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Why Microsoft's Zune is Still Failing
Posted by
Zonk
on Fri Nov 23, 2007 05:13 PM
from the fall-over-dead dept.
from the fall-over-dead dept.
DECS writes "Last winter, RDM detailed why Microsoft's iPod Killer would fail miserably. This year, the site argues, Microsoft will fail again, but for a new set of reasons. It is not obvious that the company has figured this out itself. 'Microsoft doesn't seem to learn from its mistakes in consumer electronics very well. When it does however, it frequently gets the timing wrong. This year, Microsoft appears set to compete against the Apple of 2006. It now offers two flash models, last year's leftover 30 GB unit, and new 80 GB version. The problem is that Apple moved the goalpost dramatically. Apple's new 3G Nano is ultra thin and small, but delivers the same video resolution as Microsoft's boxy flash Zunes at the same price. It also plays games.'"
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Failure? (Score:5, Insightful)
Re:Failure? (Score:5, Insightful)
When Linux "slowly gains market penetration," it's always a success.
When Microsoft "slowly gains market penetration," it's always a failure.
Is the cup half full or half empty? It all depends on who makes the cup.
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Re:Failure? (Score:5, Funny)
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Re:Failure? (Score:5, Insightful)
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Re: (Score:3, Insightful)
CompUSA anecdote (Score:3, Interesting)
Re:Failure? (Score:5, Insightful)
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Re:Failure? (Score:4, Insightful)
Add to that the brown colour, the pointless wireless and the "Welcome to the Social" slogan (which must be the most twattish slogan in the history of slogans with the possible exception of "We eat excrement"), and the thing is just a gigantic hunk of fail.
The Xbox 360 is OK though. The Xbox Live service is pretty good, although it should be free like the PSN. At least Microsoft brought something new to that aspect of the market and it does have its own charm, once you get past the hordes of castrati calling you a fag for beating them at Halo.
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Re:Don't support monopoly (Score:5, Insightful)
iTunes doesn't work with anything other than an iPod... but Windows Media Player will work with ANY device (except an iPod, of course, because Apple decided to cripple it in order to maintain their monopoly). Or I can use WinAmp. Or some other player, so long as it's not from the Apple monopoly.
Microsoft: because it's all about choice. Freedom, and choice.
Instead of competing with retailers and manufacturers, Microsoft morphed Windows Media into a framework for them to license and use. You see, all the retailers would need a DRM scheme to effectively sell their music. This would then force all the device makers to choose some DRMs to support and effectively segment the market (market = money). DRM systems are complex to implement and require trust by both consumers and labels. With Windows being ubiquitous on Desktops worldwide, MS was positioned from the start to CONTROL the music/video market through Windows [Media Framework]. WMP supports WMA/V DRM, and since its present on 95% of computers in the world, device makers and retailers almost have to use it to hope to compete with the iTunes lock in.
Microsoft charges device manufacturers and retailers a licensing fee for each and every unit of WMA/V enabled product they ship. The rates are negotiated for each company of course, but are likely higher than the "suggested" sample rates on the Microsoft website. Using the sample rate, a company that offered 2 WMA enabled portable music players could pay $1,600,000 to Microsoft in fee's each year. On top of that, your device has to be "approved" by MS. This means it can't use open source software (even open source decoders or operating systems) and basically makes you pay to be Microsoft's bitch.
Now, after reading the preceding, do you still believe Microsoft is all about choice?? Perhaps you've drank too much corporate cool-aid? Microsoft designed their model around lock in too... it's just more subtle than Apple's model... and it's not even close to as profitable, hence the Zune! MS has now gone into the hardware space itself (a strange move for them considering how they've handled cell phones/Windows Mobile) in an attempt to get closer to an Apple-style lock-in model.
References:
http://www.microsoft.com/windows/windowsmedia/licensing/agreements.aspx [microsoft.com]
http://download.microsoft.com/download/d/0/1/d01ec2b5-a42f-4cef-ae27-123c02515fc7/WMDRM10_FinalProduct_v3-20-2006_Sample.pdf [microsoft.com]
http://gizmodo.com/gadgets/portable-media/zune-on-linux-done-kinda-219657.php [gizmodo.com]
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Re:Failure? (Score:5, Insightful)
Saying that Microsoft will simply "outlive the competition" has to assume that the competition its supposed to outlive has no air supply. But Apple is making good money in iPods, iPhones, and even media sales, Google is making money in search, and Linux doesn't require oxygen to thrive. It's Microsoft that is suffocating here. There's a reason its stock is flat as a pancake despite making fat revenues and profits: it has no viable future.
What You Expected, What You Got: Apple and Microsoft in Consumer Electronics [roughlydrafted.com]
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So apple doesn't think ahead? Only Microsoft....? (Score:5, Funny)
Joel spotted the real difference between iPod and Zune:
http://www.joelonsoftware.com/items/2007/10/05.html [joelonsoftware.com]
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Re:So apple doesn't think ahead? Only Microsoft... (Score:5, Interesting)
And when you've figured out why they do something so silly you'll have cracked the problem.
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Re:Failure? (Score:5, Interesting)
IBM used to do this all the time. If they ended up with viable competition in, say, mainframe hard drives, they would drop the prices or give out special deals to customers. then they'd adjust the prices on their typewriters.
I remember that the court case went all the way to the US Supreme Court. However, the Supreme Court announced the results of that case on the same day they started breaking up AT&T, so it kind of got lost in the shuffle.
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Re:Failure! (Score:5, Interesting)
Channel stuffing was never brought up about NPD's retail sales because "channel stuffing" is stuffing the channel, not selling through retailers. Stuffing the channel was obvious because Microsoft was "meeting its goals" just in time with huge shipments, but retail sales (such as reported by NPD) weren't reflecting those same shipment volumes. The chart in TFA makes it very clear that Xbox 360s were stuffed dramatically in time to meet goals, not demand.
Stores have been sitting on piles of 360s over the last year. That's why Microsoft dropped its June 2007 cumulative shipment goal from 15 million to 12 M and then only shipped 11.5 M. Since June, new shipments have been very small--the channel is stuffed to the gills! Additionally, Xbox Live subscriptions (which come with new units as a free trial) are only around half the units shipped. Are there that many people who buy a 360 and then don't use the free Live membership? Or are those unused subscriptions just sitting in unopened boxes at retailers?
The number and popularity of games available for the 360 and PS3 also don't reflect the idea that there are only 1/2 the number of PS3 players, despite the year head start Microsoft had. Microsoft also has anemic sales outside of the US with the 360, and isn't even attempting to sell the Zune overseas.
Microsoft can plan on ten year profits, but that didn't work out with WinCE, which has been a flightless bird since 1998 and has been left behind by the rapid ascent of the iPhone in its first few months.
Would all the theorists who think Microsoft should be granted a quiet, uncritical ten year waiting period to see whether their products can survive in the market please take a look at the iPhone? It went from announcement to available product in 6 months, and instantly became the hottest selling mobile. It now has 27% of a contentious market, despite being a luxury, premium priced product competing against simpler and apparently cheaper (when subsidized with more expensive contracts) Windows Mobile phones. It sounds a bit like pundits insisting that President Bush's actions should not be criticized until ten years out, at which time he will somehow look like a competent statesman.
There is no reason to believe that ten years will help the Zune, and no examples of any dinosaur needing ten years to take over a market. Microsoft took the graphical desktop market from Apple between 1990-1995, not by slowly taking Mac sales, but by expanding a larger market outside of Apple in the DOS PC market. It isn't doing anything similar here. Microsoft rapidly took the browser market from Netscape within a couple years 1996-1997.
Microsoft also talked about how PlaysForSure would rapidly take the iPod. It didn't. It started over with an incompatible version of the same technology, starting the clock back at zero while also competing against existing PlaysForSure devices.
How is it that "3% doesn't even matter" Apple rapidly earned a significant share in smartphones (27% in the US in its first quarter) on its first try, while monopolist Microsoft can't be expected to take more than a shred of a very specific market for "MP3 players using a hard drive"? Also note that if you reserve the right to define your own market, Apple has 100% worldwide market share for "mobile phones with more than 2GB of RAM."
iPhone Grabs 27% of US Smartphone Market [roughlydrafted.com]
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Re:Failure? (Score:5, Informative)
"Actually, the Zune has been a failure.... The fact is, consumer electronics do not "Slowly gain market share" - they are hit or miss."
This is at odds with how things tend to work in the electronics and CE industry.
Microsoft started by looking at the market, looking at what they wanted to accomplish, set a budget, and then built a unit and market share forecast. And, they hit that forecast. This makes it a success. Sorry -- that's not the politically correct answer, but it's the truth.
"the iPod is king and will remain king - the Zune, in it's wildest dreams, may become a distant also ran in the top 20 selling."
Again, I'm not sure where you're coming from, as your statement is at odds with the actual situation that's occurring. As of this writing, Zune models occupy the #1 (yeah, #1), #9, #16 and #20 slots in the Amazon top 100 [amazon.com]. This matches up with the NPD industry data (available via subscription only), which consistently shows that Microsoft has no problem keeping Zune models in the top ten.
More importantly, they've passed Sansa in dollar sales. They've passed Creative. Their dollar share is greater than 10% (something that Sandisk and Creative haven't been able to do for a while), and it's growing. So, I'm having trouble understanding why you claim that the "wildest dreams" for Microsoft are to place it low in the top 20 when they're already doing quite well.
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Re:Failure? (Score:5, Insightful)
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Re:Failure? (Score:4, Informative)
"Do you think that many people want the 30gb brown zune or are they buying it because it's been so heavily discounted because it's the brown zune?"
I think that the pricing is a biggest part of it; there's a lot of elasticity between $199 and $249 (I'm talking list prices here), so I'm guessing that most people presently opting for the 80GB Zune would choose the 80GB iPod classic if both were offered at the same price.
That being said, the Zune has a lot going for it -- it's not the complete POS that many Slashdotters paint it to be. The interface has gotten good reviews and has that "gee whiz" factor that can make a difference if you're standing there in Best Buy preparing to buy your first MP3 player and wondering if the iPod is worth the additional $50 - $70.
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Price drop (Score:5, Insightful)
Amazon bestsellers (Score:4, Interesting)
Re:Amazon bestsellers (Score:5, Funny)
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Re:Amazon bestsellers (Score:5, Insightful)
That may have more to do with the diversification of Apple's product line than anything. They have the iPod touch, iPod Classic, iPod Nano, iPod Shuffle, the iPhone, etc. Microsoft may sell more of one particular model, but I'm gonna take a wild guess that Apple is still moving a lot more iPods. Out of the top 5 slots, Apple has the next 4. Out of the top 20 media players, 13 are made by Apple.
As for whether the Zune is a failure or not, it's all relative. If the Zune had been made by a small startup, it would be hailed as a potential iPod killer. But it's made by Microsoft, the 500-pound gorilla of the digital world, a company with a lot of bright people and billions of dollars at their disposal. When one of the world's most successful corporations enters a market with all those resources behind them, anything less than runaway success is going to be seen as something of a failure. Even if they do manage to grab a large chunk of the market, the question really becomes, how much money are they spending to do it, and how much profit are they making on each Zune?
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Re:Amazon bestsellers (Score:4, Interesting)
I know the US is a big (the biggest?) and important market, but with Zune sales it's a different story [amazon.co.uk] in the UK. When I looked just now, the first Zune appears in 61st position, with iPods of all kinds dominating the top ten. Of course, the position changes all the time but I've been looking at this every time I see a story on Zune's top spot on Amazon US and the highest position I've seen for Zune is 35th.
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Re:Amazon bestsellers (Score:4, Insightful)
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Re:Amazon bestsellers (Score:5, Interesting)
From 25 - 50, there are 2 more Zunes, and 8 more iPod model, From 51-100 - 5 zunes and 7 ipods.
That the -brown- zune is the most popular product could well be pretty meaningless, as well as a reflection of the blowout pricing. The black and red versions ranked FAR lower, and I find it impossible to imagine that brown is what everybody wants.
The point is: there are 14 zunes in the top HUNDRED, while there are 13 ipods in the top TWENTY. (and 28 in the top 100).
If the brown zune at blowout pricing can grab the #1 spot, yeah that's impressive, but really doesn't say THAT much. Looking at the numbers its clear that ipod still utterly dominates. If only we had the numbers so we could add up total zunes and total ipods then we'd know by how much.
Its also clear the ipod is far more profitable, considering the lock they have on positions 2,3,4,5,and 8 all at pretty much regular full retail, and especially considering the number 3 spot is held by the 16GB ipod touch which is their flagship product and runs more than twice the price of the zune.
Also, ipod, by having twice as many sku's roughly cuts its sales scores in half, because sales are divided by that many more products. I suspect that if ipods weren't available in quite the same rainbow of options as they are, they'd handily lock up the top 5 to 10 spots no matter what Microsoft did.
-cheers
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how about (Score:3, Insightful)
write to congress (Score:5, Funny)
So, Microsoft, and everyone else: please, stop trying. Apple has the only music player worth anything. You have no chance.
(If you don't see the sarcasm tags, then you're probably on a Mac)
Re:write to congress (Score:5, Interesting)
The reason macs are typically more expensive than generic x86 clones is because there's less competition in their segment. There's a thousand and one makers of x86 clones, but only one that has the apple branding, reputation and the capability to legally run OSX.
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Re:write to congress (Score:4, Insightful)
...design of hardware, support of the OS and hardware under one roof, and a place to go and learn (ProCare) and get your problems looked at for free (Genius Bar). The small price difference (it is small, not to beat an already dead horse) is worth it IMO.
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Simpler explanations (Score:5, Insightful)
Exhibit A: Cute, functional, the industry standard. Everyone knows what it is. Comes in gift-friendly colors. A status symbol.
Exhibit B: Volvo-esque, crippled, and ignored by accessory manufacturers. No one outside Slashdot and the Black Friday Loss Leader Bin has heard of it. Comes in brown. Also a status symbol (but of an undesirable status).
Don't try to overthink it.
any iPod killer is doomed to fail. (Score:5, Insightful)
And yet another thing: I think, psychologically, just like myself, every time you hear of xyz-killer from Microsoft, somehow you end up visualizing Balmer throwing the chair, and then somehow you end up *not* purchasing Zune.
Goalposts (Score:5, Funny)
Can you say one-sided? (Score:5, Insightful)
Re: (Score:3, Insightful)
Just because he's pro-Apple doesn't mean he's necessarily wrong. Does his arguments make sense? Are they logically sound and based on evidence? Are his analyses cohesive? Do you agree with them? That's really the whole point
Re:Can you say one-sided? (Score:4, Insightful)
That's because it is a mistake. When deciding what features to include in a product, the important question is how many of your customers want it and whether that justifies the cost on every single unit.
-jcr
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Customer and Buyer must be one and the same (Score:5, Informative)
I think it is axiomatic that if your buyer/user and customer are not the same person, then you are in trouble. In Microsoft's case, without hardware sales there will be no advertisements or add sales either, and since they're selling the zunes at a loss, they lose on all counts.
Re: (Score:3, Insightful)
MSFT Trapped in Same Old Rut (Score:4, Interesting)
It worked for web browsers and maybe mouses - but their efforts to penetrate the consumer electronics market in any meaningful way have so far failed to gain any traction.
They've got lots of cash, so they can "compete" while they're losing money and do it for years. Who knows, Xbox might take over the game console market someday. Maybe Zune will amount to more than a poor copy of last year's product. On the Xbox front, they can buy up game developers and convert their products to Xbox-only products. I don't see that kind of business plan working with music players, though. Even if they negotiate exclusive distribution rights for many important acts - the market will ignore those restrictions as it has already shown itself capable of doing. Which act wants to be the first to release "Zune only" tunes? Let's keep in mind the percentage of the portable music player market that Zune represents.
And they've already burned a lot of bridges - remember "Plays For Sure"? They signed up player manufacturers right and left - then left them high and dry. Their potential customers are more than a little aware of this too - who wants to buy a player that you might not be able to purchase any music for in a year or two?
Just Look At The Xbox Fiasco For Why (Score:4, Insightful)
Although the Zune failure looks time compared to the Xbox fiasco in some ways the Xbox marketplace disaster has moderated the Zune marketplace failure. The Xbox project is now some six years into its life and the console has wasted some seven billion dollars and is dead in the water. The new Xbox 360 after two years on the market is still dead in both Japan and Europe and selling to a fairly niche hardcore US fps/pc gamer demographic. After all those billions the 360 is on track to just making the same 24 million or so worldwide installed base numbers as the first Xbox mess.
The Zune was supposed to be subsidized by the 360 'profits' LOL
Instead of sitting down and hiring really good industrial and UI experts and coming up with something comparable to the iPod line Microsoft has been unable to get out of their same old product strategies:
* Using other products to subsidize new ones to force their products out into the marketplace
* Stupid viral marketing tactics
* Buying off media
* Hiring people to sit around on messageboards hyping their products and slamming their competitors
* Inane attempts at coming up with 'fastest ever' or other silly PR claims
It's a culture thing. People from Microsoft would rather slash your tires or tie your shoe laces together than legitimately win a race and then sit around high fiving each other afterwards over drinks at the local Rendmond wateringhole. Someone up in Redmond needs to wake up and realize that culture is getting them nowhere in the console and digital media markets.
Re:Just Look At The Xbox Fiasco For Why (Score:4, Insightful)
I once read a short history of the car industry and it pointed out that GM ate Ford's lunch in part because they realized that consumers wanted to buy experience, status, and identity with their cars, not just new engines and better brakes. Microsoft seems stuck in this rut now - for a while consumers were excited about Windows because it was their entree into the futuristic world of computers and the Internet, but Windows/Microsoft never really became a identity brand. Apple has mastered the identity branding - after all, functionally the iPod does very little that the Rio didn't do (with the notable exception that Apple streamlined the process of getting music onto the damn thing), but Apple made it simultaneously safe and sexy to make the leap from collecting music on CDs in a big CaseLogic book to collecting music on a computer in one form or another. The iPhone is really the same simple concept - make the computer part of a smartphone work easily and make it sexy.
I have quite a number of friends at Microsoft, and they are all smart and aware people, so I'm always surprised at how tone deaf the company itself is. The only blindspot I could ever really discern was the combination of Not Invented Here and We Know What the Future Will Look Like And We Can't Talk Because We're Inventing It Now. Surely Apple has its blindspots, but I have to agree with your view that they are fundamentally better attuned to the consumer market.
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Re: (Score:3, Interesting)
that's not good, considering how long the Wii has been out. I mean a new console has the same market share as a console years old, this is 'good'?
I have to quote the great philosopher, Homer (Score:3, Funny)
Bloat, ignorance, and arrogance (Score:5, Insightful)
MS is about as nimble as a beached whale carcass. I'm impressed that they're only a year behind.
MS has a long record of not caring what users want, instead assuming that the public will gleefully accept whatever MS produces. They think they can win at consumer electronics by playing like the monopoly in a market they just entered and have no chance to control, even if they played smart by carving a niche for themselves instead of assuming the market will shift according to their will simply because they enter it.
Wireless sharing impractical? (Score:3, Insightful)
Wireless sharing is a great idea, but Microsoft's implementation was so neutered and locked-down it ended up being a non-factor.
Unfortunate logo (Score:5, Funny)
It doesn't distinguish itself in any way (Score:3, Interesting)
Marketing campaign based on the word "squirt" (Score:5, Funny)
You can "squirt" your music at your friends and they'll be able to listen to it a maximum of three times before deciding to pay for a legal copy.
Yeah, dude! Can't wait to get me one of those!
Re:Competition sells iPods (Score:5, Interesting)
Anyway, they couldn't done it, IMO. There's a saying attributed to Ford Motor Company that says, "Culture eats strategy for breakfast." I used to work at Microsoft, and Microsoft's culture eats everything for breakfast. When they acquired my former employer, the first thing they did was wipe out our culture, and our culture was a lot of what helped us to make a product good enough to make Microsoft want us.
I left after a year and a half and know work for another company that was recently acquired. Our new parent wants to preserve our culture no matter what, so that we keep making the great product that made them want to buy us. What a night and day difference.
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Re:Idiotic premise (Score:5, Insightful)
If you happen to like another player that's fine - but don't spout BS. As a wise man once said, it is better to keep your mouth shut and be thought a fool that to open it and remove all doubt.
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Re:M$ != consumer goods merchant (Score:5, Insightful)
They are desperately looking around to diversify, to enter new markets with new products to build up new revenue streams before the Windows/Office cow dies.
They have tried to break into so many different product areas and markets that its almost funny. None of the attempts have been a great success.
They tried to change the rules of the game and make customers subscribe to software if they couldn't re-sell the same thing with new bells and whistles. That pissed off customers to the point where they bit the bullet and started looking at the alternatives, and what a move to Linix might really entail.
They tried to become the owner of the gateway to multi-media distribution. They went as far as building a whole new OS to support this attempt, and bludgeoned a lot of hardware manufacturers into producing HW to support it. They actually sold the idea to a few media creators, and those that bit are finding that the only thing they really bought was yet another way to alienate their own customers.
Consumer hardware is just another branch they are trying. Unfortunately, like Sony they are letting their various product branches force requirements on others. It makes for a nice consistent story, and the different different branches reinforce each other -- but at the price of producing products that consumers just don't want because of the broken aspects in there simply to support restrictions that some other branch of the company wants to see.
Microsoft should by Sony. Their two brain-dead executive managements seem to have a lot in common.
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monopolistic (Score:5, Insightful)
MP3 players are NOT a critical component of the infrastructure of modern society. No matter how successful Apple is in dominating the ipod market
Your tax dollars are not voraciously consumed by Apple license fees because politicians promise "An MP3 player for every school child !!".
Apple does NOT receive licensing income from the sale of competing non-apple-ipod MP3 players, just in case those non-apple units are used to 'pirate' ipod toons.
Job adverts do not require submissions in "Apple iPod format", nor do the majority of jobs available today "require" experience with stated versions of licensed Apple ipod releases.
Worst of all - the world is NOT full of semi incompetent "professionals" working towards building critical multi-million dollar infrastructures for the future, who are incompetant because their only exposure to how things fit together is from what they learned on their ipod.
Its really not the same thing. There are plenty of benign and inneffectual monopolies around
Monopolies on - food, water, electricity, oil, computers, transport, comunications, weapons, healthcare, legal services, education, etc can be potentially disastrous.
Monopolies on portable music players though ? Thats about as bad as a monopoly on ice cream. Lucrative maybe, but its not the end of the world by any stretch of the imagination. You are not exactly cut off from society if you refuse to buy into Apple's iPod dominance.
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