Why Microsoft Fails...

[iGary]

I just read this (http://www.cnn.com/2006/TECH/ptech/09/28/microsoft.zune.reut/index.html) 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? :confused:

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]

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

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]

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. :p

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]

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? :confused:

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]

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]

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.]

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.

[mdntcallr]

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]

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?

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? :confused:

[OllyW]

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 :eek:

[andiwm2003]

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]

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]

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]

Im off to get a laugh from the Zune forums,:rolleyes:

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

Absolutely brilliant:D

[eyemacg5]

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]

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

[Scarlet Fever]

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]

That forum makes me lol, my tummy hurts.

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

= 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!

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 :rolleyes:

Funniest quote EVER:
I think he has a worm in his apple
ha ha that would be funny but i think microsoft is the one with worms

Classic comeback, well done whoever that was :D

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.


http://i9.tinypic.com/2pt6i45.jpg

[iGary]

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

They will fail, though.

[bigandy]

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]

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]

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]

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

:D ;)

[hayduke]

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.

[tech4all]

Microsoft Points....wow :p :rolleyes:

Which one sounds better (not price wise):

99 cents a song

or

79 Microsoft Points a song, that just rolls of the tongue, huh?

They could have at least made it 77 cents....umm Microsoft Points. It's easier saying 77 than 79. I mean it sound a little smoother saying a double number like 77, 88, 99, etc. as opposed to 79, 89, 98, etc. It's like how prices are done (a little different, but similar principle); something is $99.99 instead of being $100. I just sounds a cheaper even if it's only by one cent.

I'm guessing as it's been said here that the remaining MP's could be used to redeem other things as well. Mabye games for the Zune, or something.

Eh, a little competition is always good for us consumers anyways.

[Meatball]

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

:D ;)

I've registered :D

[IJ Reilly]

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.

Except in this case, Microsoft is losing money, hardware and software combined. Yet another winning strategy from Microsoft.

[matticus008]

Hmm. This doesn't sound right to me. Certainly Apple isn't making all of there profit from games.
Apple also doesn't sell any game consoles. It's true that most consoles are sold at or below cost in order to get them off the shelves--people are locked into whatever console they buy, as they are not likely to switch platforms many times. Sega, Sony, Nintendo, and Microsoft have all used this strategy in at least some console launches.

As for Microsoft points, there is some merit to it. As mentioned, if all Microsoft products can be purchased for points, it has the potential of starting a miniature economy. Just think if points come with product purchases--say you buy a Vista upgrade for $239 and you get, say, 5000 points with that purchase as a "bonus." You could then use those points to buy music, or save them to apply toward the next Windows retail bugfix.

It also has the potential to abstract away from price changes--MS can keep Zune songs at 79 points while adjusting the point:dollars ratio. This means that you can take your Microsoft Points to any country and you can always count on 79 points getting you a song--even if one day that equivalent is $1.17 or $.91 instead of $0.99. Apple's close market association with 99-cent downloads will make it difficult for them to change their price--any increase will get lots of public attention. The Zune thing would be more "wrath of the bloggers."

As for the Zune itself, the prototype works pretty well. Apple actually has a potentially strong competitor coming down the pipe--especially from a company that can afford to lose money on it for quite a long time.

[GFLPraxis]

You learn something new every day :eek:


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?


Wasn't it, like, 1% of the value of Apple?

[zim]

Wasn't it, like, 1% of the value of Apple?

1%.. wonder how many Microsoft points would that be? :D

[iGary]

1%.. wonder how many Microsoft points would that be? :D

$150,000,000 = 12,000,000,000 MS Points. :D

[generik]

Wasn't it, like, 1% of the value of Apple?

That is like saying $1000 is 200% of Bill Gates' net worth 40 years ago... :rolleyes:

Back in those days Apple was almost worthless.

[zim]

Back in those days Apple was almost worthless.

Obviously they were worth something for MS to invest some money into them. MS needed Apple to survive, how else would they have ever furthered their ideas for Windows?.. Personally feel that Apple would have pulled through with or without MS :).

[matticus008]

That is like saying $1000 is 200% of Bill Gates' net worth 40 years ago... :rolleyes:

Back in those days Apple was almost worthless.
Well, if by almost worthless you mean somewhere in the neighborhood of $20 billion, then yeah, you're right. (Compare to $66B or so in 2005).

Of course, they lost hundreds of millions of dollars for FY1997, and near the end of '97 Microsoft invested about $150 million in the company--which definitely had a role in keeping the company afloat in the short term but certainly isn't the only reason Apple's still around.

[IJ Reilly]

$150,000,000 = 12,000,000,000 MS Points. :D

How much is that in dog years?

[IJ Reilly]

Of course, they lost hundreds of millions of dollars for FY1997, and near the end of '97 Microsoft invested about $150 million in the company--which definitely had a role in keeping the company afloat in the short term but certainly isn't the only reason Apple's still around.

Nope, not even in the short run. Even at that time, Apple had over $1 billion in liquid assets and little debt. The $150 million "investment" had nothing to do with keeping Apple afloat, long term or short.

[tringo]

Just one little thing I wanted to add is that it's actually equipped with an FM TRANSMITTER and tuner. I guess this saves poeple having to buy an iTrip equivalent.

I'm still not going to buy one but I wanted to correct some peoples misconceptions.

[2nyRiggz]

FM Transmitter and tuner...:eek: *Does happy dance*

Sorry I couldn't resist:o



Bless

[zap2]

Just one little thing I wanted to add is that it's actually equipped with an FM TRANSMITTER and tuner. I guess this saves poeple having to buy an iTrip equivalent.




....how many other players have that?

I'd sooner by a Creative player then a Zune, but alas Apple is my first choices!
(And again ignoring the whole Zune only works on XP, Come on MS would have been wise to strike hard and were it hurts, I mean they are not attacking Apple's home turf(OSX) and its not any cheaper then the iPod, yet they still lose money)

MS should have tried this
Buy Music and Videos on the Zune with Wi-Fi, 40Gb harddrive, Mac OS X and Linux support..and smaller then the current iPod all for 249. Then they might get some fans..still not me

[zap2]

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.


Looks at a picture of the Wii....really?

[SMM]

I live in Microsoft country. I have been very close to the company since 1982. Even with their incredible success, I do not ever recall them being a great innovator. In fact, when they have been innovative, they have usually suffered many start/stops before getting it right.

Today, MS is seriously bloated with layers of management and approval levels. It is difficult for them to get even basic decisions made in a timely manner. They have multiple teams working on different project phases which do not mesh when assembled.

In my opinion, they better get some basic things figured out soon. Otherwise, they are poised to keep losing market share.