Why Microsoft's Zune is Still Failing

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.'"

Comments

Failure?

[nurb432]

Lets see, they are selling lots of them, and slowly gaining market penetration. I don't see that as a 'failure'.

Re:Failure?

[syntaxeater]

That's because this is slashdot.

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.

Re:Failure?

[MightyMartian]

I don't think there's any grand strategy in this other than "Apple keeps out-marketing us, but let's keep plugging away anyways." It's the behavior of a company with lots of money but absolutely no vision. I think, judging by what they're releasing nowadays, that Microsoft indeed has no vision left, it's just a cranky old behemoth that's getting slowly bled away, and other than a few clever tricks like trying to destroy an international standards body isn't showing much imagination at all.

Re:Failure?

[blzabub]

Sorry to tell you this but there are expectations associated with who you are. A massive corporation with $29 billion cash on hand and dominant control over most widely used computing platform in the world is expected to do better than just slowly gain meager amounts of market share. The expectations for David are different from those for Goliath.

Re:Failure?

[Admiral Ag]

As far as the Zune is concerned, that's true. When the iPod came out it didn't look or work like other mp3 players. It was a genuinely fresh approach. Now most mp3 players look a bit like an iPod. I guess Microsoft could have realized that doing that would get them not much further than Creative et al, but they didn't. Now it's Apple reinventing the form of the device with the iPhone/iPod Touch, and Microsoft's players look like old hat.

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.

Re:Failure?

[EastCoastSurfer]

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?

Re:Failure?

[DECS]

Yes but it burned up 8 billion dollars of revenues trying to expand outside of its windows/server/office monopolies. It's only making money in areas where consumers have no choice. So from that perspective, it is being slowly bled as it tries to transition from the mature PC market into other areas. It's doing a really poor job in music/media/mobiles, and despite the fact that people like playing the xbox 360, its not making money in games either. Or more accurately, its losing billions more than its making.

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

Price drop

[sootman]

In the Black Friday sales papers, first-gen Zunes are going for $80-100.

Simpler explanations

[Just Some Guy]

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.

[porky_pig_jr]

Zune (and any like product) will succeed when judged on its own merits, rather being competitor of brand A. But it will never be like that, since Zune *was* positioned as iPod killer from the start.

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.

Can you say one-sided?

[TSDMK]

Zune shortcomings aside, just look at RoughlyDrafted's other articles. All pro-Apple. Is it a surprise that this guy claims that the Zune is a failure? Personally, the fact that Microsoft don't even try to compete outside the USA speaks volumes about their confidence at this point.

Just Look At The Xbox Fiasco For Why

[Anonymous Coward]

It is a culture thing that causes Microsoft to fail over and over again in the consumer media/entertainment markets.

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:Amazon bestsellers

[flyingsquid]

Zune has occupied the top spot for quite some time. Is this a failure?

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?

Re:Idiotic premise

[pushing-robot]

All "golden ear" discussions aside... In case you've been living under a rock, Apple has an 160GB player. The only PMPs with more storage use 2.5" notebook drives and are about four times as large as an iPod. iPods have supported lossless audio for years, which is uncommon among popular media players.

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.

Bloat, ignorance, and arrogance

[Dracos]

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.

Re:Amazon bestsellers

[Anonymous Coward]

Possibly related to the fact that the Zune isn't launched in the UK yet. You reckon?

Re:M$ != consumer goods merchant

[PhilipPeake]

What you say has a lot of truth behind it. Unfortunately, Microsoft can see the writing on the wall for their current software products. Their OS market share has reached saturation, attempts to persuade people to dump their current Windows for the flashy new one are becoming less and less successful. The end of the road for their office products is similarly in view. The trick of adding new bells and whistles and forcing upgrades with a format change has been used once too many times.

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.

monopolistic

[steveoc]

Well, OK, maybe apple sort of dominates the ipod market .. big deal.

MP3 players are NOT a critical component of the infrastructure of modern society. No matter how successful Apple is in dominating the ipod market .. it DOES NOT affect things like access to government documents and services, access to internet content, access to electronic lodgement of tax returns.

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 .. but we do cast serious ire on the MS monopoly, not because we are fanbois of the alternatives, but because the abusive MS monopoly is a dangerous thing that drags down on so many aspects of our modern society.

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.

Re:Don't support monopoly

[Jahz]

I'll never, ever, ever get an iPod. I'll be damned if I support the Apple monopoly.

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. Ahhhh, you're blind. Microsoft is just as much after lock-in as Apple. Forget the past and present anti-trust problems that plague Microsoft... They support a multitude of devices not "because [Microsoft]s all about choice" (to quote you), but rather, they do it because their business model is just different than Apple's. Microsoft decided early on that it'd be better to let dozens of manufacturers fight over the music hardware market, and dozens of online retailers/labels fight over the music sales pie while controlling both markets from behind the scene. It was a good plan, but Apple destroyed it by sucking up nearly all of the market with a non-Microsoft system.

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
http://download.microsoft.com/download/d/0/1/d01ec2b5-a42f-4cef-ae27-123c02515fc7/WMDRM10_FinalProduct_v3-20-2006_Sample.pdf
http://gizmodo.com/gadgets/portable-media/zune-on-linux-done-kinda-219657.php