[typoon]

http://money.cnn.com/2006/07/21/tech...ex.htm?cnn=yes

Microsoft confirms 'iPod Killer'
Tech giant confirms plan for new 'Zune' music and entertainment project after months of speculation.
July 21 2006: 7:08 PM EDT

SEATTLE (Reuters) -- Microsoft Corp. said Friday it plans to release a new music and entertainment player and accompanying software under the "Zune" brand this year, in a belated attempt to challenge the dominance of Apple Computer Inc.'s iPod player.

The announcement comes after weeks of rumors and speculation about such an offering. Microsoft (Charts) has already touted the products to record companies.

"Under the Zune brand, we will deliver a family of hardware and software products, the first of which will be available this year," said Chris Stephenson, general manager of market for entertainment and services at Microsoft, in an statement. "We see a great opportunity to bring together technology and community to allow consumers to explore and discover music together."

The world's largest software maker faces an uphill climb in closing the gap on Apple's (Charts) iPod media player and iTunes Music Store, the runaway leaders in their respective areas.

The iPod holds more than half of the digital media player market, according to research company NPD, while iTunes accounts for over 70 percent of U.S. digital music sales. In the United States, the iPod has more than 75 percent of the digital music player market, according to NPD.

"Creating a lifestyle device, Microsoft is clearly going to face a battle here," said Michael Gartenberg, research director at JupiterResearch. "It's going to be hard for them to create the same level of cachet that Apple has with the iPod."

Music industry sources told Reuters earlier this month that Microsoft disclosed plans to be in the market before Christmas with a media player that will allow users to download videos and music wirelessly.

It will also try to replicate Apple's simple approach to providing an integrated, seamless ecosystem for digital media, seen as the key to its success with iPod/iTunes, the sources said.

"What Apple has done really successfully is they've controlled all the elements of the solution," said Gartner analyst Mike McGuire. "But having all of those elements does not guarantee success - just look at Sony."

Sony (Charts) introduced a music service as well as its own software and player, which has to date failed to dent Apple's share of online music sales or sales of the iPod.

Microsoft did not disclose pricing for the new media player or whether it would be willing to take losses on the hardware to make money from the sale of music, video and possibly games. This is the strategy it adopted with Xbox game console.

"The iPod is going to be a tough nut to crack, but you probably could have said the same thing with Sony and the PlayStation and it has done a good job positioning the Xbox," said Toan Tran, analyst at Morningstar.

Microsoft sources said Robbie Bach, president of Microsoft's entertainment and devices division, is working with J Allard, vice president of its Xbox team, on the digital media player/software project.

Allard's involvement is seen as significant because he is one of the few executives at Microsoft with experience in launching a consumer electronic device from scratch with the X-Box gaming system. His involvement suggests that gaming might be part of the media player.

Analysts also said Microsoft will be very aggressive marketing the product as it did with the Xbox. "It definitely is a big bet," said Morningstar's Tran. "Microsoft definitely has its work cut out for it, but the company has massive financial resources and it's very persistent."

-----------------------------

Things should get more interesting in the near future. I'm sure Apple will have something up it's sleeve.

All have tried many have gone by the wayside. Bring it on MS. It's going to be tough.

[KeyLimePi]

I've seen some threads on this over in the iPod forum.

Personally, I think the concept is interesting, but I believe the execution will be horrid. M$ is notorious for trying to jam ten pounds of potatoes into a five-pound sack, and this sounds like it will be no exception. I expect:

1) It will have a bad UI
2) It will have heavy DRM
3) It will never *quite* be as networkable as promised
4) It will sell big.

[mitchell_pgh]

Google "iPod Killer" and you get over seven MILLION references...

...wake me up when it' ships.

[typoon]

Originally Posted by mitchell_pgh

Google "iPod Killer" and you get over seven MILLION references...

...wake me up when it' ships.

LOL I agree.

[mitchell_pgh]

Originally Posted by typoon

LOL I agree.

I'll be interested to see what Microsoft comes up with. Sony tried their own service... but it hasn't made any type of dent in the industry... and they owned some of the music and had a good brand "Walkman."

I'm guessing Microsoft will link this device to the OS and xBox along with everything else it can think of.

The wireless thing just seems like a bad idea (yah, it's cool, but sounds slow and confusing for non-IT people).

I guess we will just have to wait.

[mydog8mymac]

I haven't seen the "Music Store" M$oft and MTV launched earlier this year. I suppose that this bit of equipment will work with it?

[::maroma::]

This will be the same deal as Vista in the fact that Vista will be so behind by the time it ships, that OS X will be far ahead. And when this "iPod Killer" ships it will be so far behind whatever the current version of the iPod is, MS's will be a joke.

MS doesn't seem to learn from their past mistakes. They seem to repeat history quite often. I doubt this will be any different.

"Microsoft definitely has its work cut out for it, but the company has massive financial resources and it's very persistent."

And how is that different from any other point in their history? They've always had massive financial resources and have always been sickeningly persistent. Yet they continue to release crap products. Again, this "iPod Killer" will be no different.

[mitchell_pgh]

Originally Posted by ::maroma::

This will be the same deal as Vista in the fact that Vista will be so behind by the time it ships, that OS X will be far ahead. And when this "iPod Killer" ships it will be so far behind whatever the current version of the iPod is, MS's will be a joke.

MS doesn't seem to learn from their past mistakes. They seem to repeat history quite often. I doubt this will be any different.

"Microsoft definitely has its work cut out for it, but the company has massive financial resources and it's very persistent."

And how is that different from any other point in their history? They've always had massive financial resources and have always been sickeningly persistent. Yet they continue to release crap products. Again, this "iPod Killer" will be no different.

I think the real problem is... Microsoft doesn't know when to say "we don't do that very well..." and leave an industry alone. They see the success of Apple and basically say "why not us?"

[::maroma::]

Originally Posted by mitchell_pgh

I think the real problem is... Microsoft doesn't know when to say "we don't do that very well..." and leave an industry alone. They see the success of Apple and basically say "why not us?"

Indeed that is another problem MS has. This amounts to greed. They see a market that is making a lot of money. They see that they aren't in that market. So they want in, not because they think they can make something better, but because there is money to be made. Lots of money.

Apple, on the other hand, refuses to enter a market where they aren't almost certain that they can make something that is much better than what is currently offered (or offer something that is currently not there, but the market is demanding it). If Apple doesn't think they can bust the market wide open with a new and innovative product, they don't touch it.

[loki74]

Originally Posted by ::maroma::

Indeed that is another problem MS has. This amounts to greed. They see a market that is making a lot of money. They see that they aren't in that market. So they want in, not because they think they can make something better, but because there is money to be made. Lots of money.

Apple, on the other hand, refuses to enter a market where they aren't almost certain that they can make something that is much better than what is currently offered (or offer something that is currently not there, but the market is demanding it). If Apple doesn't think they can bust the market wide open with a new and innovative product, they don't touch it.

You know, that is a very good observation. I never thought of it that way...

I guess MS likes to do a lot of things crappy, while Apple likes to do a few things good.

Anyway, whatever they have planned, it will not kill the iPod.

Seriously, the anti-Apple guys try to propogate all manner of FUD, prophesying the iPod's demise, but I just don't see it happening. iPod has a hold on the portable music market not unlike that of Windows on the OS market...

[exca1ibur]

What I dont understand is how they bitch about the iPod being a closed format, yet when the next 'iPod killer' appears its WMA DRM, and that isn't an issue. Since when has DRM WMA been an open format? Not to mention most of these services, aren't even compatible with the Mac.

[imitchellg5]

Zune sounds wimpy and typical of the Microsoft image.

[KeyLimePi]

Are you guys forgetting the Xbox? Sony owned the console market when M$ decided to get into it. They don't have to innovate...they can just buy innovators. And they can make up ground in marketshare by giving away hardware. The first Xboxes sold for about half what they cost to make. M$ lost millions the first couple years, but they knew they would make up for it (which they are).

I think the Zune will be crap by most standards, but greedy ol' M$ will fall back on its strategy of giving away this crap until it has at least a plurality of the market.

[ironknee]

let's say zune has a chance (in hell) to be a challeger to apple...then ms will be the enemy of all the other makers of mp3 players, right?

so whatever happens the zen makers are in trouble

love it

[Salty]

The iPod only happened because there were no good MP3 players doing jack on the Mac. If you've noticed Apple has never come out with a digital camera (OK the quicktake but not since digital cameras became the big thing), Apple hasn't come out with a camcorder, phone, or anything else. Market's they've entered in somewhat recently.

Music listening with iPod and iTunes
Music creation by buying Logic, creating Logic Express and Garageband, but they still rely on companies like M-Audio who are doing a good enough job and are supporting the Mac platform fine.
Video creation, with Final Cut Pro, and other associated software products, as well giving birth to iMovie and iDVD, products they actually asked Adobe to make but Adobe refused.
Photography first with iPhoto and then with Aperture again not taking on Photoshop but instead proving a tool that should work well with.

Apple really isn't big on taking on big third party developers like Microsoft is. Do they compete in some places? Yes. But typically they try and make a solution to make the platform do more, and will only do anything if they feel the competition isn't pulling their weight.

[loki74]

Originally Posted by KeyLimePi

Are you guys forgetting the Xbox? Sony owned the console market when M$ decided to get into it. They don't have to innovate...they can just buy innovators. And they can make up ground in marketshare by giving away hardware. The first Xboxes sold for about half what they cost to make. M$ lost millions the first couple years, but they knew they would make up for it (which they are).

I think it's fair to say that MS did the Xbox right.

I think its also fair to say that this is the exception, not the rule.

In the case of the Xbox, I do not think it was so much a matter of innovation, but a matter of progress--the Xbox promised (note how this time, they actually delivered as well) power that was unparalleled at the time. It also got a constant flow of positive attention. The press was good, the development team was good, and most importantly, the product was good. Hence, it sold.

I will be very surprised if they do the same thing with this "iPod killer." It's not impossible, but like I said, I just don't see it happening.

[ironknee]

but isn't ms losing money for every xbox? sure they can afford it but it's not a sound business model

[imitchellg5]

No they are making some money cause they charge $299 for a $100 product.

[loki74]

and dont forget, they make money off of the SDK licencing for game developers who want to release a title on the Xbox... that probably buffers most of the cost incurred at the sales end. (assuming this cost is still being incurred.)

[angelmb]

Originally Posted by ironknee

but isn't ms losing money for every xbox? sure they can afford it but it's not a sound business model

No they are making some money cause they charge $299 for a $100 product.

Not that I care that much, but I also though xbox numbers were far from being stellar… I had saw some comparison between the three videogame players out there and they were like this… sony had a stellar 1998 year, Nintendo could beat such mark this present year and MS had still to get some good numbers… I'll check that out…

Nevertheless, is Zune just a code-name or the product's real name?, sounds terrible… Zune, reminds me this:

[Salty]

I bet they'll name it like... zBox... or maybe Xbeat... hahhaa

[Dr.Michael]

To give something this weird name just to have the joke "coming zune", is very microsoft like. No fantasy at all and just able to make bad copies.
Shame on them (one more time). Embarrassing company!

[KeyLimePi]

I think 'Zune' is going to be more of a platform than a device. Zune music, zune videos, zune games, etc. But yeah, it's a weird name.