don't ask.)
  • integration with both Media Center and XBox360
and, something Apple would never do: free upgrades to the firmware of the original Zunes - essentially bringing them to the same level of functionality as the Zune2's.

I bought in. I got one - and it, as I said previously, magnificently hit all the goals. (Wireless sync is my personal favorite. I walk into my house after work, and by the time I get to my home office, a new days' set of podcasts are on the Zune in my pocket.) However, almost immediately upon purchase of the Zune, I realized all the items in my life that I had iPodified. The one that keeps me from eBaying my iPod? The Alpine x001 head decks in my cars.

There are only a handful of tech companies out there with the clout to enter a hopelessly stacked-against-you game like this and hope to become a serious threat - and Microsoft is one of those companies. There stock is lagging behind Apple's now, but they still have enough money in the bank to buy and sell able several times over.

If Microsoft is serious about wanting to capture the digital media experience with its Media Center-Xbox360-Zune triad, it needs to do 2 things immediately:
  1. Outspend Apple dollar for dollar on its marketing campaigns. Not these weird Zune-As-60's-Acid-Flashback ads I see on TV, but saturated marketing that gets the message out - and that never stops. Not just ad spots that inform and are informational, but billboards, internet campaigns, etc.

    I was discussing this over the weekend with a friend, an avid Machead, and he said something interesting about the effectiveness of Apple's marketing over the iPhone this summer. He watched people in the Apple store on 5th Ave in NYC walk into the store, and without reading a manual or talking to an assistant, pick up an iPhone and start to use it. Was this because of its "intuitive" interface? Or was it because we had all already been exposed to 6 months of those goofy TV spots that showed us how to use 2 fingers to stretch open a webpage in Safari?

  2. Work your partnerships, people! Get in tight with the Case Logics, the Alpines, the Logitechs... offer out subsidies to accessory providers to get them to support the product. (How hard would it be for Alpine, for instance, to sell a $20 adapter and firmware upgrade for the x001 to support the Zune?)

Without these two extreme spends, Microsoft will never sell anything close to a significant percentage of the portable media marketplace - and people will point at the failure of the Zune in the marketplace as another episode of Apple's Mac vs. PC ads. Hmmm... maybe John Hodgemen can be holding a Zune in the form of a "Mini Me"?

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