iPod Why Microsoft Fails...

iGary · Sep 29, 2006

I just read this article on CNN about the Zune.

Here are some reasons this whole "multi-year" strategy will fail:

SEATTLE, Washington (Reuters) -- Microsoft Corp. said Thursday its new Zune music player will be sold at a price matching Apple Computer Inc.'s market-leading iPod and, as a result, lose money this holiday season.

Winning strategy = lose money?

"We had to look at what was in the market and offer a competitive price," said Scott Erickson, Microsoft's senior director of product marketing for Zune. "We're not going to be profitable this holiday but the Zune project is a multiyear strategy."

How does a guy like this get a job?

Redmond, Washington-based Microsoft has said it plans to invest hundreds of millions of dollars to develop and market the Zune, and acknowledged the investment may take years to bear fruit.

Or never...

The music player is the first step in creating a new brand of portable devices, according to company officials, who also said a Zune phone is in the works.

Another hit.

Unlike the iPod, it comes with an FM radio tuner and wireless connectivity to allow users to beam photos and songs to one another.

We all know how much people will be Zuning songs to each other.

_______________________________________________________________

Now here's where it gets good:

Microsoft also announced it will sell a music subscription pass for $14.99 a month, allowing users to listen to any of the songs on Zune Marketplace. It pledges to offer 2 million-plus songs at launch. After the pass expires, users will not be able to access those songs.

We all know how well this market works.

For consumers looking to own a song, the Zune Marketplace will sell tracks for 79 Microsoft points. A user can buy 80 Microsoft points for $1 and points will also be redeemable at its online video game store, Xbox Live Marketplace.

WTF?

Microsoft Points? They expect people to understand this crap? Tracks sell for 79 MS Points, you can buy 80 of them for a dollar. How about 99¢ = 99¢ and leave it at that?

Microsoft said it will initially sell only music -- and no video -- at the Zune Marketplace. The company said it was negotiating with major record companies and labels.

Translated "Record labels are waiting to see how long it takes for this to flop before committing."

Each Zune device will come preloaded with an array of songs, music video, images and short films, Microsoft said.

Freaking whoopee.

I was really hoping they would do better than this, honestly. It's almost embarrassing.

gauchogolfer · Sep 29, 2006

I bet some genius starts saying, look songs are 79 for Zune and 99 for iTMS, better get a Zune

. Honestly what is the fecking idea behind that? Can't they use a base-10 system like the rest of us? Microsoft-points, indeed. I guess you'll be able to play lots of Halo and redeem it for songs, or something. But why not make 100 points cost 100 cents and be done with it.

Lame.

bartelby · Sep 29, 2006

I hate the people always mention the iPod not having a radio tuner. I'd hate it if it did. I gave up listening to radio 20 years ago!

And "Microsoft Points" money make it sound like a tacky funfair!!!

balamw · Sep 29, 2006

gauchogolfer said:
But why not make 100 points cost 100 cents and be done with it.

Having your own currency is one of the first steps to establishing your own government. Maybe Microsoft is planning a coup.

Actually I'm a bit surprised they didn't further inflate their currency as is the case for many rewards programs, like airline mileage programs where you may need 60K points to get something worth a few hundred bucks.

B

iGary · Sep 29, 2006

I bet some genius starts saying, look songs are 79 for Zune and 99 for iTMS, better get a Zune

That was my thought. Almost brilliant marketing on MS's part.

But seriously - why make it confusing - MS Points?

Seriously, people will not adopt this when the iTunes Store is so easy and simple.

Apple still has nothing to worry about. Not saying they won't get toppled by the next big thing, but for now, they own the show.

2nyRiggz · Sep 29, 2006

Anybody ever checked out the zune message boards...its very funny reading some of the moron-ish crap they post there. Always a good laugh and they sure know how to hate on macs/ipod.

http://www.zunescene.com/forums/

Bless

bartelby · Sep 29, 2006

2nyRiggz said:
Anybody ever checked out the zune message boards...its very funny reading some of the moron-ish crap they post there. Always a good laugh and they sure know how to hate on macs/ipod.

http://www.zunescene.com/forums/

Bless

OMG! I just cringe reading some of those comments!!

Dane D. · Sep 29, 2006

It will fail because MS can't design anything that works without hassles. I'd love to see a market share breakdown of the MP3 players. I'll bet if you add-up the competitors share and compare to iPod's share, they don't come close. MS is just late to the party and as usual playing catch up with Apple. Another example of "How can we rip-off Apple" with a sub-par product.

IlluminatedSage · Sep 29, 2006

microsoft is weird.

smart people but weird. like they will have any better luck than napster (roxie version), mtv online and yahoo music.

where they will do best, is to link xbox 360 and the zune.

if they do that. all in one solution... they will move some units.

timnosenzo · Sep 29, 2006

It is really amazing that MS thinks its going to own the marketplace by just showing up and doing something that other companies have been doing for years. I mean, what are they offering that hasn't been offered before?

bartelby said:
OMG! I just cringe reading some of those comments!!

I know, how can you be a fanboy for something you don't own or never used?

OllyW · Sep 29, 2006

Another Idiot at Zune Board said:
This is why I hate Ipod Fanboys. Without Bill Gates, Apple would probably not have survived. Do you have any idea how much Microsoft invested money to Apple?

Uhh, dont you guys know that William Gates sent over a few of his top employees over to apple, some of which begun the work on the iPod? Many die hard apple/iPod fans want to leave that detail out, but it in fact is there.

You learn something new every day

andiwm2003 · Sep 29, 2006

losing money in the beginning worked for the Xbox. And Microsoft can afford that.

Microsoft points is of course crap. BUT: if they include Microsoft points in Microsoft software purchases and stuff, then people suddenly have lots of MS points (e.g. all system admins in companies) and eventually buy a Zune.

Don't count the Zune out right now.

gloss · Sep 29, 2006

In Microsoft's defense, it's a viable business strategy to lose money getting a product in order to gain market share. That's what Sony did with the PS2 and their overall profits have been immense. It just has to be well-considered.

Lixivial · Sep 29, 2006

Playing Devil's Advocate

iGary said:
Winning strategy = lose money?

It's worked wonders for prying themselves into a heavily dominated console market. They were written off when they entered into the console market. They took second and are first-to-market in the current generation.

How does a guy like this get a job?

The same way anyone else would. Microsoft has been pushing these multi-year strategies as a way of a brute-force attack on a closed industry. They did quite well in the console arena, so it's not exactly fair to write them off.

Or never...

Why? They're offering a similar solution that Apple is offering and then some. 99 cent downloads of songs, plus a centralized app/location to transfer and buy these songs and also, now, a capability to share songs between others wirelessly. They've also got a one-up on Apple -- they have millions of beefed up iTVs already in place in homes around the world.

Another hit.

You know nothing about any of these products and yet you're writing them off already? OK.

We all know how much people will be Zuning songs to each other.

At least they have the option, right? If Apple had done this and labeled under the term Photocasting and WANCasting, methinks we'd be hearing applause.

Microsoft Points? They expect people to understand this crap? Tracks sell for 79 MS Points, you can buy 80 of them for a dollar. How about 99¢ = 99¢ and leave it at that?

Well, I'll grant you this point. I'm curious about the lack of details on this one, as it's pretty fundamental to the whole experience. If I start seeing prices for Microsoft products in Microsoft's currency, then I'm going to say whoop-de-do to Microsoft and keep in touch with the real world. However, I see this as a sidenote and as a means of furthering tethering the Zune with the Xbox 360.

This is the aspect to which I can see the Zune failing. On the other hand, I can also see it as a way of it finding its own niche. That's all based around the assumption that it's the primary and only method of paying for songs.

Translated "Record labels are waiting to see how long it takes for this to flop before committing."

Kinda in a similar fashion to how iTunes began?

I was really hoping they would do better than this, honestly. It's almost embarrassing.

OK. I disagree.

pknz · Sep 29, 2006

Im off to get a laugh from the Zune forums,

its from zuneinsider, can't think of any more reliable source,
the guy works for microsoft...

Absolutely brilliant

eyemacg5 · Sep 29, 2006

LOL

song cost 79 microsoft points and yuo can get 80 for a dollar i think this is a less cheeky way of putting.

Were better than apple, look with microsoft market place you can get 80 songs for the same price as you can get 79 on itunes.

Lol also microsoft names is stupid reminds me of the eraser on the end of a pencil, micro meaning small and soft, what idiots

-jake

abeyk · Sep 29, 2006

I think we were expecting too much (and forgot it was MS

)

Scarlet Fever · Sep 29, 2006

Zune.... rofl...

they won't win. Apple is too far ahead. Zune can't compete with ~80% of all new cars in the States having iPod integration, can they?

It will be more of a sucess than previous iPod killers, but it won't win.

Meatball · Sep 30, 2006

That forum makes me lol, my tummy hurts.

Examples:
http://www.zunescene.com/forums/index.php?topic=357.0

bdr31693 on Zunescene said:
= I would rather have a heavier duty, longer lasting zune battery that will not crap out on me in a year.

How does he know the battery on the zune will be any better? He's saying the battery on the zune wont "crap out on me" in a year when it hasn't even been released! Great post...! I've had a 4G iPod for nearly two years now and it's battery is still as strong as ever, honest!

BTNH Fan said:
Thats cool i guess but was it neccesary to post this in a forum that has nothing to do with mac computers.

If it's not about mac computers/iPods why do most of the users have iPod orientated "HATE" avatars etc? It has nothing to do with Apple/Mac/iPod afterall

Funniest quote EVER:

curly said:
I think he has a worm in his apple

potboy said:
ha ha that would be funny but i think microsoft is the one with worms

Classic comeback, well done whoever that was

manman said:
i made the biggest blunder till date .... i bought the ipod 1 week before apple announced the price drop ..... not only that i had also read that the zune willl b priced at around 284$ and expected a december launch (christmas)

So he's saying Microsoft are good at sticking to deadlines?! And what's this rubbish about "I bought an iPod and one week later apple announced a price drop" - BOOHOO! I hate people like this. If you buy an iPod or ANY electrical goods for that matter, alot of people buy products just before a price drop. is that Apples fault? Did they force them to buy an iPod then? NO! they choose to buy it then and were stupid enough not to check on the internet for any information about price drops/updates.

iGary · Sep 30, 2006

I concede on the loss leader thing - companies give away crap to get a market all the time.

They will fail, though.

bigandy · Sep 30, 2006

gloss said:
In Microsoft's defense, it's a viable business strategy to lose money getting a product in order to gain market share. That's what Sony did with the PS2 and their overall profits have been immense. It just has to be well-considered.

Actually, consoles are always sold at a loss. The hardware goes cheap to entice people to the platform. All profits are made on games and game licensing.

ViveLeLivre · Sep 30, 2006

andiwm2003 said:
Microsoft points is of course crap. BUT: if they include Microsoft points in Microsoft software purchases and stuff, then people suddenly have lots of MS points (e.g. all system admins in companies) and eventually buy a Zune.

Pepsi (or was it Coke?), had codes imprinted on the bottom of their soda caps that you could redeem for 1 free iTunes download... I don't remember that promotion exactly taking the iPod world by storm.

OllyW · Sep 30, 2006

Lixivial said:
At least they have the option, right? If Apple had done this and labeled under the term Photocasting and WANCasting, methinks we'd be hearing applause.

I'm surprised one of the porn streaming sites hasn't snapped up the WANCasting name.

They would probably substitute a K for the C though

iBrad · Sep 30, 2006

ok everyone register there and take em down! let's Go!

hayduke · Sep 30, 2006

bigandy said:
Actually, consoles are always sold at a loss. The hardware goes cheap to entice people to the platform. All profits are made on games and game licensing.

Hmm. This doesn't sound right to me. Certainly Apple isn't making all of there profit from games.

I'm fairly certain that Apple is really a hardware company and that is a very big reason why they won't allow OS X to install on anything other than an Apple machine. They develop the *best* software in order to sell machines that are significantly higher priced ($$$/GHz) than the competition and hence profit handsomely from it. Kind of off topic, but I think that's there model.

Oh...and Zune stinks. What a ricockulous (stems from ridiculous...but *much* more ridiculous) POS.

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