Wrong. Anti-trust involves using your market dominance to destroy competition in other markets, not just having done so in the past. If the US wanted open markets, it could have stopped Microsoft before it destroyed markets, rather than just spending millions to establish the facts and then doing nothing long afterward.
However, Microsoft has already failed to use its market dominance to get PlaysForSure off the ground, and sure doesn't seem to be doing a bang up job with the Zune. If th company started dumping the Zune in other markets, you could be sure Sony and others would attack the company using local laws. That's unlikely, as Microsoft has no significant hardware sales outside the US.
Apple doesn't have much to fear in the US from the Zune, as Microsoft can't manage to even sell the Xbox at a profit in volumes around 5 million per year. Apple sells ten times that many iPods, and the number is only going up. Sure some of those iPods are $200, but around a third are $400, and the iPod will add another 10 million per year. Compare Microsoft's greatest hardware "success" to Apple's similarly priced iPod business, and it is clear Microsoft has no hardware position to leverage. The Windows monopoly isn't selling the Zune or the Xbox.
In media sales, Apple is at the top of music, TV, and movie sales--despite the fact that it hasn't even started offering rental movies or HD content. It's still #1 in each segment, with 60-90% of those markets. Microsoft doesn't place among the top four outfits that sell 97% of content downloads, even when combining its incompatible Zune and Xbox media sales.
Microsoft doesn't have any position to leverage. It can't make hardware that works, can't sell it at a profit, can't sell downloads, and still seems to think rental music will somehow take off after ten years of failure in the market. On top of that, it has lost its leadership position in desktop operating systems, lost its effort to monopolize server operating systems, and can't make money in any new markets, including search.
So on one hand, you're wrong about anti-competitive markets, but on the other hand, it doesn't matter because Microsoft is on the way to oblivion. Its 90s crown isn't going to be any good in a world where OEM PC licensing is increasingly not the primary way to make money and wield influence. That weird period of tech history is on the wane, and a new era of open competition will leave Microsoft's fiefdom as obsolete as Windows.
How persuasive would that be? It sounds like saying the popularity of DVD rip software "will eventually win over the labels to embrace the idea of piracy."
Are you suggesting that some profitable new market will emerge from FOSS users that will convince Apple to change its sales strategy to target "people who don't want to pay for things" as opposed to "people to pay a premium for higher end products"?
Without a service subsidy (and it is a subsidy, even if AT&T is paying Apple rather than the customer), can you imagine a scenario where the iPhone would cost $399 unlocked? Does it look like any other new $399 phones? Which $399 phones have 8GB of RAM and a large touch screen?
The only phones I can see that are comparable hardware wise with the iPhone are high end phones from Nokia, HTC and others which cost around $800. Sure you might be able to find a discounted model that has been around for a year (and has already made its "new" profit) and has an upfront subsidy that reduces the price to the consumer, but there are no $399 touch screen wireless computers that can be manufactured new at a profit. Apple is clearly getting AT&T to subsidize the cost of hardware for consumers.
That being the case, how will Apple be convinced by a surge of interest behind making it easier to cheat the company out of its AT&T subsidy and destroying its bargaining chip with service providers? I'm sure you're all about freedom, but how is it you expect Apple to be persuaded here?
The 2006 Zune was intended to be sold for $300, but Apple's price cuts last year forced Microsoft to sell it at $250. Even at that price, it couldn't sell.
By June 2007, Microsoft had stuffed the channel with 1.2 million units. Retailers have been trying to sell them ever since, as low as $80. The fact that last years models, which Microsoft has already claimed having sold, are being sold at fire sale prices of a half to a quarter of the original price indicate that Microsoft hasn't made any profit on the Zune hardware.
Last year, the speculation was that Microsoft would give away hardware with a rental subscription. So the OP is pointing out that no, the hardware itself is a huge failure, and rentals (or sales) can't even bring those losses into the black. Microsoft can't make any money on downloads. Even Apple didn't make money on downloads until it was selling millions of downloads per week.
The idea that Microsoft backers would parade out the line that "the Zune 30 is outselling the iPod at certain retailers!!!" was predicted last week in:
Why Microsoft's Zune is Still Failing Last winter, I detailed why Microsoft's iPod Killer would fail miserably. This year, Microsoft will fail again, but for a new set of reasons. It is not obvious that the company has figured this out itself. Here's why the Zune will fail in 2007, and how Microsoft is painting a fraudulent portrait of interest that doesn't exist.
Cringely is hardly an authority on what has happened or will happen in the tech industry. Among other far fetched ideas, he also wrote that Google was setting up massive data centers around the world to translate the web in to Flash on the fly; he thought the Apple TV had a USB port so it could be used to "teleconference movies," somehow using a USB cam to do teleconferencing with grandma and then facilitate virtually watching movies together with extended family over the web; he even wrote that he suspected Microsoft Bob was "named after him," despite the fact that "Robert X. Cringely" is just the pen name of Mark Stephens, not really a Bob (although perhaps equally infamous in a chucking sort of way).
Patent sharing agreements mean companies won't sue each other over the use of certain patented ideas. It does not convey "rights to a API" or other implementations of those patents. Entering into a patent sharing agreement with Apple would not give you rights to Mac OS X, the source code to iTunes, nor distribution rights to the iPhone's operating system. Similarly, a patent sharing deal with Microsoft would not give you access to duplicate Windows.
Recall that when Microsoft offered Apple a licensing deal on Windows NT, the company turned Microsoft down, even during the midst of its OS crisis, and began looking at the early developer betas of BeOS, which couldn't even print and didn't support multiple users. The "Windows API" is hardly a pinnacle of technology.
Debunking Cringely only requires two brain cells and a few molecules of the neurotransmitter of your choice. Reading his column is like watching a Nicholas Cage movie: an overwhelming sense of "Why did this happen?"
If you're more interested in rational reasons why Apple would NEVER add the "Windows API" to Mac OS X, you can read the Red Box Myth. Here's free ones for starters: WTF good would 1995's Win32 be as Microsoft actively tries to abandon it for.NET/WinFX? And why would Apple spend its resources trying to deliver Microsoft's past when it's doing a pretty decent job delivering its own, superior, portable, proven API of the future in Cocoa? And why bother implementing Win32 given that commercial developers have already delivered a WINE environment good enough to port Windows games to the Mac, and third party virtual machines can already run Windows apps on the Mac desktop?
The entire idea of Win32 in Mac OS X is absurd on every level.
Wrong: Windows XP got two free updates Microsoft calls Service Packs. Over the past half decade, the company worked hard to deliver a major consumer update to Windows, but was unable to do so as planned in 2003. It then failed again in 2004, 2005, and 2006. It officially shipped Vista in January as Windows 6.0 for $200-500.
Apple delivered reference updates to Mac OS X in 2002, 2003, and 2005, along with a transition to Intel processors in 2006 and a port to ARM for the iPhone in 2007 and a new reference release as Leopard for Macs. That's four paid releases, which adds up to less the cost of Vista Ultimate and a de-malware checkup. In between, Apple has released over 35 free minor updates that fix issues and add significant new features (such as IP over Firewire, or file system journaling).
Vista is the most expensive consumer OS ever, but offers very little to PC users. Leopard, like every OS ever released, has issues. Tiger had issues, and new Macs running Tiger have issues. There will never be a perfect OS, and if there were, third party apps would have issues for it. But Leopard is a solid upgrade over Tiger, and fixes issues in Tiger.
The fact that Oliver Rist--a complete Microsoft shill who has minimal experience in small business selling Windows software, yet writes a column on "Windows in the Enterprise" for InfoWorld--has written a "Leopard has Vista-like problems that ever Vista doesn't have!!" should be of no surprise. The Windows Enthusiasts have all been trying to associate all of Microsoft's problems upon Apple lately.
Rist's last flamebait was an article titled "Does OS X Suck!!!?!?" where he tried to suggest the idea that Mac OS X is just FreeBSD with some custom icons painted by Apple, talked about "Apple jihaders," and tied in the hard drive failure of his MacBook as a problem with Mac OS X Tiger. Now suddenly he views Tiger as rock solid, and Leopard as something that suffers regular kernel panics? Rist even won a Zoon Award for his rant.
Leopard, like Vista, is unlikely to suffer from kernel failure unless bad hardware in involved, or problematic kernel drivers have been installed. The problems with Vista are largely related to an inefficient, version 1.0 graphics compositing engine that assumes the presence of a high power GPU; a new driver model that fails to support a lot of common hardware; a flashy new interface that sacrifices usability to look interesting; and the lack of many practical new features.
Leopard doesn't have any of those problems (aside from some that don't like the look of the Dock, which is easy to change). Leopard has some minor issues with some apps and some new kinks to work out, problems that Vista also shares. Leopard has a mature graphics compositing engine that has been refined over the last 7 years and can scale down to work on less than stellar hardware; a largely unchanged driver model; and lots of new practical features, from visual backups to virtual desktops to UI refinements, file viewers, et cetera.
A USB equipped PC with USB ports that actually worked was as rare before 1999 as a PC with support for EFI is today. Sure you can find examples, but they were not significant enough to matter.
Dell and HP weren't packing legacy ports onto PCs to facilitate old gear as much as they were hoping to save a few bucks shipping a $2 PS/2 keyboard over a $10 USB one.
The quarter dozen slots I was referring to were ISA, PCI/PCI-X, PCI E, AGP, etc. That was legacy more than cheapness. Sure it's valid to advocate for holding onto the past; that conservative engineering outlook is the hallmark of the PC industry. It's also the root of many of its most grievous problems. Apple does have a unique set of circumstances that allows it to liberally roll out new technologies faster, in large part due to developing hardware and software together.
What I pointed out what that Apple blazed the trail, and PC users benefitted. I don't think anyone has ever suggested that everyone should have to buy Macs against their will.
In addition, Vodafone originally hoped to buy out the original AT&T's wireless business and turn it into its own American GSM operation. Once that deal was done, Vodafone planned to pull out of Verizon Wireless (which it jointly owns with Verizon).
Vodafone lost out to Cingular in buying up AT&T's GSM. That made Cingular/AT&T the largest GSM operator in the US by far, and left Vodafone stuck with Verizon's CDMA2000 network in the US.
The first problem with your story is that AT&T didn't buy Cingular. Instead, Cingular acquired the AT&T name and rebranded itself. The company didn't change anything but its name.
The second problem is that the RAZR phone doesn't work across different network types.
The third problem is that your thinly veiled troll about Verizon and the NSA and hookers might suggest you have a more interesting life than you do.
In reality, Verizon is an absolutely vile service provider, equally bad if not significantly worse than the rest.
Well Verizon Wireless is almost entirely CDMA2000+ EVDO, while the iPhone uses GSM + EDGE. Unless Verizon rolls out a huge WiFi network, the iPhone won't be able to use Verizon's network. On the other hand, it appears that the move was pushed by the popularity of the iPhone, and the threat of Google. With Verizon locked out of 27% of the US mobile phone market within just a few months of iPhone sales*, it wants/needs as much telephony tied to CDMA2000 as possible as a counterbalance. If Google can buy up and deploy open networks on the old analog TV spectrum within a few years, that would leave Verizon's ~$5 billion new CDMA2000/EVDO networks a vast, unsalable investment that can't be monetized in the subsidy lock model of the 90s.
Nominal USB support. There was a reason that PCs shipped with PS/2 keyboards for a decade after that. It's the same reason that all USB stuff from the late 90s was translucent and day-glow colored. In 1998, the big change to the reference design for the PC was the addition of color coded legacy ports.
Unless you really were paying attention while things happened, reviewing bullet point "features" in Wikipedia doesn't really fill in what happened. If Windows had non-buggy, generally functional software USB support and PC makers had delivered non-buggy, generally functional USB hardware, then it wouldn't have been novel for Apple to deliver a USB-only machine that just worked in 1998. There would also be no reason for major PC makers to continue selling PS/2 legacy hardware for another decade, or for Microsoft to continually advertise "now, USB support!" in ever version/service pack of Windows from 98 thru 2002.
The lack of leadership by both Microsoft and the passive PC makers combine to result in hardware where the only consideration is cost/profit. That's also why PCs have legacy BIOS rather than using Intel's EFI, and why most desktops had a quarter dozen different types of slots rather than just using one standard one.
Microsoft's attempts to get into media with Windows Media DRM and Media2Go/PlaysForSure/Janus/Zune have very clearly outlined where the company wants to go, and its not anywhere near liberal DRM. Bill Gates hoped to spring Palladium on the PC, so that no media or software would work without Microsoft's permission. Windows Media DRM tried to do similar things with music and movies. It's fortunate for consumers that Microsoft has failed, but that failure was right in line with what the studios pushing HD-DRM were asking.
Conversely, Apple has maintained an anti-DRM stance for years prior to opening the iTunes Store, as was documented in the Steve Jobs Rolling Stone interview* back in 2003. It hasn't changed since. Apple set up the most permissive DRM in the industry, and was the first major commercial music distributor to deliver DRM-free music from a top five label. That's despite the fact that Apple holds a majority position in the online media market. Do you think Microsoft was gearing up to liberalize media downloads after it expanded its monopoly position into media?
Arguing that Microsoft now has no significant control over DRM policy is a bit weak. It is interesting that Apple hasn't moved to support playback of either Blu-Ray or HD-DVD and the required HDCP DRM. While that might happen in the future, one might expect that Leopard would deliver the underpinnings, and no evidence has arrived to suggest that's the case. Modern Macs appear to have the hardware to support HDCP, but Apple isn't exposing it to jump on the HD-DRM bandwagon. Microsoft is.
Conversely however, the worthless puck mouse on the 1998 iMac singlehandedly created a significant third party USB peripheral market, since there was no way to plug in earlier ADB Mac mice. That rapidly pushed the industry to adopt USB. Microsoft delivered USB support in Window XP SP1 2002 and Dell migrated to bundling USB peripherals around 2006.
If it weren't for the iMac and its puck mouse, you'd still be using PS/2 keyboards and mice, parallel ports, serial modems, and loading their drivers from floppy disks. Apple breaks the eggs so you can eat your omelet.
For your needs, and the other users of Linux on the desktop, I would wholeheartedly agree: choice is great and having 200 options in a desktop window manager is a feature. However, I'm talking about a significant number of users in the PC desktop market.
There may be many thousands of people who would benefit from a learning to type DVORAK, too. There are thousands of US postal workers who benefit from having a steering wheel on the left side of their mail trucks. There are thousands of people who speak Esperanto or Klingon or carry a torch for the Amiga. Those people can form conventions and financially support minor book publishings. But in the overall consumer market, they DON'T FUCKING MATTER AT ALL.
There is not going to be a sudden surge of literature in Esperanto typed on DVORAK keyboards extolling the virtues of the Amiga by users of Desktop Linux anytime soon. Many think the Mac platform doesn't matter, and that's 20 - 25 million people who actually spend money. What makes you think that the few thousand people tinkering with free software on the desktop (and seriously, good for them if its the best tool they've found for their task at hand) are suddenly going to deliver an important product to the mass market without major support from a company that has the ability to affect real change?
The community can deliver tools others can use (including Apple on the desktop, or in enterprise development, or embedded applications), but Linux is never going to matter as long as its run by an assortment of squabbling groups working at cross purposes. Novell's OpenLinux failed. Apple's ability to develop Mac OS X over the last half decade was an extremely difficult task funded by billions of dollars of Apple's hardware revenues and was carried out as a sharply focused project of strategic planning by some extremely talented people.
A distributed community effort isn't going to do anything with Linux in 2008-2010 that wasn't done between 1996-2007. OpenLinux and LSB failed before Mac OS X was even delivered as a public beta. Ubuntu is a nice distro with potential. Unless a significant hardware maker can apply it however, it isn't going to matter any more than OS/2 or BeOS. Individuals might pick it up as a silent protest against Windows, but if they're forced to buy an OEM license for Windows in order to make their point, it won't really matter, will it?
This isn't about ineffectually distracting a handful of people, it's about reaching buyers of the billion PCs that are sold. Microsoft sees the threat posed by Linux in the enterprise. It had correctly identified no threat from Linux on the desktop.
So if you're talking about having fun, I agree. But having fun and accomplishing things are different objectives.
How is the Sony rootkit any different than Windows Media Player? Both install vendor control over the media you use in a unilateral way, and open up ways to harvest your personal habits for uploading to the vendor. The only difference was that Windows users weren't ever told that Microsoft was bad for building this into Windows, while Windows Enthusiasts have blown Sony's DRM out of proportion. If you don't want a vendor screwing up your system and opening security and spyware holes, it shouldn't make any difference if the perpetrator is Microsoft or a third party such as Sony.
Right, and if the unwashed masses all switched to Linux, there would be no driver problems like those associated with Vista, nor ever any circumstance where an update resulted in problems booting as described here.
Apple earns the same hardware margins as other PC vendors, it just doesn't lose money on $500 loss leaders like Dell and HP. From that perspective, Apple's OS X is essentially free and typically comes with a year or two of free updates. Reference updates cost $100, which is what you'd pay for Linux support. So no, there isn't any dramatic software markup from Apple, there's just a limited hardware selection. Windows is a pretty significant markup, because PC makers all have to pay $30 to sell you the basic version of Vista, and you have to pay $200-300 more for the version that actually does things. Add another $300 for a word processor and spreadsheet, and yes, you can see the software price effect of owning a monopoly.
Even if KDE and GNOME could work things out and deliver a standard Linux desktop, it would still have Windows-like problems, except there wouldn't be a Microsoft to blame them on. The user problems in the market aren't the fault of Windows or OS X; they are the reason we pay for software. Vista doesn't solve more problems that it solves, so nobody is buying it. Leopard offers more than $100 of advantages, so its selling to Mac users. Linux doesn't immediately solve the same problems as XP with enough advantages to motivate users to switch on the desktop in numbers that are significant. OS X does enough so to get people to buy new hardware.
When Linux can do the same, people will start switching en mass. Right now however, the development focus in Linux is in specific projects (XO) or server/business markets, not in selling low cost PCs. Who is going to lead Linux into the mainstream? It would appear to require a hardware manufacturer. Why isn't Dell or HP or any other major PC maker even investigating serious PC sales? Are Microsoft's OEM contracts really that limiting that they can hold back all development potential across the entire PC industry apart outside of Apple?
Exactly, except for the "handsome and substantial" part.
PCs of the early 80s (I was there) were impractical curiosities but better than nothing. Technical comprehension was pretty low. IBM's brand carried the PC, not any useful functionality or superiority. The design of the PC was purposely stunted by IBM to allow it a product to sell against Tandy/Apple/Commodore without actually eating into its existing business machine monopoly.
It was also well known then, as it is now, that Microsoft's PC-DOS was a complete rip off of CP/M, but in those days there wasn't the Microsoft fervor to stop competition through lawsuits. Microsoft subsequently ripped off the work of various other companies, and then spent billions of dollars paying out settlements in the late 90s and early 2000s after obtaining and maintaining its monopoly position.
It's not really "competition" to steal someone else's work, prop up your shoddy clone of it, and then throw money at it until you drive innovators out of business.
Nobody wants $15 exploding media rentals or people would have been buying Microsoft's PlaysForSure. Also, a radio isn't a hot seller for buyers of a hard drive based music player. Apple knows what people buy, and if there was significant demand for a radio it wouldn't be optional on the iPod.
The $80 Zune is indeed a low priced item. However, remember that there were only about 1.2 million ever made. So its not like those fire sale Zunes from last year are going to outsell the 20-25 million iPods Apple will sell this winter. There are also a few things the Zune can't do that make it a problem. It can't play iTunes purchases without re-ripping them, it can't play games, and it doesn't work with Macs. It also looks clunky, and has more hardware problems than the iPod (loud hard drives, flakey software that crashes, battery problems).
You complain about Firewire back in 2002, but when Apple released the iPod, there was no installed base of USB 2.0, so Firewire was important for making the iPod sync much faster than other systems. Apple has always owned the market because it innovated. Microsoft doesn't have to innovate anything, it can simply copy. Even so, its doing a really bad job of ripping Apple off. It can't compete even in a fairly mature market.
Microsoft also hasn't "hit gold" with the Xbox 360; it's losing billions on it, even in a year when it faced little other real competition. This year, the Wii has caught up in sales (actually Wii sales are tied with Xbox "shipments," which means that there are far more Wiis in use) and the Sony PS3 has matched the 360's sales from last year.
It's funny that Windows Enthusiasts claim victory for the 360 despite its plateau of shipment sales reached prior to real competition and ignoring the fact that its year long head start is now gone, but claim that it will take Microsoft ten years to prevail over the iPod. The only way that could happen would be if Apple had dropped the ball and continued selling the 2005 5G ipod for ten years.
In 2015, a Zune competing against a 5G iPod might look attractive. However, the iPod is already migrating into a mobile device far thinner and far more capable than Microsoft has ever produced. It really has no expertise in developing desirable consumer hardware (look at the clunky xbox that overheats and looks dumpy), and can't deliver strong software to use in mobile products. Case in point: ten years of failure invested in WinCE.
Apple is also aggressively bringing prices down--for hardware (it forced Microsoft to sell the original Zune at a loss right out of the gate) and for media. Apple is also pushing sales of non-DRM content, which from its powerful position is a strong message about the difference from Apple in control vs Microsoft in control. Do you think Microsoft would be releasing non-DRM tracks if it had any power in the industry? That's the company that tried to unleash Palladium PCs.
It's not a success to sell off old models at less than half price--at tremendous losses--and still only make a minor showing in sales charts compared to new, full price competing products from Apple and SanDisk.
"Also, most places that offer Zune also sell iPods. At least that's what I've noticed." Again, that is why it is failing: no monopoly. Do you see PCs with Linux installed at most places where you see Windows PCs? How about any other alternatives? Ever see PCs with OS/2 or BeOS in stores? In 30,000 stores?
If you really want choice, it is actually important for the Zune to fail. If you want the Zune to succeed, you can't be interested choice at all. It's that simple.
If "the bottom line is that there are lots of inaccuracies," why don't you point any out? It's easy to dismissively ignore the facts and stuff words into TFA that don't exist, but if you are an expert, why can't you present anything substantial that was not correct in the article?
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."
The Zune 80 is hard to find because Microsoft focused its efforts on producing the 4 and 8 GB models that compare poorly with the iPod Nanos. Bad move! As TFA notes, Microsoft is competing against the Apple of 2006. The Zune 4 & 8 might have done better against the original Nano last year, but now the new Nanos are smaller, thinner, and do more. That leaves people who want a Zune interested in the 80 GB model that isn't available. No because of high demand, but because of tight supply.
Even Paul Thurrott admitted that the Zune 80 is "sold out" due to Microsoft not making very many, rather than some fictitious great demand: "Microsoft this week can exult in the fact that the hard drive-based version of its new Zune portable media players, the Zune 80, is sold out online and in retail stores around the country. But this apparent success is muted by a simple fact: The Zune 80 was never manufactured in volume, and many retailers never got a single unit to begin with," Paul Thurrott wrote for WinInfo.
That "number one spot" was taken by last year's model being sold off at half price. Meanwhile, the majority of the top ten models were iPods of various colors, including the premium priced iPod Touch. If that's the best Bill Gates can feather his cap with, the emperor needs new clothes.
The rest of the top ten were mainly low priced models from SanDisk, which sells several MP3 players in the $30-99 range.
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.
Well that's wrong as Apple makes more money from its media efforts than Microsoft does. Microsoft licenses Windows and Office profitably, and loses money on everything else, including its WinCE/Xbox/Live/Windows Media/Windows Mobile businesses. Apple makes money on Macs, iPods, iPhone, and music/video distribution.
If Burst had any real claims, Apple would have been the fat target to jump on. When Microsoft settled for $60 million, it appeared clear that Burst expected to jump from Microsoft into big money with Apple, and pundits threw around numbers like $1 billion. Windows Enthusiasts hoped Microsoft had enriched Burst just enough to take down Apple, similar to the hopes that Microsoft had earlier contributed enough in "licensing" to SCO to keep Linux under perpetual attack for years. Microsoft has frequently paid out patent trolls and sent them after competitors.
If you paid any real attention to the patent claims Burst was lining out, they were all centered around the idea of sending "burst" data faster than it would be played back. In other words, Burst insisted ownership of the idea of any media distribution that delivered a two hour movie in less than two hours. It didn't have technology it was selling, it only had "patented ideas" for things that were impractical when Burst began patenting them. It then continued pushing the patents as renewals, so that somebody would have to pay big money to actually deliver that technology when it became practical.
Microsoft was a stepping stone to Apple. Once Burst got big money from Apple, it would have a reputation that could bully every other company that might want to actually build video distribution products. This isn't a specialized idea about how to build a new mousetrap, it's a patent covering the idea of catching mice in the future using new materials. That's not invention, it's futurism.
Imagine if Arthur C. Clarke had patented the idea of geosynchronous satellites and then hounded the actual developers of satellites because he wrote about the idea, and demanded half of their revenues. Dreaming up an idea is great, but it's not worth a major share of the profits of actually creating something.
Instead, Apple invalidated a wide swath of Burst's patents, and then prepared to attack the rest of them. Had Apple continued, Burst could have lost everything. Apple could easily have spent another 10 million fighting Burst's claims, and Burst would have spent more millions in attorney fees. Apple paying Burst for use of its patents took the heat off Apple while giving Burst some remaining reason to stick around. It will now either try to extract more reasonable licensing fees from other media players, or attempt to shake down less defensive companies for more million dollar settlements.
Apple has shaken off the monkey as quietly as possible with the least payout, and Burst's patents have been slashed in half and then revalued at a 84% discount. To keep some shred of valuation, Burst licensed its patents to Apple with a few exclusions, but granted Apple immunity from further targeting. That appears to have been done to escape valuing Burst's entire patent portfolio at $10 M or less from an Apple sized company.
A strong defense against patent troll attacks it the best bet against unreasonable patents, given that the patent office can't manage to regulate things.
Why Microsoft's Zune is Still Failing Last winter, I detailed why Microsoft's iPod Killer would fail miserably. This year, Microsoft will fail again, but for a new set of reasons. It is not obvious that the company has figured this out itself. Here's why the Zune will fail in 2007, and how Microsoft is painting a fraudulent portrait of interest that doesn't exist.
Extremely constrained supplies. I tried to get a review unit for a major publication two days ago, and they said there were none available.
Of course, the other company advertising constrained supplies is Microsoft, which has been trying to play up the idea the 80 GB Zunes have "sold out" due to popularity, when in reality very few stores ever got any. It's also trying to milk the idea that last years' 30 GB Zune is a "best seller" topping the Amazon sales charts. In reality, those sales represent an $89 fire sale to clear out inventory of those 1.2 million Zunes Microsoft said it sold back in July to meet its goal. They were, of course, only sold to stores, which are still sitting on them. They're now being sold to actual consumers at a nearly $200 discount over their intended price: 65% off.
It's like saying the Halloween Store is selling well in the first week of November. The WSJ posted an online poll asking what people are "most likely to buy" for Christmas, and listed the iPhone and Zune but no iPod. The results: 123,000 votes later, the Zune had 0% of the votes. Over half said the iPhone.
Not being able to launch the Kindle in volume in time for Christmas might allow Amazon to declare it a sell out success, but it will be a Pyrrhic victory (pun intended). Nintendo better get crack(l)in on the Wii as well.
It's pretty comical that CNET was outraged that Apple--an electronic device designer that develops integrated software--would attempt to deliver a phone, while it thinks it is mission critical for Nintendo--which has only made game consoles--to deliver one.
Perhaps the real business model in danger is that of CNET offering manufacturers advice. CNET doesn't seem to be doing very well at that at all.
Slashdot Mirror
Wrong. Anti-trust involves using your market dominance to destroy competition in other markets, not just having done so in the past. If the US wanted open markets, it could have stopped Microsoft before it destroyed markets, rather than just spending millions to establish the facts and then doing nothing long afterward.
However, Microsoft has already failed to use its market dominance to get PlaysForSure off the ground, and sure doesn't seem to be doing a bang up job with the Zune. If th company started dumping the Zune in other markets, you could be sure Sony and others would attack the company using local laws. That's unlikely, as Microsoft has no significant hardware sales outside the US.
Apple doesn't have much to fear in the US from the Zune, as Microsoft can't manage to even sell the Xbox at a profit in volumes around 5 million per year. Apple sells ten times that many iPods, and the number is only going up. Sure some of those iPods are $200, but around a third are $400, and the iPod will add another 10 million per year. Compare Microsoft's greatest hardware "success" to Apple's similarly priced iPod business, and it is clear Microsoft has no hardware position to leverage. The Windows monopoly isn't selling the Zune or the Xbox.
In media sales, Apple is at the top of music, TV, and movie sales--despite the fact that it hasn't even started offering rental movies or HD content. It's still #1 in each segment, with 60-90% of those markets. Microsoft doesn't place among the top four outfits that sell 97% of content downloads, even when combining its incompatible Zune and Xbox media sales.
Microsoft doesn't have any position to leverage. It can't make hardware that works, can't sell it at a profit, can't sell downloads, and still seems to think rental music will somehow take off after ten years of failure in the market. On top of that, it has lost its leadership position in desktop operating systems, lost its effort to monopolize server operating systems, and can't make money in any new markets, including search.
So on one hand, you're wrong about anti-competitive markets, but on the other hand, it doesn't matter because Microsoft is on the way to oblivion. Its 90s crown isn't going to be any good in a world where OEM PC licensing is increasingly not the primary way to make money and wield influence. That weird period of tech history is on the wane, and a new era of open competition will leave Microsoft's fiefdom as obsolete as Windows.
Ten Myths of Leopard: 10 Leopard is a Vista Knockoff!
How persuasive would that be? It sounds like saying the popularity of DVD rip software "will eventually win over the labels to embrace the idea of piracy."
Are you suggesting that some profitable new market will emerge from FOSS users that will convince Apple to change its sales strategy to target "people who don't want to pay for things" as opposed to "people to pay a premium for higher end products"?
Without a service subsidy (and it is a subsidy, even if AT&T is paying Apple rather than the customer), can you imagine a scenario where the iPhone would cost $399 unlocked? Does it look like any other new $399 phones? Which $399 phones have 8GB of RAM and a large touch screen?
The only phones I can see that are comparable hardware wise with the iPhone are high end phones from Nokia, HTC and others which cost around $800. Sure you might be able to find a discounted model that has been around for a year (and has already made its "new" profit) and has an upfront subsidy that reduces the price to the consumer, but there are no $399 touch screen wireless computers that can be manufactured new at a profit. Apple is clearly getting AT&T to subsidize the cost of hardware for consumers.
That being the case, how will Apple be convinced by a surge of interest behind making it easier to cheat the company out of its AT&T subsidy and destroying its bargaining chip with service providers? I'm sure you're all about freedom, but how is it you expect Apple to be persuaded here?
iPhone Grabs 27% of US Smartphone Market
The 2006 Zune was intended to be sold for $300, but Apple's price cuts last year forced Microsoft to sell it at $250. Even at that price, it couldn't sell.
By June 2007, Microsoft had stuffed the channel with 1.2 million units. Retailers have been trying to sell them ever since, as low as $80. The fact that last years models, which Microsoft has already claimed having sold, are being sold at fire sale prices of a half to a quarter of the original price indicate that Microsoft hasn't made any profit on the Zune hardware.
Last year, the speculation was that Microsoft would give away hardware with a rental subscription. So the OP is pointing out that no, the hardware itself is a huge failure, and rentals (or sales) can't even bring those losses into the black. Microsoft can't make any money on downloads. Even Apple didn't make money on downloads until it was selling millions of downloads per week.
The idea that Microsoft backers would parade out the line that "the Zune 30 is outselling the iPod at certain retailers!!!" was predicted last week in:
Why Microsoft's Zune is Still Failing
Last winter, I detailed why Microsoft's iPod Killer would fail miserably. This year, Microsoft will fail again, but for a new set of reasons. It is not obvious that the company has figured this out itself. Here's why the Zune will fail in 2007, and how Microsoft is painting a fraudulent portrait of interest that doesn't exist.
Cringely is hardly an authority on what has happened or will happen in the tech industry. Among other far fetched ideas, he also wrote that Google was setting up massive data centers around the world to translate the web in to Flash on the fly; he thought the Apple TV had a USB port so it could be used to "teleconference movies," somehow using a USB cam to do teleconferencing with grandma and then facilitate virtually watching movies together with extended family over the web; he even wrote that he suspected Microsoft Bob was "named after him," despite the fact that "Robert X. Cringely" is just the pen name of Mark Stephens, not really a Bob (although perhaps equally infamous in a chucking sort of way).
.NET/WinFX? And why would Apple spend its resources trying to deliver Microsoft's past when it's doing a pretty decent job delivering its own, superior, portable, proven API of the future in Cocoa? And why bother implementing Win32 given that commercial developers have already delivered a WINE environment good enough to port Windows games to the Mac, and third party virtual machines can already run Windows apps on the Mac desktop?
Patent sharing agreements mean companies won't sue each other over the use of certain patented ideas. It does not convey "rights to a API" or other implementations of those patents. Entering into a patent sharing agreement with Apple would not give you rights to Mac OS X, the source code to iTunes, nor distribution rights to the iPhone's operating system. Similarly, a patent sharing deal with Microsoft would not give you access to duplicate Windows.
Recall that when Microsoft offered Apple a licensing deal on Windows NT, the company turned Microsoft down, even during the midst of its OS crisis, and began looking at the early developer betas of BeOS, which couldn't even print and didn't support multiple users. The "Windows API" is hardly a pinnacle of technology.
Debunking Cringely only requires two brain cells and a few molecules of the neurotransmitter of your choice. Reading his column is like watching a Nicholas Cage movie: an overwhelming sense of "Why did this happen?"
If you're more interested in rational reasons why Apple would NEVER add the "Windows API" to Mac OS X, you can read the Red Box Myth. Here's free ones for starters: WTF good would 1995's Win32 be as Microsoft actively tries to abandon it for
The entire idea of Win32 in Mac OS X is absurd on every level.
The Red Box Myth
Wrong: Windows XP got two free updates Microsoft calls Service Packs. Over the past half decade, the company worked hard to deliver a major consumer update to Windows, but was unable to do so as planned in 2003. It then failed again in 2004, 2005, and 2006. It officially shipped Vista in January as Windows 6.0 for $200-500.
Apple delivered reference updates to Mac OS X in 2002, 2003, and 2005, along with a transition to Intel processors in 2006 and a port to ARM for the iPhone in 2007 and a new reference release as Leopard for Macs. That's four paid releases, which adds up to less the cost of Vista Ultimate and a de-malware checkup. In between, Apple has released over 35 free minor updates that fix issues and add significant new features (such as IP over Firewire, or file system journaling).
Ten Myths of Leopard: 2 It's Only a Service Pack!
Ten Myths of Leopard: 10 Leopard is a Vista Knockoff!
Vista is the most expensive consumer OS ever, but offers very little to PC users. Leopard, like every OS ever released, has issues. Tiger had issues, and new Macs running Tiger have issues. There will never be a perfect OS, and if there were, third party apps would have issues for it. But Leopard is a solid upgrade over Tiger, and fixes issues in Tiger.
The fact that Oliver Rist--a complete Microsoft shill who has minimal experience in small business selling Windows software, yet writes a column on "Windows in the Enterprise" for InfoWorld--has written a "Leopard has Vista-like problems that ever Vista doesn't have!!" should be of no surprise. The Windows Enthusiasts have all been trying to associate all of Microsoft's problems upon Apple lately.
Rist's last flamebait was an article titled "Does OS X Suck!!!?!?" where he tried to suggest the idea that Mac OS X is just FreeBSD with some custom icons painted by Apple, talked about "Apple jihaders," and tied in the hard drive failure of his MacBook as a problem with Mac OS X Tiger. Now suddenly he views Tiger as rock solid, and Leopard as something that suffers regular kernel panics? Rist even won a Zoon Award for his rant.
The August 2007 Zoon Awards for Technical Ignorance and Incompetence
Leopard, like Vista, is unlikely to suffer from kernel failure unless bad hardware in involved, or problematic kernel drivers have been installed. The problems with Vista are largely related to an inefficient, version 1.0 graphics compositing engine that assumes the presence of a high power GPU; a new driver model that fails to support a lot of common hardware; a flashy new interface that sacrifices usability to look interesting; and the lack of many practical new features.
Leopard doesn't have any of those problems (aside from some that don't like the look of the Dock, which is easy to change). Leopard has some minor issues with some apps and some new kinks to work out, problems that Vista also shares. Leopard has a mature graphics compositing engine that has been refined over the last 7 years and can scale down to work on less than stellar hardware; a largely unchanged driver model; and lots of new practical features, from visual backups to virtual desktops to UI refinements, file viewers, et cetera.
Ten Myths of Leopard: 1 Graphics Must Be Slow!
Ten Myths of Leopard: 8 No Hidden New Features!
It is unlikely that Rist has any real understanding of what Leopard even is.
A USB equipped PC with USB ports that actually worked was as rare before 1999 as a PC with support for EFI is today. Sure you can find examples, but they were not significant enough to matter.
Dell and HP weren't packing legacy ports onto PCs to facilitate old gear as much as they were hoping to save a few bucks shipping a $2 PS/2 keyboard over a $10 USB one.
The quarter dozen slots I was referring to were ISA, PCI/PCI-X, PCI E, AGP, etc. That was legacy more than cheapness. Sure it's valid to advocate for holding onto the past; that conservative engineering outlook is the hallmark of the PC industry. It's also the root of many of its most grievous problems. Apple does have a unique set of circumstances that allows it to liberally roll out new technologies faster, in large part due to developing hardware and software together.
What I pointed out what that Apple blazed the trail, and PC users benefitted. I don't think anyone has ever suggested that everyone should have to buy Macs against their will.
In addition, Vodafone originally hoped to buy out the original AT&T's wireless business and turn it into its own American GSM operation. Once that deal was done, Vodafone planned to pull out of Verizon Wireless (which it jointly owns with Verizon).
Vodafone lost out to Cingular in buying up AT&T's GSM. That made Cingular/AT&T the largest GSM operator in the US by far, and left Vodafone stuck with Verizon's CDMA2000 network in the US.
How AT&T Picked Up the iPhone: A Brief History of Mobiles
The first problem with your story is that AT&T didn't buy Cingular. Instead, Cingular acquired the AT&T name and rebranded itself. The company didn't change anything but its name.
The second problem is that the RAZR phone doesn't work across different network types.
The third problem is that your thinly veiled troll about Verizon and the NSA and hookers might suggest you have a more interesting life than you do.
In reality, Verizon is an absolutely vile service provider, equally bad if not significantly worse than the rest.
Well Verizon Wireless is almost entirely CDMA2000+ EVDO, while the iPhone uses GSM + EDGE. Unless Verizon rolls out a huge WiFi network, the iPhone won't be able to use Verizon's network. On the other hand, it appears that the move was pushed by the popularity of the iPhone, and the threat of Google. With Verizon locked out of 27% of the US mobile phone market within just a few months of iPhone sales*, it wants/needs as much telephony tied to CDMA2000 as possible as a counterbalance. If Google can buy up and deploy open networks on the old analog TV spectrum within a few years, that would leave Verizon's ~$5 billion new CDMA2000/EVDO networks a vast, unsalable investment that can't be monetized in the subsidy lock model of the 90s.
*iPhone Grabs 27% of US Smartphone Market
Nominal USB support. There was a reason that PCs shipped with PS/2 keyboards for a decade after that. It's the same reason that all USB stuff from the late 90s was translucent and day-glow colored. In 1998, the big change to the reference design for the PC was the addition of color coded legacy ports.
Unless you really were paying attention while things happened, reviewing bullet point "features" in Wikipedia doesn't really fill in what happened. If Windows had non-buggy, generally functional software USB support and PC makers had delivered non-buggy, generally functional USB hardware, then it wouldn't have been novel for Apple to deliver a USB-only machine that just worked in 1998. There would also be no reason for major PC makers to continue selling PS/2 legacy hardware for another decade, or for Microsoft to continually advertise "now, USB support!" in ever version/service pack of Windows from 98 thru 2002.
The lack of leadership by both Microsoft and the passive PC makers combine to result in hardware where the only consideration is cost/profit. That's also why PCs have legacy BIOS rather than using Intel's EFI, and why most desktops had a quarter dozen different types of slots rather than just using one standard one.
Ten Myths of Leopard: 10 Leopard is a Vista Knockoff!
Microsoft's attempts to get into media with Windows Media DRM and Media2Go/PlaysForSure/Janus/Zune have very clearly outlined where the company wants to go, and its not anywhere near liberal DRM. Bill Gates hoped to spring Palladium on the PC, so that no media or software would work without Microsoft's permission. Windows Media DRM tried to do similar things with music and movies. It's fortunate for consumers that Microsoft has failed, but that failure was right in line with what the studios pushing HD-DRM were asking.
Conversely, Apple has maintained an anti-DRM stance for years prior to opening the iTunes Store, as was documented in the Steve Jobs Rolling Stone interview* back in 2003. It hasn't changed since. Apple set up the most permissive DRM in the industry, and was the first major commercial music distributor to deliver DRM-free music from a top five label. That's despite the fact that Apple holds a majority position in the online media market. Do you think Microsoft was gearing up to liberalize media downloads after it expanded its monopoly position into media?
Arguing that Microsoft now has no significant control over DRM policy is a bit weak. It is interesting that Apple hasn't moved to support playback of either Blu-Ray or HD-DVD and the required HDCP DRM. While that might happen in the future, one might expect that Leopard would deliver the underpinnings, and no evidence has arrived to suggest that's the case. Modern Macs appear to have the hardware to support HDCP, but Apple isn't exposing it to jump on the HD-DRM bandwagon. Microsoft is.
*Rise of the iTunes Killers Myth
Conversely however, the worthless puck mouse on the 1998 iMac singlehandedly created a significant third party USB peripheral market, since there was no way to plug in earlier ADB Mac mice. That rapidly pushed the industry to adopt USB. Microsoft delivered USB support in Window XP SP1 2002 and Dell migrated to bundling USB peripherals around 2006.
If it weren't for the iMac and its puck mouse, you'd still be using PS/2 keyboards and mice, parallel ports, serial modems, and loading their drivers from floppy disks. Apple breaks the eggs so you can eat your omelet.
iPhone Grabs 27% of US Smartphone Market
For your needs, and the other users of Linux on the desktop, I would wholeheartedly agree: choice is great and having 200 options in a desktop window manager is a feature. However, I'm talking about a significant number of users in the PC desktop market.
There may be many thousands of people who would benefit from a learning to type DVORAK, too. There are thousands of US postal workers who benefit from having a steering wheel on the left side of their mail trucks. There are thousands of people who speak Esperanto or Klingon or carry a torch for the Amiga. Those people can form conventions and financially support minor book publishings. But in the overall consumer market, they DON'T FUCKING MATTER AT ALL.
There is not going to be a sudden surge of literature in Esperanto typed on DVORAK keyboards extolling the virtues of the Amiga by users of Desktop Linux anytime soon. Many think the Mac platform doesn't matter, and that's 20 - 25 million people who actually spend money. What makes you think that the few thousand people tinkering with free software on the desktop (and seriously, good for them if its the best tool they've found for their task at hand) are suddenly going to deliver an important product to the mass market without major support from a company that has the ability to affect real change?
The community can deliver tools others can use (including Apple on the desktop, or in enterprise development, or embedded applications), but Linux is never going to matter as long as its run by an assortment of squabbling groups working at cross purposes. Novell's OpenLinux failed. Apple's ability to develop Mac OS X over the last half decade was an extremely difficult task funded by billions of dollars of Apple's hardware revenues and was carried out as a sharply focused project of strategic planning by some extremely talented people.
A distributed community effort isn't going to do anything with Linux in 2008-2010 that wasn't done between 1996-2007. OpenLinux and LSB failed before Mac OS X was even delivered as a public beta. Ubuntu is a nice distro with potential. Unless a significant hardware maker can apply it however, it isn't going to matter any more than OS/2 or BeOS. Individuals might pick it up as a silent protest against Windows, but if they're forced to buy an OEM license for Windows in order to make their point, it won't really matter, will it?
This isn't about ineffectually distracting a handful of people, it's about reaching buyers of the billion PCs that are sold. Microsoft sees the threat posed by Linux in the enterprise. It had correctly identified no threat from Linux on the desktop.
So if you're talking about having fun, I agree. But having fun and accomplishing things are different objectives.
How is the Sony rootkit any different than Windows Media Player? Both install vendor control over the media you use in a unilateral way, and open up ways to harvest your personal habits for uploading to the vendor. The only difference was that Windows users weren't ever told that Microsoft was bad for building this into Windows, while Windows Enthusiasts have blown Sony's DRM out of proportion. If you don't want a vendor screwing up your system and opening security and spyware holes, it shouldn't make any difference if the perpetrator is Microsoft or a third party such as Sony.
Ten Myths of Leopard: 10 Leopard is a Vista Knockoff!
Right, and if the unwashed masses all switched to Linux, there would be no driver problems like those associated with Vista, nor ever any circumstance where an update resulted in problems booting as described here.
Apple earns the same hardware margins as other PC vendors, it just doesn't lose money on $500 loss leaders like Dell and HP. From that perspective, Apple's OS X is essentially free and typically comes with a year or two of free updates. Reference updates cost $100, which is what you'd pay for Linux support. So no, there isn't any dramatic software markup from Apple, there's just a limited hardware selection. Windows is a pretty significant markup, because PC makers all have to pay $30 to sell you the basic version of Vista, and you have to pay $200-300 more for the version that actually does things. Add another $300 for a word processor and spreadsheet, and yes, you can see the software price effect of owning a monopoly.
Even if KDE and GNOME could work things out and deliver a standard Linux desktop, it would still have Windows-like problems, except there wouldn't be a Microsoft to blame them on. The user problems in the market aren't the fault of Windows or OS X; they are the reason we pay for software. Vista doesn't solve more problems that it solves, so nobody is buying it. Leopard offers more than $100 of advantages, so its selling to Mac users. Linux doesn't immediately solve the same problems as XP with enough advantages to motivate users to switch on the desktop in numbers that are significant. OS X does enough so to get people to buy new hardware.
When Linux can do the same, people will start switching en mass. Right now however, the development focus in Linux is in specific projects (XO) or server/business markets, not in selling low cost PCs. Who is going to lead Linux into the mainstream? It would appear to require a hardware manufacturer. Why isn't Dell or HP or any other major PC maker even investigating serious PC sales? Are Microsoft's OEM contracts really that limiting that they can hold back all development potential across the entire PC industry apart outside of Apple?
SCO, Linux, and Microsoft in the History of OS: 2000s
Exactly, except for the "handsome and substantial" part.
PCs of the early 80s (I was there) were impractical curiosities but better than nothing. Technical comprehension was pretty low. IBM's brand carried the PC, not any useful functionality or superiority. The design of the PC was purposely stunted by IBM to allow it a product to sell against Tandy/Apple/Commodore without actually eating into its existing business machine monopoly.
It was also well known then, as it is now, that Microsoft's PC-DOS was a complete rip off of CP/M, but in those days there wasn't the Microsoft fervor to stop competition through lawsuits. Microsoft subsequently ripped off the work of various other companies, and then spent billions of dollars paying out settlements in the late 90s and early 2000s after obtaining and maintaining its monopoly position.
It's not really "competition" to steal someone else's work, prop up your shoddy clone of it, and then throw money at it until you drive innovators out of business.
SCO, Linux, and Microsoft in the History of OS: 1970s
A few errors in your faith:
Nobody wants $15 exploding media rentals or people would have been buying Microsoft's PlaysForSure. Also, a radio isn't a hot seller for buyers of a hard drive based music player. Apple knows what people buy, and if there was significant demand for a radio it wouldn't be optional on the iPod.
The $80 Zune is indeed a low priced item. However, remember that there were only about 1.2 million ever made. So its not like those fire sale Zunes from last year are going to outsell the 20-25 million iPods Apple will sell this winter. There are also a few things the Zune can't do that make it a problem. It can't play iTunes purchases without re-ripping them, it can't play games, and it doesn't work with Macs. It also looks clunky, and has more hardware problems than the iPod (loud hard drives, flakey software that crashes, battery problems).
You complain about Firewire back in 2002, but when Apple released the iPod, there was no installed base of USB 2.0, so Firewire was important for making the iPod sync much faster than other systems. Apple has always owned the market because it innovated. Microsoft doesn't have to innovate anything, it can simply copy. Even so, its doing a really bad job of ripping Apple off. It can't compete even in a fairly mature market.
Microsoft also hasn't "hit gold" with the Xbox 360; it's losing billions on it, even in a year when it faced little other real competition. This year, the Wii has caught up in sales (actually Wii sales are tied with Xbox "shipments," which means that there are far more Wiis in use) and the Sony PS3 has matched the 360's sales from last year.
It's funny that Windows Enthusiasts claim victory for the 360 despite its plateau of shipment sales reached prior to real competition and ignoring the fact that its year long head start is now gone, but claim that it will take Microsoft ten years to prevail over the iPod. The only way that could happen would be if Apple had dropped the ball and continued selling the 2005 5G ipod for ten years.
In 2015, a Zune competing against a 5G iPod might look attractive. However, the iPod is already migrating into a mobile device far thinner and far more capable than Microsoft has ever produced. It really has no expertise in developing desirable consumer hardware (look at the clunky xbox that overheats and looks dumpy), and can't deliver strong software to use in mobile products. Case in point: ten years of failure invested in WinCE.
Apple is also aggressively bringing prices down--for hardware (it forced Microsoft to sell the original Zune at a loss right out of the gate) and for media. Apple is also pushing sales of non-DRM content, which from its powerful position is a strong message about the difference from Apple in control vs Microsoft in control. Do you think Microsoft would be releasing non-DRM tracks if it had any power in the industry? That's the company that tried to unleash Palladium PCs.
iPhone Grabs 27% of US Smartphone Market
It's not a success to sell off old models at less than half price--at tremendous losses--and still only make a minor showing in sales charts compared to new, full price competing products from Apple and SanDisk.
"Also, most places that offer Zune also sell iPods. At least that's what I've noticed." Again, that is why it is failing: no monopoly. Do you see PCs with Linux installed at most places where you see Windows PCs? How about any other alternatives? Ever see PCs with OS/2 or BeOS in stores? In 30,000 stores?
If you really want choice, it is actually important for the Zune to fail. If you want the Zune to succeed, you can't be interested choice at all. It's that simple.
If "the bottom line is that there are lots of inaccuracies," why don't you point any out? It's easy to dismissively ignore the facts and stuff words into TFA that don't exist, but if you are an expert, why can't you present anything substantial that was not correct in the article?
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
The Zune 80 is hard to find because Microsoft focused its efforts on producing the 4 and 8 GB models that compare poorly with the iPod Nanos. Bad move! As TFA notes, Microsoft is competing against the Apple of 2006. The Zune 4 & 8 might have done better against the original Nano last year, but now the new Nanos are smaller, thinner, and do more. That leaves people who want a Zune interested in the 80 GB model that isn't available. No because of high demand, but because of tight supply.
Even Paul Thurrott admitted that the Zune 80 is "sold out" due to Microsoft not making very many, rather than some fictitious great demand: "Microsoft this week can exult in the fact that the hard drive-based version of its new Zune portable media players, the Zune 80, is sold out online and in retail stores around the country. But this apparent success is muted by a simple fact: The Zune 80 was never manufactured in volume, and many retailers never got a single unit to begin with," Paul Thurrott wrote for WinInfo.
Microsoft's Zune 80 'sold out'
That "number one spot" was taken by last year's model being sold off at half price. Meanwhile, the majority of the top ten models were iPods of various colors, including the premium priced iPod Touch. If that's the best Bill Gates can feather his cap with, the emperor needs new clothes.
The rest of the top ten were mainly low priced models from SanDisk, which sells several MP3 players in the $30-99 range.
SCO, Linux, and Microsoft in the History of OS: 1990s
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
Well that's wrong as Apple makes more money from its media efforts than Microsoft does. Microsoft licenses Windows and Office profitably, and loses money on everything else, including its WinCE/Xbox/Live/Windows Media/Windows Mobile businesses. Apple makes money on Macs, iPods, iPhone, and music/video distribution.
Microsoft's Three High Profit Monopolies.
If Burst had any real claims, Apple would have been the fat target to jump on. When Microsoft settled for $60 million, it appeared clear that Burst expected to jump from Microsoft into big money with Apple, and pundits threw around numbers like $1 billion. Windows Enthusiasts hoped Microsoft had enriched Burst just enough to take down Apple, similar to the hopes that Microsoft had earlier contributed enough in "licensing" to SCO to keep Linux under perpetual attack for years. Microsoft has frequently paid out patent trolls and sent them after competitors.
SCO, Linux, and Microsoft in the History of OS: 1990s
If you paid any real attention to the patent claims Burst was lining out, they were all centered around the idea of sending "burst" data faster than it would be played back. In other words, Burst insisted ownership of the idea of any media distribution that delivered a two hour movie in less than two hours. It didn't have technology it was selling, it only had "patented ideas" for things that were impractical when Burst began patenting them. It then continued pushing the patents as renewals, so that somebody would have to pay big money to actually deliver that technology when it became practical.
Microsoft was a stepping stone to Apple. Once Burst got big money from Apple, it would have a reputation that could bully every other company that might want to actually build video distribution products. This isn't a specialized idea about how to build a new mousetrap, it's a patent covering the idea of catching mice in the future using new materials. That's not invention, it's futurism.
Imagine if Arthur C. Clarke had patented the idea of geosynchronous satellites and then hounded the actual developers of satellites because he wrote about the idea, and demanded half of their revenues. Dreaming up an idea is great, but it's not worth a major share of the profits of actually creating something.
Instead, Apple invalidated a wide swath of Burst's patents, and then prepared to attack the rest of them. Had Apple continued, Burst could have lost everything. Apple could easily have spent another 10 million fighting Burst's claims, and Burst would have spent more millions in attorney fees. Apple paying Burst for use of its patents took the heat off Apple while giving Burst some remaining reason to stick around. It will now either try to extract more reasonable licensing fees from other media players, or attempt to shake down less defensive companies for more million dollar settlements.
Apple has shaken off the monkey as quietly as possible with the least payout, and Burst's patents have been slashed in half and then revalued at a 84% discount. To keep some shred of valuation, Burst licensed its patents to Apple with a few exclusions, but granted Apple immunity from further targeting. That appears to have been done to escape valuing Burst's entire patent portfolio at $10 M or less from an Apple sized company.
A strong defense against patent troll attacks it the best bet against unreasonable patents, given that the patent office can't manage to regulate things.
Why Microsoft's Zune is Still Failing
Last winter, I detailed why Microsoft's iPod Killer would fail miserably. This year, Microsoft will fail again, but for a new set of reasons. It is not obvious that the company has figured this out itself. Here's why the Zune will fail in 2007, and how Microsoft is painting a fraudulent portrait of interest that doesn't exist.
Extremely constrained supplies. I tried to get a review unit for a major publication two days ago, and they said there were none available.
Of course, the other company advertising constrained supplies is Microsoft, which has been trying to play up the idea the 80 GB Zunes have "sold out" due to popularity, when in reality very few stores ever got any. It's also trying to milk the idea that last years' 30 GB Zune is a "best seller" topping the Amazon sales charts. In reality, those sales represent an $89 fire sale to clear out inventory of those 1.2 million Zunes Microsoft said it sold back in July to meet its goal. They were, of course, only sold to stores, which are still sitting on them. They're now being sold to actual consumers at a nearly $200 discount over their intended price: 65% off.
It's like saying the Halloween Store is selling well in the first week of November. The WSJ posted an online poll asking what people are "most likely to buy" for Christmas, and listed the iPhone and Zune but no iPod. The results: 123,000 votes later, the Zune had 0% of the votes. Over half said the iPhone.
Not being able to launch the Kindle in volume in time for Christmas might allow Amazon to declare it a sell out success, but it will be a Pyrrhic victory (pun intended). Nintendo better get crack(l)in on the Wii as well.
iPhone Grabs 27% of US Smartphone Market
It's pretty comical that CNET was outraged that Apple--an electronic device designer that develops integrated software--would attempt to deliver a phone, while it thinks it is mission critical for Nintendo--which has only made game consoles--to deliver one.
Perhaps the real business model in danger is that of CNET offering manufacturers advice. CNET doesn't seem to be doing very well at that at all.
UnWired! Rick Farrow, Metasploit, and My iPhone Security Interview