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Microsoft To Exit the Zune Business?
thefickler writes "According to Microsoft's quarterly filings to the Securities and Exchange Commission, the Zune platform experienced a revenue drop of 54 percent, or $100 million. This compares to relatively healthy sales of the iPod, which were up 3 percent in the same period (though revenue did drop by 16 percent). Obviously, with the recent job cuts at Microsoft's Entertainment and Devices Division, pundits are wondering how soon until the Zune also gets the chop. As one pundit wrote: 'Microsoft, by now, should be realizing that it's never going to be as "cool" as Apple, so why waste its time with the Zune where it has no competitive advantage?'"
Steve Ballmer saying "squirt".
Heckuva marketing slogan, that one.
No sig today...
the "suddenoutbeakofcommonsense" tag
It's fairly easy to see why the Zune failed.
1. A mammoth uphill struggle to beat the popular and well-established iPod (as well as many other competitors)
2. The use of DRM.
3. The use of the word "squirt." Which is easily associated with bodily functions.
4. It came in brown. Which made "squirt" all the more obnoxious.
5. The lock-up issue.
No-one will miss it...
All of this (the article and our posts) are speculation, so as long as we are guessing/gossiping/conjecturing, etc.
Microsoft has indicated that they would prefer less manufacturers and models of Windows mobile based phones, so they can make the OS more tightly integrated with the hardware. There have also been rumors that Zune functionality would be folded into the phone, which tends to make sense. So my guess would be they gracefully lose, er...bow out to the iPod and say they are "providing a great combination to their customers by putting the Zune features into the phone."
no comment
Just rename it the iZune, eZune, or better yet, the ieZune...slap a Vista Capable sticker on it and it can't help selling like hotcakes!
*crickets chirping*
Well, then again, maybe not.
Down With Slashdot BETA!!! I've been around the corner and seen the oliphant; you can only abuse me from your perspecti
Nobody except this guy:
http://sydfish.files.wordpress.com/2008/04/zune-tattoo.jpg
Oh, now I see why it failed...
No sig today...
It's more about making products people want to buy. How many people really want to buy Microsoft products anymore? When was the last time we heard about people lining up to buy the latest version of Windows? The problem for Microsoft is that it has a hard time making products that excite the vast majority of the public, and they've had a few huge mistakes in public perception lately. The Xbox 360 Red Ring of Death was a just a debacle. They shipped a Zune that was less feature-filled than the then current iteration iPod. Don't get me started on Vista, "Vista Capable," and "Vista Ready," or whatever those stupid stickers said.
Sure, Apple products are cool, but they also work pretty well. Why Microsoft didn't look to Apple's or it's own playbook and more closely linked the Zune to the Windows environment is beyond me. This worked for years with Explorer.
Seriously, Xbox games are "cool." I have an original Xbox, and I have been giving Microsoft my $$$ for several years now for my Xbox Live membership. However, I'm just too stingy to give my money to Microsoft for an Xbox 360 after all the hoopla about failure rates. The race to beat Sony to the market was a failure of vision and an appreciation of paradigm shift. There was a huge market for casual gaming that just wasn't going to be satisfied by the first-person shooter, and Nintendo was able to capture it. We can chalk that up to a happy accident for Nintendo executives, but so what?
If a company tries to be all things to all people, it will be unable to do everything as well as companies that are smaller, more focused, or more nimble. Look at General Motors as example number one. Consumers have too much access to information and too many choices. The problem with Microsoft's executive leadership is that the strategic steps they take are, primarily, reactions to market forces. Then, they are placed in the position of having to respond. Why didn't anyone at Microsoft see that Netbooks might one day become popular and have a version of Vista which would run on them? No one? How long was Intel working on the Atom?
Microsoft stocks are, historically, looking pretty affordable right now, but I'm going to wait. I just don't see any game changing ideas coming out of Redmond. Until, as a company, it starts doing something much better than the competition, it will never rise to its former glory days, and its market share and/or profits will continue to decline.
Make love, not reality television.
In a bid to win back profits after huge layoffs worldwide, Microsoft UK has launched Zune MusicTurd(tm) for mobile phones.
The highly competitive music store offers tracks at twice the price, DRM-locked to a chosen individual ear of the purchaser. If they can get it to work with their phone. Microsoft were careful to point out to the financial press that charging your account, however, works perfectly and that the helpline number has been connected to a fax machine.
Microsoft is confident the MusicTurd(tm) service will attract millions of people who will buy tracks from them to play on one mobile ever, not transferable to any other device including the same phone's replacement, in preference to stores offering cheaper unlocked MP3s, and won't just drive people to filesharing networks, MP3 blogs or copying 500 gigabyte USB disks full of music from their friends in sheer disgust at these corporate tools.
"We understand that lots of people use telephones they carry around with them these days," said Hugh Griffiths, Microsoft UK head of Mobile, "and you can even play music on them. A bit like a transistor radio. Whatever will they think of next! So if we get the consumer interest, we'll offer an enhanced version, MusicTurd(tm) Polished(tm). Like we're doing with Windows 7. You can't expect it to be any good until the third version, of course. So buy the first two and it'll be fantastic. Trust us on this. We have hundreds of loyal suck, er, customers on the MSN website, I'm sure we can squeeze them until the pips rattle.
"What do you mean, I'm lacking enthusiasm for our product? You'd think I was trying to get redundancy in the next round of layoffs or something. Ha! Ha! What a ridiculous notion."
[Read the original interview. Least enthusiastic marketer in history. It was quite hard to outdo.]
[Oh, and have a Zune-Anus logo.]
http://rocknerd.co.uk
This is a good example of Microsoft snatching defeat from the jaws of victory. The Zune had pretty good hardware at a reasonable price ... then they put (a) horrible firmware on it (b) THE WORST PC software imaginable for it (c) no way to put your own firmware on.
If they'd made it possible to reflash, a zillion Linux weenies would have bought the devices just to put Rockbox on them.
But no. Obsessive control is so much more important than actual, uh, sales. Remember, it worked for the music industry! Oh wait, it didn't.
http://rocknerd.co.uk
(c) no way to put your own firmware on.
The other points may be valid, but- much as I hate to say it- this is irrelevant for 99.9% of the mass market I assume MS were going for.
If they'd made it possible to reflash, a zillion Linux weenies would have bought the devices just to put Rockbox on them.
No, they probably wouldn't have because it's an MS product.
And the hacker/modder/enthusiast market always overestimates its own importance anyway. Sorry to say this, but you're a relatively tiny percentage. Even if it had been massively successful in that small niche it would still have flopped relative to the mass market iPod.
Nothing wrong with spotting a niche and successfully filling it, of course. However, if your motives- and marketing budget- aim for success with the great unwashed hordes, then niche success is still a flop.
"Slashdot - News and Chat Sites Deviant". (Click "homepage" link above for details).
Windows got the market by price, not by opening up new frontiers.. They copied a lot of stuff from the Mac.. Just iimplemented it on a platform that became affordable to more users than the Apple hardware/software.
Then their 'hammering away' wasn't actually technical; they employed marketing campaigns, misinformation, and even error messages in their products to scare people away from competition (c.f. the old messages in windows 3 when you ran it on a competing DOS)..
MS doesn't (historically) play the 'competition' game.. It plays scorched earth tactics. Find a market it wants to play in.. Throw endless money at it, pushing products out for less than a commercial competitor in only that market can afford (c.f. IE vs Netscape, and other similar events in other markets). Wait until said competitor is dead, then lock it in, and perhaps charge more for the product afterwards, or let it stagnate and put no further development in, killing the development of a whole market.
In the iPod battle, it's Apple, not Microsoft, which pushes to new areas (all the functionality of the iPod touch, the ease of use, so on, so forth).. MS had the almost killer app in there with their wireless sharing, but with its limitations, nobody would have been that enthused about it..
So, MS did their usual "throw money at it, and see what sticks", Apple did design work, and targetted their resources and worked out what people would want to see..
There's a point at which you decide to cut your losses and run. MS have been trounced solidly on all fronts on this one. Now that MS seem to actually have to worry about money (wonder how much they lost in the market crashes), seems this loss maker that isn't going anywhere soon would be a good cut, rather than other areas that actually make a profit.
Wars are won (or at least not completely lost) by not fighting on too many fronts, especially ones where you're getting solidly thrashed by overwhelming opposition. Sometimes a ceasefire, or strategic withdrawl can save the whole show, rather than throwing everything you have in every direction.
It was doomed from the start and here is why. Most MS products do not stand on their own. They are either riding on someone's coattails initially or shoved down people's throats (e.g. DOS and office and explorer). This is usually through corporate sales which a bribeable. Zune had to stand on it's own but had no legs.
I don't see what anyone could possibly think was wrong with the Zune logo.
http://rocknerd.co.uk
I presume you missed this.
The idea of the original posting that since MS "only" sold $100M of the devices last year they'll leave the market? Or is it that they'll leave the market because the successful iPod line is eating their lunch? Or is is because we all agree the Zune isn't "cool"?
MS has many lines of business that are under $100M in annual revenue, yet they continue on in those markets, despite not being #1 - I'm thinking keyboards, mice, MS Home Server, etc.
The Zune is a fine piece of hardware, despite the recent bru-ha-ha over the particular model that couldn't handle leap year, and I suspect that MS will lower their investment in Zune hardware development, focus on differentiation on the software side, and (likely) focus on the "self-ripped" MP3 market (as opposed to the $0.99 per-song download market.
A $100M revenue company selling MP3 devices that are tailored to the Windows platform should be a no-brainer, and I believe MS will turn it around. Having said that, my family has all iPods, despite most of our computers running windows...
Ken
I can't imagine what it must be like to work in the Mac Business Unit at Microsoft knowing that all your efforts are going to nothing more than playing accounting games to hide the Xbox disaster.
It is staggering to grasp the magnitude of the Xbox diaster when you look at it:
* Over 4 billion dollars in losses on the first Xbox hardware
* Mac Business Unit moved into the Xbox division to cover up the losses
* Absolute worst and cheapest console hardware ever created with the Xbox 360
* Online fees for everyone playing online games effectively adding 50-150 dollars in extra revenue per console
* Three years on the market
And the E&D division still was only able to post a relatively tiny profit for 2008. Take away the profitable Mac Business Unit, the Xbox online fees, and other profitable parts of the E&D division and the Xbox 360 hardware is obviously still generating huge losses.
Seriously, I've been amazed at watching the ipod over the years. They came up at 40 gig and it was quite remarkable. I bought an 80 gig model about 2 years ago when they had introduced those. But now you go to the stores and it's hard to buy a classic. They are pushing the nano.
That's usually the first sign of a product hitting it's peak in the business cycle. When they stop caring about the consumer, and start pushing the models which have the highest profit.
If I were MS, I'd stay in this market. Apple hasn't changed the ipod fundamentally since they introduced the color screen and videos.
That means Microsoft have not only managed to damage to MP3 market to the extent that Apple "won", but now they're dropping out too. If I weren't convinced they were just short-term reactionary fools I would believe they had it planned all along.
What am I going on about? Well, you see, back in the days just after iPod, Microsoft introduced this thing called PlaysForSure. It was a system to provide a variety of DRM options - single track purchase, promotion with timeout, monthly fee all-you-can-eat, limited play count, and so on. This in itself would have provided a superset of the functionality iTunes provided.
(For the record, where I stand: DRM must die. Three times. Horribly. Preferably acid bath.)
Sounds great, at least from a technical and business standpoint, right? Unfortunately, just to remind us that they're Microsoft, in order to get a PlaysForSure badge on your product, and to be allowed to use the system whatsoever, you have to pass certain certification processes. That includes making sure you have a good startup time, good inter-track delay time, fast database indexing, and so on.
Still sounds great? Aha, but just to remind us they're Microsoft, they're the people that design the protocol, and they make damn sure it's near-impossible to actually implement a good player from it. The database updates and queries are so horribly defined you'd struggle to get good performance out of a proper SQL-like database running on a PC, let alone a tiny little device with 1MB RAM. The requirement to support PlaysForSure means you must use MTP protocol, which is another botched abortion of a protocol. It also requires that if you use MTP you cannot use Mass Storage, further annoying your customers and very neatly if "accidentally" meaning they don't work on Macs. And then there's the encryption itself which is so horribly over-the-top and poorly implemented (you MUST use Microsoft's libraries) that it badly impacts player performance and its battery life.
So Microsoft screw the entire non-Apple MP3 market for a couple of years. Then they bring out their own PlaysForSure player. Except it's not PlaysForSure. You can imagine the language used where I worked (and presumably other companies). They decided that it was too hard to implement their own spec, so they make a player which doesn't comply to it. It's not even in the set at all - it's totally incompatible.
After an electronics-generation of fucking up the non-Apple MP3 market, then screwing up their own solution, and now after (very likely) ditching Zune, they've basically done almost exactly the right set of steps to put Apple into a lead that will be hard to make a dent into.
I stick with my decade old opinion that you don't partner with Microsoft - you watch your back.
Agreed. People who badmouth the Zune have either never owned one (the "lol zune sux!" crowd), or have only used the original 30 GB model (aka Toshiba Gigabeat) with 1.x firmware. The second gen Zunes are fantastic and I have never regretted buying one (80 GB model) after owning several generations of iPods.
I love the FM radio as I listen to NPR at work. I love the wireless sync and marketplace, which EVERY Zune model can use, but only the iPod Touch and iPhone are able to do. I love the big, vertically-oriented screen. I love the clean navigation menus on the device. I love the ZunePad, which is quicker and way more intuitive to use than the gimmicky Click Wheel.
I also really love the Zune software. It made me appreciate just how bad iTunes really is, which most seem to be in denial about, but ignorance is bliss as they say. I have every intention of buying another Zune when this one no longer serves my purposes.
If people would get over their prejudices about Microsoft and actually try the Zune, I'm sure they would be impressed by it. MS even deleted their own name from the product (it appears only at the bottom of the "About" screen) because of the popular belief that MS can't put out a "cool" product.
tl;dr: zune > ipod
iPod sales (22.7 million) went up 3%, revenue ($3.3 billion) was down 16% compared to last year. That would suggest more people were buying this year but were buying the cheaper models compared to last year.
Zune on the other hand drop 54% in revenue ($100 million) due to drop in sales. There's no other breakdowns. Considering the whole division was profitable by only $151 million and the Xbox made up $135 million of that, the Zune doesn't generate much profit for MS whereas the iPod is substantial money maker for Apple.
Well, there's spam egg sausage and spam, that's not got much spam in it.
Here is a list of features I've found very useful on my iAudio G3 over the couple years I've owned it. Some seem obscure, and I never knew about them until I looked for them because I found a need. (I'm not saying the iPod lacks these features, since I just don't know).
Plus I have it set to work as a USB drive, and show/navigate my tracks via the directory structure (no ID3 info required). Just how I like it. And it runs on a standard AA for about a month of my typical usage.
So, I prefer lots of options, even if I never need some of them.
And about the Zune having DRM (is what I heard), I don't really understand that because it comes with a built-in wireless system so you can share your music with any other nearby Zune. Which seems like the opposite of what DRM is trying to accomplish.
Aren't those shared songs DRM-wrapped, meaning they're exactly what DRM is trying to accomplish? DRM isn't about trying to prevent "sharing", but rather about trying to control what you can do with the music you've bought.
Anyway, I don't think it's really all about the Zune being "uncool". I'm going to go out on a limb and make the following claim: The problem people have with the Zune is not the Zune itself, but rather that it's yet another lame attempt by Microsoft to take over a market that they perceive as a threat. Microsoft (rightly) perceived that the iPod was an indirect threat to their OS as well as their WMA format, and their response was to release an "iPod killer" that failed to understand the MP3-player market to a laughable degree.
Keyword graphs show the story...
http://www.realmeme.com/roller/page/realmeme?entry=zune_meme_rerun
Microsoft entered a market nearing its growth inflection point with a marginal product. They thought they could win through hype and Microsoft branding.
Microsoft Vista is failing for similar reasons.
I have a brown Zune too. When I first got it, I absolutely loved it. 30 GB of storage, ability to play photos, videos and music either in headphones or on my TV. Then a strange thing happened... Last September I wanted to get a mobile device that allowed me to surf the web. I saw my friends' iPhones and thought it was a good experience. "No problem" I thought. I'll just check out this Windows Mobile 6 stuff. I started on a hunt to find a non-iPhone that browsed the web as well as an iPhone. I went to AT&T stores (since I had their service already though my contract had expired), Verizon stores and Sprint stores. At the time, every other phone's web surfing was a J-O-K-E compared to the iPhone. A joke. I can't tell you how much it pains me to say that, since I am in reality a Microsoft fan and have used their development products professionally for over a decade and a half.
So I got the iPhone 3G. My Zune was then in the glove compartment of my car for a few months. I pulled it out a few weeks ago to try out the Zune games that seemed to be taking off. What I used to think was a sleek, intuitive interface on the Zune now looked clunky. The entire device actually felt cheap. The Zune hadn't changed though - I did. I got used to the iPhone. But anyway, I upgraded my Zune firmware, installed the Zune Games and actually tried the default ones out. Texas Hold'em was actually fun. But man, the experience is nothing - NOTHING - like the iPhone.
I guess I'll try selling my brown Zune on eBay before they become totally worthless.
I'm a big tall mofo.
The zune was never going to be a the ipod killer that MS hoped it would be and it is difficult to see why MS entered the market.
Basically if you are going up against the gorilla that is Apple in the ipod market, you have to have something that differentiates markedly. The only thing the zune had was the wireless sharing. However two problems with that. Firstly it was hopelessly crippled by MS usually DRM fan boys. Secondly it relied on enough mass usage of the zune so that there was a chance someday you might meet another zune user. If you took that away you were left with a nice MP3 player competing with all the other nice non apple MP3 players in a sea made by Apple. And remember an ipod is not just a music player but is the focal point of a whole industry providing ipod addons. Zune never had a chance.
The question is what could compete with ipod? History has shown that it would either take a whole new technology shift(wireless music ???) or Apple to make a mis-step. So far Apple has shown they are not likely to do the latter, in fact you have to be impressed how they do not sit back and wait for the competition to catch up, but are constantly pushing the envelope. This makes it very hard to compete against. You only have to look how a few months after the zune was produced apple produced the itouch so totally changing the market before the zune ever got going.
So what about MS. Probably what they should of done instead of spending millions on Zune was got into phones. Here they have a slight advantage in that their software runs the corporate world so if they made a phone that seamlessly connected then corporate world would probably buy a few.
However even here they have a few problems. Firstly it would eat away at their mobile OS market, since they would be competing against the same people who buy there software from them at the moment. This would almost certainly push these same manufacturers to android and the like.
Secondly MS hardware sucks. They just do not have the ability to integrate the software and hardware into one unit, in the same way apple do. This must be partly to do with their reliance on 3rd party hardware suppliers to do the hardware design, then having to fit their software to it.
In the end of the day, MS should really concentrate on doing what it knows best, making operating systems for gray boxes
Choose your allies carefully, it is highly unlikely you will be held accountable for the actions of your enemies
Blaming Microsoft for the fact that Apple doesn't support MTP is ridiculous. Apple locked down iTunes so that you can't really use it with other players, and they tried to lock down the iPod so that you can't use it with other music management applications.
You missed my point. They specified that you can only use MTP and no other protocol. You were not allowed to have a dual-protocol device, which was perfectly possible. Of course, they eventually settled for allowing this, but not before the damage was done - vendors implemented MTP instead of the ubiquitous Mass Storage (MSC) and when you've got limited resources to do things, you settle for one protocol. So a mass of MTP devices appeared, which neatly didn't work on Mac.
And, of course, just to let us know they're Microsoft, MTP wasn't supported unless you had Windows Media player 9 installed. And of course, WMP9 wasn't supported unless you had Windows XP installed. Very neat.
I was there when this all happened and it was as obvious as a 100ft tall pink elephant. They got away with all this crap simply because the US and EU were busy with the bigger fish of browsers, openness, protocol compatibility and all the other monopolistic practices. I don't see why you should give them the benefit of the doubt here - there's decades and hundreds of examples of Microsoft doing the same thing over and over. This is no different.
As for "screwing the entire non-Apple MP3 market", I think you give Microsoft too much credit; Microsoft has had virtually no impact either way. If you want an MP3 player, there are plenty of choices that cost almost nothing.
You are wrong. If you are a non-Apple MP3 manufacturer you must go with PlaysForSure. It's a tick-box. The mass market wants tick boxes, and customers wanted P4S. If you didn't have P4S, you didn't sell. It's sad and believe me it's true. Microsoft screwed the market by crippling all the non-Apple vendors with a shitty product.
MP3 players are dead anyway; like PDAs, they are just becoming part of phones.
That is patently untrue. There are so many factors which will ensure they'll be around for years. Form factor is one. Price is a fucking obvious one too.
Also notice that the phones which list music playback as a strength have all gone with their own implementations. Notice how big the companies are that had the guts to do it: e.g Nokia. Sadly we're left with a bunch of walled-garden solutions, iTunes included.
Any Windows 7 beta user will tell you that Microsoft are definitely capable of "cool". I fully predict Win7 to be a resounding success, both in sales and in actual performance and usability terms. This is personal, but I find it to be superior to OS X even in its current beta state.
Success aside, the "coolness" of this OS could lead to a rise in the number of MS fanbois (yes they do exist). This, combined with MS's newfound "coolness" (assuming it persists), could just breath new life into their Joe Sixpack consumer products like the Zune.
Fool me once, shame on you. Fool me twice, watch it -- I'm huge!