Zune 2: Mediocrity grows on trees

Zune 2

At SuperSite for Windows Paul Thurrott comments on Zune 2:

And while Zune 2.0, as I think of it, is obviously not good enough to suddenly push Microsoft’s device beyond the iPod, it may just be good enough to help it snag some market share and move things forward. You never know.

“You never know.” An interesting conclusion. Even Microsoft’s second loudest cheerleader out there isn’t quite sure if the company’s second attempt in five years to unseat Apple will succeed.

How can that be? Microsoft has more money, ambition and a clear need to break down Apple’s dominance in digital music than any other player out there. It has stated its desire and willingness to do anything to get there many times. It gave a per-box bounty to music label Universal. It even moved the Zune team under J Allard’s XBox division, presumably to get it as far away from Windows as it’s possible at Microsoft.

Unfortunately for Microsoft, the XBox has been a bottomless money pit. The company has been reported to have lost over $6 billion to get a foothold in the game machine industry. In FY 2006 alone, XBox 360 development and launch costs exceeded $1.25 billion. Some business model for Zune to follow!

This is how it’s done

Think of what Apple, Microsoft’s adversary for market and mind share, had to do to enter a highly competitive market with unit shipments in the hundreds of millions. Apple had to “reinvent” not just what a cellphone is, but define what a mobile convergence device could be. It ushered in a new form factor (extremely thin, huge high-density screen), new interface (multi-touch), new business model (no direct carrier subsidies, revenue sharing, unlimited data plans), new apps (YouTube, visual voice mail, full-function web browser) and so on, all tightly integrated in a jewel of a gadget that more than a million people snatched up in less than 80 days.

Apple surely did not enter the phone market with a “You never know” attitude. The iPhone wasn’t just “good enough.” As evidenced by the praise it got even from the executives of chief rivals Motorola and Nokia, in just a few months it has managed to put a fire under the ‘smart phone’ segment of the mobile industry. Unless something extraordinary happens, it’s highly likely that the iPhone will soon be a market leader in that segment.

Incrementalism to nowhere

Under Steve Ballmer’s reign, Microsoft’s failures in most consumer-centric markets (XBox, Media Center, Zune, Tablet PC, UMPC) is strongly indicative of its inability and unwillingness to out-think its competitors and take significant risks.

There can be no better evidence of this incrementalism and dogged pursuit of mediocrity than Zune 2. Microsoft had Apple in its cross-hairs for the last 3-4 years as a potentially lethal threat against its digital media format, DRM and distribution dominance.

After so many recent debacles (Zune, Urge, PlaysForSure), Zune 2 is the answer to Apple’s threat? What strategic design reframing of the problem has Microsoft exercised here? Matching iPods spec for spec with virtually identical form design, functionality and pricing down to the dollar?

Parsing of Zune 2’s feature list against similar iPods the way Thurrott does is a meaningless exercise. Zune 2 has to not only match the iPod but has to significantly exceed it to redefine competition rules to make a dent. Being “good enough” is not going to be good enough. Microsoft is dealing with a company willing and able to terminate the most successful digital music player in history (iPod mini) at the height of its run with another product line (iPod nano). A few feature disparities won’t tilt the scales here.

Apple needs more imaginative competition, Zune 2 ain’t it.


You may also be interested in this counternotions article:
iPod touch nay-sayers: shackled by “gadget thinking”

16 thoughts on “Zune 2: Mediocrity grows on trees

  1. This articls in now 4 months old and the ZUNE out sold the IPODS almost 2-1 this christmas. The screen on the new Zune is 2X that of the IPOD, and the sound is better on the Zune also.

    In the only market that means a darn the Zune won out. BIG TIME.

    By the way doesn’t Microsoft own 50% of Apple?

  2. Microsoft has so much money they just need t find ways to waste it. And pinpointing markets they think they need and unleashing the MBA’s is what they do. They will fail into some foothold somewhere. But eventually they will become what IBM was in about 1990. They will become not a leader (look in the online ad space) but a has-been and a me-too. They are too big to matter, as odd as that sounds.

  3. I saw someone who owned a Zune. I asked her why she bought it, and she told me she didn’t want to be like all the other kids with iPods.

    I showed her my iPhone and she was dumbstruck by it – I wouldn’t be surprised if her next player is an iPod Touch.


  4. Dmitri I happen to own a zune and I love it. Before I bought it I checked out several different players including the ipod and as far as I was concerned using the same set of headphones everyone else’s had better sound quality than the ipod. Apple keeps adding on to their ipods to bad they don’t try to improve sound quality.

  5. Pingback: Consumer markets: Time for Microsoft to exit? « counternotions

  6. Dmitri, what’s wrong with Zune is that it’s not an iPod. As an “iPod-killer”, it doesn’t measure up. And in this market, if you can’t unseat the iPod, you’re left with the crumbs.

  7. Kontra, the 1.2 million sales is to the retail channel, not to end customers apparently. I reckon the customer figure will be a tad smaller.

  8. Michael, I’m still dumbfounded as to how (if such numbers can be trusted) 1.2 million people actually bought a Zune 1 so far. Why would a person do that?

  9. Whilst MS is “looking beyond” and thinking Zune 3, Apple will have done iPod touch 2, iPod classic 7, iPod nano 4, iPod shuffle 4, iPhone 2 and probably a new product as well. The problem for MS was well put by John Davis. MS is full committees that think too much and do little. Keep thinking MS.


  10. Well, Puzzled, you have to “look beyond” Zune 2, as Microsoft’s J Allard put it. So Think Zune 3. :-)

  11. I look at the new iPod models with lust. I just look at the photos of the Zune 2 and think “Huh?” The controls look like a frightened frog, and that green is the ugliest color I’ve ever seen.

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  13. Good article. You’re right. MS just doesn’t get it. They never will get it as long as they are trying to unseat Apple. That’s not the game. Apple is developing cooler and cooler products that people want, not trying to knock a rival off the pedestal. If MS did this and dumped the committee concept, they might make something.

    I did some work for MS in Tokyo a few years ago and the two things that struck me at the time were these – the endless meetings and the general air of complacency. I realized at the time that these guys were on their way out. “Pride goes before a fall.”

    John Davis

  14. MSFT doesn’t know what regular people want; they only know what enterprise IT shills want. Regular people buy Windows so they can run the Office suite they may have “copied” from work. They used to also by Windows to run games, but now they buy Wii’s, and PS3’s and Xbox’s instead.

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