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

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.

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.

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.)

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.