Microsoft “super-pleased” with Zune. Do you believe it?

robbie-bach.jpg

In an interesting San Francisco Chronicle interview, Robbie Bach, president of Microsoft’s entertainment and devices division, reveals in no uncertain terms how pleased the company is with Zune:

Q: How is the Zune business going?

A: We’re actually super-pleased at where we are. When you talk to people, customer satisfaction is somewhere north of 90 percent. We think we’ve got a product that is very strong. You’ve seen that strength in some of the new ideas that we are trying, things like Zune Social, where we have over 2 million people who are on the Zune Social site, who are sharing their playlists with other people, letting people experiment with what they are listening to, letting people see their top 10 list and creating a social experience around it.

If you look at actual sales, depending on the month, we’re No. 2, sometimes No. 3. It goes back and forth. It’s a good solid share. We’re not clipping at the heels of Apple just yet in the market share space. But that’s something that will evolve over time.

I’d be interested in our readers’ impression of how Zune is doing:

  1. Should Microsoft be “super-pleased” with Zune?
  2. Do products with 90+ percentage satisfaction ratings result in an on-target outfit like GameStop to discontinue selling Zunes due to “insufficient demand from customers”?
  3. Is Zune a “very strong” product?
  4. Is Zune’s market presence a “good solid share”?
  5. Is Zune capable of “clipping at the heels of Apple” in market share over time?

Bonus questions:

  1. Bach: “We will outsell the iPhone. We will outsell the BlackBerry.” Do you believe him?
  2. Bach: “We don’t make phones ourselves. We don’t have any plans to make phones ourselves.” Do you think Microsoft will or will not get into cellphone hardware business?

I’m not even going to bother asking the awkward question as to why Robbie Bach is still employed at Microsoft, because that wouldn’t be fair…to MSFT shareholders.

31 thoughts on “Microsoft “super-pleased” with Zune. Do you believe it?

  1. http://venturebeat.com/2008/06/12/interview-with-microsofts-robbie-bach-part-1-on-zune/

    “It’s not like [GameStop] sells iPods either. GameStop saw it as a place to expand. We tried. It hasn’t gone as well as they’d like so they decided to stop selling them. It doesn’t say a lot. It was a channel expansion opportunity and it didn’t work out. It was a good thing to try. But it’s not called GameStop for nothing. It’s not called MusicStop. We have good traction with Best Buy, Circuit City and elsewhere.”

    Zune 2.0 is a very well-designed product. Yes, I own one. And no I don’t work for Microsoft. I previously owned 3 iPods. I wanted a small, solid-state player, and I hated the form factor of the newest iPod Nanos.

    The Zune UI makes great use of typography for clear, easy navigation. And the Zune software on the PC is also well-designed and easy to use. I’ve been using my iPhone as my primary music player since I got it, just to save carrying around a second device. But I do think Microsoft has finally gotten it, after a bad 1.0 start.

  2. I can answer one of your questions: “Do you think Microsoft will or will not get into cellphone hardware business?”

    Either way, not so that anyone would notice.

  3. @Dave – Even before the latest firmware update you could manually tell your Zune to sync wirelessly. When it is plugged into a power source and idle, then it automatically syncs wirelessly.

  4. Dave – You might not have heard about the latest firmware updates. I configured Wireless sync on the Zune Software and after those settings were sync to my Zune the first time, I can now sync wirelessly with my PC. It doesn’t need to be connected to any type of power.

    The device doesn’t need to be connected to anything.

  5. “2. Bach: “We don’t make phones ourselves. We don’t have any plans to make phones ourselves.” Do you think Microsoft will or will not get into cellphone hardware business?”

    Absolutely yes. MS blames their phone problems on OEMs who don’t build compelling devices and believes the only way people will recognize the benefits of Windows Mobile is to build their own hardware.

  6. Rask “…while in the car in my driveway I kicked up the sync…” You must have a power plug in your car, because somehow, Microsoft’s definition of ‘wireless sync’ means your Zune has to be plugged into a power-supply. I guess it really should be named ‘remote sync’, not ‘wireless sync’ because you always need a wire connected to your Zune for it to sync, even if the wire isn’t directly connected to the computer. Leave it to MS to figure out how to botch what could have been a real feature for the Zune.

  7. Kontra – That I can completely understand. E&D may be posting profits now but at the rate they lost money during the first 5 years of the Xbox, it’ll be another 15 at this rate until they break even with their original investments.(Kotaku enjoys posting the quarterly’s of the gaming companies hence why I know this bit of info).

    The money they lost getting it off the ground is quite legendary(Wasn’t the figure 5-6 billion if you include that Xbox 360 warranty write-off?).

    BTW – I’ve subscribed to your RSS. Really enjoy the conversation here.

  8. Rask: “Don’t own any stock at all actually.”

    That’s fine. Many people look at, say, the XBox, play a game on it, read the Microsoft press releases and make the assumption that it’s a “super-pleased” kind of success. Whereas the financial reality is that over the years Microsoft has sunk billions into that bottomless money pit.

  9. Is Microsoft making a profit from Zune sales? Are they pleased with the return on investment?

    When you already have the two hottest selling products (Windows and Office), it’s hard to come up with a worthy third act. Personally, I don’t think Zune will ever be it.

  10. Don’t own any stock at all actually. I’m just a tech afficionado and follow products and developments as opposed to the people leading the companies.

  11. Rask, are you by any chance a shareholder of MSFT? If so, what do you think of the current management in financial performance terms?

  12. So I’m here temporarily cause I read Thurott’s blog and he linked to you. I’ve read a few posts and you guys have a great blog going here so congrats.

    Just like to add one last thing here before I get to annoying to your userbase. =)

    Similarly to the Apple ecosystem of having Apple TV to get your iTunes content from your PC to your TV, my home Media Server/PVR runs on Windows Vista Media Center. I use the Xbox 360 as an extender and my Zune can be used seamlessly to get that same content when I’m traveling. It just works extremely well for me and my family loves it.

    Now I realize there are reliability issues with the 360. But I’ve been very fortunate with mine in that I has never died on my and I’ve only had to replace it once because of what I believe was a HDD controller issue.

    For a bit of background disclosure, I’m an IT professional and I earn my living implementing and supporting a variety of solutions between VMWare/Microsoft with some smattering of Open Source stuff.

    That being said, I really see the appeal of the Mac platform, the hardware Apple puts out is absolutely beautiful. I do support for OS X on a regular basis and it’s a nice OS overall. It’s just not my personal cup of tea. I have recommended Macs to friends and family though if I saw that the platform would be a better fit for their needs.

    I hope that Microsoft doesn’t exit these markets. The Entertainment and Devices division has put out some great stuff in the past 2-3 years and frankly I believe that some of the other divisions should be taking a much closer look at what this group is doing.

  13. Bach sort of reminds you of the previous Iraq minister of defense. He’s seems willing to make outrageous claims in the name of propaganda (I mean marketing).

    To be honest, I’ve never seen a Zune in the wild. I’ve actually looked for them. I don’t think retailers would turn the product away if it were actually selling well enough for anyone to be “super pleased”.

  14. Let’s recall a few things. Having identified digital music and DRM as crucial competencies, Microsoft has been trying to kill iPod/iTunes for the last five years. They have tried various strategies, including berating Apple for lack of “choice” and then shafting their own partners by discontinuing PlaysForSure. They said they wouldn’t get into the hardware business and then introduced Zune to compete against their “partners.” Unlike Apple that has always been a profitable premium-niche player, Microsoft depends almost entirely on volume sales and market dominance. On that alone, Zune has been an unmitigated disaster.

  15. “Do products with 90+ percentage satisfaction ratings result in an on-target outfit like GameStop to discontinue selling Zunes due to “insufficient demand from customers”?”

    Yes.

    Macintoshes–even back in the 1990s with a small market share–had high satisfaction ratings. That didn’t mean that Apple sold lots of them. The two million or so Zune customers may be really happy with their Zunes. That tells Microsoft that they have a good product. Now they need to promote that product and convince people who are in the market for a music player to consider one.

    “Bach: ‘We will outsell the iPhone. We will outsell the BlackBerry.’ Do you believe him?”

    Remember that Microsoft sells operating systems to cellphone makers, which is different from what Apple does. So I’m not sure it’s the same comparison. Microsoft likes to play with numbers (as does Apple).

  16. Rask: “I much prefer it’s UI over the iPod”

    Having variety and options in a market is a good thing. But the article above is really about whether Microsoft should be pleased with it.

    I’m sure Jobs/Apple was pleased with the Cube, but after it failed in the marketplace, they took it off the market. I’m sure Sony, WalMart, BestBuy, Dell, Virgin and an untold number of iPod/iTunes killers were pleased with their products when they introduced them. After seeing the reaction from the market, however, one by one they all killed their products to stem further financial bleeding.

    When Microsoft will come to the same conclusion is a matter of conjecture. I explored that in:

    Consumer markets: Time for Microsoft to exit?

    iPhone: Apple’s cross-platform innovation dilemma

  17. 1. Should Microsoft be “super-pleased” with Zune?

    I think they should be. They’re selling consistantly 2nd or 3rd on a month to month basis behind the Apple behemoth.

    2. Do products with 90+ percentage satisfaction ratings result in an on-target outfit like GameStop to discontinue selling Zunes due to “insufficient demand from customers”?

    Loaded question really. With MS upgrading all hardware in the line with new versions, they support hardware a lot longer than Apple does, which translate to less frequent repeat buyers. Gamestop’s bread and butter is also not really music players. I think them selling the Zune was a special business deal with MS. If WalMart of Best Buy dropped the Zune then there would be cause for concern.

    3. Is Zune a “very strong” product?

    In the overall PMP market, it’s a strong player. Compared to iPod marketshare, noone really is. Featurewise, if you live in the MS ecosystem (Windows/Media Center etc) it’s a worthwhile player to get.

    4. Is Zune’s market presence a “good solid share”?

    See 3

    5. Is Zune capable of “clipping at the heels of Apple” in market share over time?

    Apple would have to weaken tremendously for this to happen. I can’t see that happening.

    Bonus questions:

    1. Bach: “We will outsell the iPhone. We will outsell the BlackBerry.” Do you believe him?

    Theoretically, MS already outsells the iPhone with Windows Mobile devices. They just don’t play in the hardware field and work with great vendors like HTC.

    2. Bach: “We don’t make phones ourselves. We don’t have any plans to make phones ourselves.” Do you think Microsoft will or will not get into cellphone hardware business?

    Highly unlikely they will jump in that game. That is unless Google Android starts seriously eating into MS’s marketshare for Hardware vendors.

    I do think however that if MS starts bundling it’s Zune software in Windows Mobile 7 for Media Playback that there is going to be some interesting(Note I didn’t say serious) competition for Apple.

  18. I got a Zune last Friday(Canadian Launch date) and I couldn’t b e more pleased with it.

    I much prefer it’s UI over the iPod(Touch/iPhone line nonwithstanding), I love that I can sync TV shows from my Vista Media Center without problems and I also love having a radio tuner with me at all times if I want the traffic report before leaving the office without having to open a shitty web-streaming window.

    Frankly there’s a ton of people shitting all over the Zune without having even seen one simply because A – it’s a MS product or B – It isn’t an iPod/Apple product.

    I like to think that I buy products on it’s own merits and not because of the “everyone has one and it’s cool” mentality.

    Oh, and being able to sync my content over my home wireless network kicks all sorts of ass. I had forgotten to sync the latest podcasts before leaving the house this morning so while in the car in my driveway I kicked up the sync and grabbed my content for the commute.

  19. Pingback: Fun with headlines: The 'this is way overdue edition' - SuperSite Blog

  20. The Vista Blues
    Written by PC

    So many users leaving me,
    And they ain’t comin’ back.
    Vista’s got issues, it’s so glitchy,
    They’re leaving me for Mac.

    Problems? Too darn many.
    Patches? Not enough.
    Expensive upgrades? Well, I need plenty,
    Just to get me up to snuff.

    People hate it when I crash and freeze.
    Vista’s got me out of sorts,
    I’m often sick, to some degree,
    On hold with Tech Support!

    After a year of fixes, I’m still blue.
    The problems, they repeat.
    Now there’s only one left to do:
    Control, Alt, Delete.
    AAWWOOOOOOO!

  21. “Bach: “We don’t make phones ourselves. We don’t have any plans to make phones ourselves.” Do you think Microsoft will or will not get into cellphone hardware business?”

    Wasn’t that the same company line they gave when asked if they would make an MP3 player? Didn’t they state that the best solution was other hardware OEMs to use Microsoft’s PlaysForSure WMA format?

    It’s Microsoft’s Achilles Heel…they can’t stand to not own the next Big Thing!

  22. Let’s see, that would be:
    No, No, No, No, No, No, and Yes. If iPhone takes off, and MS Windows Mobile partners can’t build anything to compete with it, then MS will ditch them, and build its own cell phone, hoping to use the Zune as the base from which it starts.

    MS launched the Zune as a competitor because they eventually became convinced that Apple was going to grow the iPod into a mobile computing device, which it has now done with the Touch. (After all, it was called “Pod” from the beginning, not “Music” or “Player”). The mobile computing device market is huge. MS has tried to come at it from the phone, Origami, PlaysforSure, and now Zune directions, and to date, has failed pretty miserably, every which way.

  23. Not only do I not know anyone who has a Zune, when I asked around, I couldn’t find anyone who had even heard of it.

    Poor, beleaguered Microsoft.

    John Davis

  24. iPod won. There will always be a market for people who refuse to buy the market leader for one reason or another (no single product can meet everyone’s needs, of course). But just like Windows relegated MacOS to 1/10th of its market share, any Microsoft-based music player will never challenge the iPod.

    Basically, Microsoft has to hang in there until the next paradigm shift and try to win that one. The next paradigm shift appears to be coming in the way of portable streaming media, but Apple already seems to be ahead there, so we’ll see.

    That’s also the answer to why Bach’s still employed. He’s a caretaker that just has to keep the division from losing too much money and stay in the game. As soon as there’s a real opportunity in the market I’m sure they’ll bring someone capable in.

  25. I also saw that Sony-Ericsson demonstrated their new phones for the press. The press was not impressed. Some of the phones didn’t even work. It was embarrassing to see. Great things will happen after 11/7, but I can’t help to feel somewhat sad for them (S-E). After all, they are a Swedish company, and we could have done better, much better. That’s what happens when management stops listening to Engineering, and Software Engineering becomes a kind of entry level job.

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