Why Microsoft Can't Compete With iTunes

A reader submitted "Why Microsoft Can't Compete With iTunes which is an interesting op-ed piece about the differences between the two companies, but also the intersection with a different type of business like that of television. I've read some of the same arguements before, but this piece ties it up nicely together."

Comments

Somebody tell me quick...

[justinbach]

what airline I can fly to have an iPod built into my headrest, and a Ballmer-Zune hybrid for a flight attendant?

Re:Somebody tell me quick...

[ciaohound]

That's no flight attendant. It's a space station. Turn the ship around.

No.

[Kadin2048]

The U.S. DOJ settlement against Microsoft did very little. I would argue it basically did nothing of any relevance, certainly nothing that fundamentally changed Microsoft's business practices. If anything, it probably emboldened them, since the end of the settlement made it harder for a new one to be brought against them in the future -- it demonstrated that the U.S. government didn't have the political cojones to actually do anything meaningful.

Here's the DOJ's lame info site on the settlement:
http://www.usdoj.gov/atr/cases/ms-settle.htm

Re:No.

[Anonymous Coward]

it demonstrated that the U.S. government didn't have the political cojones to actually do anything meaningful.

Not quite. The US Government could do something quite meaningful if it chose to. This administration, however, chose not to do anything meaningful.

this bit is interesting ..

[rs232]

The Power of Monopoly

Interestingly, while Microsoft's monopoly power dominates the PC industry, it didn't achieve that position in the same manner as Apple found success with the iPod. This is very important to understanding why Microsoft can't compete with iTunes.

It has everything to do with choice.

More than 80% of Microsoft's revenues for Windows come from corporate volume licensing and OEM copies of Windows bundled with new PCs. That means the company doesn't have to compete to sell a product at retail.

DRM does it

[From A Far Away Land]

Microsoft can't compete with iTunes because they are dead set on keeping their WMA DRM PlaysForSure-Maybe technology.

If anyone hopes to one day defeat iTunes, they'll have to do it by making music more convenient to listen to, not at least as hard.

Brown

[MouseR]

Enough said.

That's not the biggest problem.

[Kadin2048]

Except from what I've heard, Zune isn't going to use PlaysForSure, it's going to use some other DRM system that won't be compatible with existing (Sandisk, etc.) PFS players.

So they've basically written PlaysForSure off as a failure, it would seem -- or at least it looks like it. I don't know what you call a DRM system that you refuse to use on your own products, if not a failure.

But if you read TFA, the reasons for Microsoft's predicted failure are not just that it's hawking a more restrictive DRM system than Apple is (which I'm not sure most people care about) but because their experience just doesn't translate over into the new market. With the exception of the xBox, Microsoft really doesn't know anything about consumer electronics, and their major product is maintained through aggressive marketing agreements that don't allow for any consumer choice. In short, they're crappy at actually getting people to buy their stuff, when they have a choice. Apple, on the other hand, has been fighting an uphill battle for years and knows how to woo people, both via their brains and wallets.

Re:How about...

[2nd Post!]

How about a better product?
1) Microsoft could have easily designed the Zune to be a better MP3 player; build in a microphone for active noise cancelation and automatic volume adjustment, and provided an API for games, applications, and synchronization, and accessories.

How about an easier to use product?
1) Microsoft could have easily had the Zune do wireless sync; bring it near your host computer and everything gets synched. No plugging necessary!

Apple CONTINUOUSLY creates incentives for people to upgrade and replace their iPods by releasing better iPods:
1) Better battery life
2) Smaller
3) More features
4) Cheaper

Marketing only goes as far as product quality; a poor product won't last more than one generation. Apple is on seven now.

The day Microsoft...

[endemoniada]

...designs an MP3-player that actually does what it's supposed to, that's when I'll buy it.

What I don't want is an MP3-player that's DRM-infested, but doesn't even play their own, much advertised DRM format, an MP3-player with WiFi that can ONLY communicate with other MP3-players or an MP3-player with a navigational wheel that doesn't spin.

Congratulations Microsoft, at least you reinvented the wheel! :=)

Have you looked at the AFTERMARKET?

[ackthpt]

The fact that the market is saturated alredy with people who can use iTunes and who own iPods? What is the insentive to switch?

Apple's footprint is extended by the aftermarket, where Zune won't even have one for months or years. I was in CostCo a week ago and was stunned how many portable stereos there are with an iPod cradle. Must have been a dozen, all different manufacturers. While shopping for a new car radio I find lots of them offer an option to hook up your iPod.

Well. Looks like Apple doesn't just have a market, but a solid market. Apple's worst enemy at this point could only be themselves by changing something and screwing these aftermarket partners who provide them with greater value.

Microsoft could only achieve this quickly with some very large incentives ($$$$$$$$) given to manufacturers to adopt their platform and I don't see that happening soon enough for the holiday shopping season (which has already begun, dontcherknow.)

Apple a very minor player in PC industry

[krell]

The article called Apple a minor player in the PC industry. Yes, I'll say 0% (Apple has yet to market a PC) is a rather small share.

Re:Apple a very minor player in PC industry

[krell]

You are using it the way few others use it. See the Apple ad campaign that compared Macs to PCs (not to "other" PCs). Check all the software that has been sold in different versions: mac version vs pc version. "Personal computer" has not been a generic term since the early 1980s when, for better or worse, IBM hijacked it. You are right, though, about the new i386 machines that do Bootcamp....which pretty much means that Apple has stepped into the PC market for the first time after all these years.

factual not hypothesis ..

[rs232]

"So you are hypothesizing that Microsoft can only succeed if they can impose a product on people by means of it's monopoly"

I'm not hypothesing this, I am quoting from the article. But I do agree with its sentiments. Do you believe otherwise, that 80% of revenues don't come from volume licensing and OEM licenses and that a large part of Microsofts' current and past sucess is derived from this. This looks to any disinterested observer as factual rather then hypothesis.

was Re:Hypothesizing...

Re:How about...

[Dog-Cow]

I know it's stereotypically fashionable to be an asshole where MS is concerned, but Windows has actually improved in each generation.

1.x and 2.x were text or low-resolution graphics. They never took off.
3.0 brought the graphical UI and some applications to take advantage of that.
3.1 brought a 32-bit harddrive driver, which improved performance. It also took better advantage of protected mode for memory access.
95 brought pre-emptive multi-tasking and better memory protection. It also brought DirectX and 32-bit hardware drivers across the board. It also came with a TCP/IP stack and brought SMB over TCP. That was a big deal for Windows shops and a big improvement over the netbeui protocol used since DOS 3.3.
NT brought a real security model and none of the backwards compatibility hacks for 16-bit mode that was present in 95.
Win2k improved the stability of NT.
XP brought the stability of NT to home users, and is more compatibile with typical home applications (like games) than 2000 was.

Vista sounds like it's a step backwards, but I haven't seen it myself yet.

XBOX not profitable

[businessnerd]

With the exception of the xBox, Microsoft really doesn't know anything about consumer electronics

Actually, the XBOX still has not made any money, and probably never will because they chose to sell it at a loss. They expected to make up the difference in game sales, but that hasn't really worked out too well. This was a pretty stupid move on their part. XBOXes are NOT printers. They do not REQUIRE you to purchase supplies on a regular basis in order for it to continue to function. With a printer, you HAVE to buy cartidges when they run out, and 90% of the time, the consumer buys the cartridge made by the same company who made their printer (HP cartridges for HP printers). And furthermore, some of those printer companies also sell paper. Not everyone buys that brand, but it's out there and many do. The XBOX on the other hand, is relying on the purchase of games. Yes you do need to buy at least one game (unless one comes bundled) to use the thing, and yes most people will buy more than one game, but there is nothing forcing them to buy the games on a regular basis. When a great new game comes out, many will buy, but not everyone, and most of the games' revenue will go to the company that produced the game, NOT Microsoft.

With marketing prowess like this, it's very unlikely that they will be able to compete with Apple.

Re:duh... marketing

[vertinox]

They can't compete with iTunes because 90% of people get iPods and iTunes is the only thing that works with it.

I think the confusion here is the difference between iTunes the application and iTunes the music store.

Everyone who owns and iPod uses iTunes to transfer music to it (well you can work around this but its a pain and pointless unless you a techie)

But not everyone who owns an iPod uses iTunes to purchase their music nor everyone who purcashed songs from iTunes have an iPod (albeit they can only listen to it on iTunes and rip it to cds).

In fact for someone to fill a 60gb iPod with music from iTunes, they would need to spend over $10,000 to do so which make this fact unlikley.

Personally, I rip CDs into MP3s and put them on my iPod, wheras I have a hunch that perhaps many people get their Mp3s from houses of ill repute... *coughs* Pirate bay *coughs*

However, Apple's goal was not to make money off iTunes the music store or force people to be able to only use music on iPods that they've purchased from them.

It is a nice benefit to them that people purchase songs, but their real and true goal was to use the iTunes music service to sell iPods.

I have a feeling though that Micrsoft has this goal in reverse. In which they intend to sell Zunes at a loss to get people to buy music from their service and somehow fail horribly in this process.

Re:duh... marketing... how about windows

[tbone1]

• With a 5% share is OS X even relevant?

I would say yes, because within that 5% is 95% of the innovation in desktops.

Why corporations CHOOSE microsoft

[klubar]

I read your article about the "Microsoft fallacy", but you seem to have totally ignored the corporate market. If a Fortune 500 company really wanted to buy machines without Windows licenses they could easily cut a deal with Dell. Dell already sells machines without OS's (see the workstation/server pages) and can special price & configure machines--in fact, they'll even preload any OS/software you want on a machine (minimum quantities apply). However, big corporations really want Windows--it's easily remotely administered, works well with other applications (especially Exchange) and there is a large ecosystem to support it. From secretary training (how to log in, use word) all the way up to advance internals experts. From a corporate point of view, Windows just works.

Because the big corporation use Windows, all of the smaller firms that buy or sell to the big corporations frequently need to use windows. Sure I could deliver a presentation myself using keynote, but the first time I send it to a corporate client will be the last time with that client. Same thing with sending a document in a "weird" apple font (sure they can open it, but it will look strange--the question will come back "can't you just put it on a PC?".)

The iSeries (iTunes, iMove, iGarageBand) is essentially meaningless in the corporate environment. Apple has pretty much given up any hope of getting more than a pip of share in companies with more than 500 employees. The same thing is somewhat (although not completely) true in the educational market.

The training cost of a new hire who doesn't know how to use Windows/Office is higher than one who does--two identically candidate--one who is ready to go and the other who "gee I've only used a Mac, but boy can I operate GarageBand" which would you hire?

Apple are cool, shiny objects--just keep them at home.

Re:Why Apple can't compete with Microsoft

[multisync]

Why is it on ./ that we have articles like this once a week or so, yet I've never seen a headline like "Why Apple can't complete with Microsoft for Operating System", or "Why Apple will never amount to anything in the corporate environment"?

How about "Why Microsoft's Zune Scares Apple to the Core" from like two weeks ago?

Maybe a better question would be "why do trolls get modded +3 interesting for whining about articles suggesting Microsoft isn't the shining beacon of success they try to portray themselves as?"