Zune v2

Over a year has passed since Microsoft announced Zune to the world. According to reports published today, version 2 of the Zune brand of portable digital media devices will be unveiled tomorrow, Tuesday, Oct 1, in a joint PR event involving Bill Gates and J Allard.

I have been a Zune fan since the very first announcement despite the recent shellacking the Zune brand received following Apple’s introduction of its latest iPods—the iPod Touch, in particular. But it wasn’t what Apple did with their formidable iPod juggernaut that has me waiting on the sidelines ahead of the Zune announcements this time around. It’s really what Microsoft failed to do.

Microsoft failed to release any significant firmware, software or services updates for Zune v1 over the past year to narrow the sizeable innovation gap between its device and Apple’s family of devices. That is a very bitter pill to swallow considering Microsoft is a software + services company. That’s what we do. I don’t really care about the hardware that much as long as the device isn’t too clumsy and it has decent battery life and a killer display for watching movies. It is all about the services and the end-to-end experience (e.g., Xbox, Windows Vista Media Center, Windows Live, MSN Direct, etc.)

It’s embarrassing the original Zune has not been updated to natively support Audible files, podcasts or non-Windows Media video. It’s downright mortifying the device never received a firmware update to add a clock, alarm or casual games. The Zune desktop software is very buggy and not user friendly—I don’t use the Zune Marketplace. The one time I located a stranger in the vicinity via my Zune’s Wi-Fi connection, my attempt to share one of my favorite songs was unceremoniously rebuked…so much for getting into the social.

My Zune works and I have had no issues over the past year which is more than I can say for any of the iPods I have owned. It has traveled with me around the world and provided numerous hours of entertainment and ear candy on trains, planes and treadmills. Accordingly, I am willing to forgive all the Zune v1 transgressions above if the v2 firmware and hardware (finally) do something to significantly narrow the iPod innovation gap. If not, I will wait for Apple to fix the display issues and limited storage capacity of the iPod Touch—probably over the next 6 months—before rejoining the iPod ranks.

I am holding out hope Bill Gates’ involvement with the Zune v2 PR campaign bodes well for all the super-secret, highly-innovative user experiences the devices will offer. You see Microsoft’s beloved co-founder and chairman is on his victory lap and I doubt he wants to go out on a dud.

13 Replies to “Zune v2”

  1. You know, it’s not the fact that the Zune hasn’t done anything with the firmware, or provided any updates in the last year. The device works great, it may not be an iPod, but I didn’t buy it because it was a direct iPod competitor.

    I did buy it because I thought it would integrate nicely into my Windows Media Player/Windows Media Center systems. I can tell you, it doesn’t. It’s an awful experience. I don’t want to have WMP, the Zune player, and all others. I want one thing that just works. I want to create a play list and have it work across all my devices.

    Then again, the iPod wouldn’t accomplish this either, so I’m screwed either way. Unless I find some way to automate the creation of playlists, or auto import or whatever, but that’s not a good user experience either.


  2. That’s a very valid point, Pete. I am considering supplementing/replacing my TiVo Series3 with a Windows Vista Media Center so tighter integration between Zune and Media Center would be ideal.

    I agree with you regarding no buying Zune just because it’s an iPod competitor. There are just certain things I expect from Microsoft whenever it enters a new market. First and foremost, I have come to expect rapid iteration & innovation to get the experience beyond “good enough.”

    We’ll see what v2 has in store officially (hopefully) in the next few hours.

  3. So the new Zune 2.0 features were announced and I fin
    Unfortunately I think Zune is going to have an uphill battle.

    Wireless – Apple implemented what Zune should have had from the beginning – wireless music stores. Wireless syncing with my pc is a welcome feature but the whole “squirt songs” feature will forever be hobbled by the record industry.

    Price Tag – I think if Zune wants to compete it needs to do so at a vastly lower price point. Right now the high end Zune is $1 more than the 80gb Ipod. That’s like selling no name tennis shoes for the same price as the new Air Jordans. Which do you think the kids will buy? (yes I went there)

    At least they dropped the brown colored Zune – I was never a fan of a device the color of feces.

    Allowing video codecs aside of WMV is a really good move. Although Apple and Microsoft need to enable a DIVX codec. Of course they are both afraid of the movie industry so this won’t happen.

    The changes to the online store are welcome – Although Amazon.com deployed a DRM free MP3 store shortly before the Zune 2 announcement. What needs to happen is the quality of the syncing software needs to improve by quite a bit. I also think that there needs to be an Mac/Linux version of the syncing software. If 17% of all new laptops are Macs then there’s no reason to shut yourself out of that market. (although I guess you could sync through virtualization) Just hire an intern and make it his summer project.

    Unfortunately the things that could really make Zune shine as a device are still absent. For example – Xbox live integration – let me rent movies on live and have them wirelessly downloaded to Zune.

    I honestly feel like Zune was the right device for Microsoft 5 years ago. However all is not lost. As DRM slowly evaporates from online music stores that will certainly level the playing field a bit. But Microsoft’s only chance is to compete aggressively on price and hope that the public discovers a cool device for a bargin. That said it doesn’t help that apple has a mature product line that spans price points from $100 – $300.

    I considered getting Zune as a means of showing off digital photographs because of the nice Screen. Unfortunately the Iphone ends up being a much better device for that use case.

  4. Interesting comments, Leon.

    Most people aren’t buying music via iTunes so a Wi-Fi version of the Apple Music Store isn’t necessarily compelling. Compounding the issue of wireless music purchases is the fact that *free* Wi-Fi is not very pervasive and the majority of iPod owners don’t frequent Starbucks intent on buying music.

    Why would Zune sell for less when it offers so much more? Go back and look at the feature matrix between Zune 80 and the 80GB iPod Classic. I could see if the devices were close in hardware terms but it doesn’t make a lot of sense to sell a much-better device for significantly less than its competitor. It actually could harm the brand by positioning it as less valuable, capable than the competition. No name tennis shoes are not the same quality as Air Jordans. Don’t intermix quality and popularity. One is timeless, the other temporary. Lastly, MS must leave some room to later discount the Zune 80 to drive sales like Apple did with the iPhone. MS cannot afford to sell the initial bulk of Zune 2 units at a loss since it doesn’t have the accessory ecosystem kickbacks Apple does and the profits are slim to non-existent for digital song purchases.

    I imagine any of those Mac users who would consider buying a Zune already use Bootcamp or Parallels. I see Mac/Linux client near the bottom of the priority list this generation. The company would likely be better served by adding Audible support.

    I agree the Xbox/Live integration would considerably close the competitive gap between Zune and iPod. I take comfort knowing 1) This can all be done via software, 2) J Allard is in control and knows both businesses well and 3) Microsoft is a platform company. Now the iPhone & iPod Touch competitor is where we really need to dig deep.

    If you feel Zune 2 was the right device for Microsoft 5 years ago, you must also feel iPod Classic has added no real innovations in 5 years since it is not as good from the hardware side as the Zune 80. The iPod Touch, which is a completely unrelated device except for the fact that it plays music, has potential but it lacks considerable substance. That is much sadder state of affairs for Apple, the market leader, who has enjoyed a dominant position during the entire time. iPod has become for Apple what Windows has become for Microsoft.

    It will be interesting to see how things play out over the next 6 months.

  5. In the case of the ipod I don’t think the issue is features. There have been more feature rich MP3 players for years. Devices with FM radio and video playback before apple got around to building one. What Apple built was a cohesive experience they simply beat the pants off the competition. Personally I don’t necessarily need a million ½ thought out features crammed into my devices/software. I’m more interested in a better experience than feature bloat. This goes back to may Microsoft builds the swiss army knife while Apple builds the scalpel argument. I must have tried every single MP3 player on the market before the ipod. And they all were terrible. I haven’t seen any devices that have made me want to switch. Although as stated the zune tempted me for photo playback.

    On price the problem is Microsoft is behind the ball here. They have a lot to overcome and a short time to do it. Apple has incredible momentum at this point. If I was on the market for a digital music device – I’m not going to ignore the market leader to buy a device that costs just as much. Especially one where the differentiating feature is effectively useless. (squirting music) If you want me to check out your device it’d had better be cheaper.

    As for wifi music – I don’t disagree that everyone is going to be lining up at the local starbucks. That said I’ve purchased about 14 songs via the wifi store. 6 in my house and 8 while sitting in starbucks. I don’t buy music very often so this actually represents a larger than average purchase for me. And starbucks actually does sell a large amount of music via traditional media. I find the experience of being able to thumb through musical selections while drinking coffee or sitting on the couch a very good one.

    I don’t disagree that the number of Mac users who overlap with the Zune is a small one. Hence my comment about an intern project. (ie I’m not super serious) Although I don’t think having to buy $500 in software is a good compromise. ($400 for vista ultimate for virtualization and $100 for parallels) In that case it’s cheaper to buy an ipod. (actually my wife bought a Macbook and got an ipod for free) Don’t get me wrong I get that this is a platform issue. But in this case there is nothing about Windows that makes Zune a better device. Anymore than tying the Ipod to Macs. Granted Apple had much more to gain in that situation than Microsoft.

    The problem with the tennis shoe analogy is that the perception of Zune “IS” one of quality. Whether it’s true or not. Consumers see the Zune as a “Me Too” device that’s not compatible with content from the largest online music retailer. The device was HUGE, the wi-fi functionality was crippled, and the software was terrible. While zune did have some additional features many of those same features were on other digital music players.(FM radio for example) Additionally there was no variety of the product line -no consumer choice – no flash model, and certainly no shuffle esq device for the gym. 5 years ago the Zune would have been able to compete with the Ipod. But now they are going up against a mature product line.

    I think the ipod classic is just a way to keep people placated as Apple moves away from hard drives to complete flash based devices. They basically just tossed out a device to bridge the gap. As far as innovations – I would agree that there’s nothing ground breaking there – although they’ve continued to make the devices smaller. And I’m sure they’ve aggressively reduced the cost of building the devices as well. They have also worked to grow the services that they offer for the device – namely adding video to the store.

    I don’t claim to understand the positioning of the ipod touch. I don’t really have an interest in a neutered Iphone. Although my perspective might shift if Apple makes another big play for video. There have been rumors of HiDef content from the Itunes video store and movie rentals. Which could make the Ipod touch a more interesting device and make apple tv something more than a quiet failure.

    Sometimes the technically superior device loses. Yes Zune has nice features – but the intellivision was superior to the Atari 2600. The Sega master system was superior to the 8 bit Nintendo. Beta was a better technology than VHS. The Xbox was better than the Playstation 2. In everyone of these cases content, experience, marketing, and critical mass determined the victor.

  6. Every Zune review I read from Apple fans (Engadget, Gizmodo, etc.) and major news outlets (NY Times, Wall St. Journal, CNet, etc.) alike have always downplayed the devices as worthy competitors based on features (which includes dimensions, weight, storage, etc.) Go read David Pogue or Walt Mossberg — their reviews are riddled with feature comparisons. Features matter to laypeople otherwise everyone would have an iPod yet many choose other devices, instead.

    “If I was on the market for a digital music device – I’m not going to ignore the market leader to buy a device that costs just as much.”

    Really? So explain Apple’s pricing of the iPhone considering Nokia/Palm/RIM are the market leaders and the iPhone costs at least as much. Are you saying this theory only holds for digital music devices? I can dig up several other consumer electronics examples that refute the pricing strategy you propose.

    “Consumers see the Zune as a “Me Too” device that’s not compatible with content from the largest online music retailer.”

    What’s wrong with being a “Me Too”? I thought competition was pro-consumer. Also, the vast majority of consumers don’t buy music online. (reference)

    It’s interesting that you start by saying Zune’s wi-fi is crippled then go on to say how you can buy music over wi-fi from the iPod but don’t mention that you cannot sync your library via wi-fi on the iPod as you will be able to with both Zune v1 and v2. I’d wager 100% of the people who care about wi-fi would use wireless sync 1000% (not a typo) more often than they use wireless purchase. Which device has crippled wi-fi again?

    As far as no variety is concerned: None was promised in v1. How is that a quality issue? Apple releases new devices every 12 months and expects users to upgrade to get the new features and form factors. Microsoft is taking care of its early adopters by backporting all the supported features to the older device. That is unprecedented in the space and will make some Apple customers re-evaluate their loyalties, I’m sure. While Apple is keeping its customers placated with uninspired updates to its oldest line of iPods, Microsoft is giving its customers new value at no cost. Surely you agree Microsoft’s approach results in higher-quality user experiences for the vast number of consumers who don’t have money to throw away on the latest-and-greatest gadgetry. If all Microsoft did was make Zune v2 smaller than Zune v1 everyone would be lambasting the company. Apple does it with iPod Classic and your write it off as some maverick strategy for bridging customers to new storage platforms that are 2-3 years (upgrade cycles) out at mass market capacities and price points? :sarcastic:

    To say there have been more feature-rich MP3 players for years is a non sequitur as that notion applies to iPods as well. There have been no other MP3 players with the features Zune offers vs. iPod when comparing hardware, software and services. Apple has a big first-mover advantage in the area of a complete vertical solution. It also enjoys tremendous in-house industrial design and marketing capabilities. All of these are vulnerable and all it takes is a series of mistakes for the advantages to disappear. Oftentimes the massively successful offering eventually loses. Netscape Navigator was more successful than Internet Explorer. AltaVista/Lycos/Infoseek were better technologies than Google. Java was more widely adopted than .NET. In each of these cases vision, strategy and execution determined the victor. I am not 100% confident Microsoft will be successful with Zune (whatever that means) but I am 100% confident the company is capable and v2 is a step in the right direction.

  7. “Really? So explain Apple’s pricing of the iPhone considering Nokia/Palm/RIM are the market leaders and the iPhone costs at least as much. Are you saying this theory only holds for digital music devices? I can dig up several other consumer electronics examples that refute the pricing strategy you propose.”

    My point is when I’m looking at the new device on the block – and it doesn’t blow me away in features and capabilities – I’m not going to pay a premium price for it. In the cases where I feel the device sets a new standard – I’ll gladly pay more/the same amount. Case in point – I’ll bought an Iphone at the initial price because it was by far the best smart device I’d ever used. I made this decision in 20 minutes in the Apple store. I took a zune home for 3 days and wouldn’t even buy one at an employee discount.

    I can’t argue with the numbers as far as digital distribution goes. I can only say that it’s become the default way that I purchase music and has been that way since the itunes store opened. As content (at least music) goes DRM free I will be interested to see if there is any bump.

    As far as WI-FI goes – in my first comment I stated that Wi-Fi syncing is a great feature for this device. It’s something that should have been there from the start. And I am in total agreement that the ipod/iphone should have this functionality. But speaking as a consumer I find being able to look for NEW content wirelessly more appealing. An even better solution would be to allow me to grab content over the wireless radio.

    That said the “hook” (to borrow a music term) for Zune was wi-fi music sharing. – ie “Welcome to the Social.” Thanks to the music industry this feature was stillborn from the start. The problem is this is that the vast majority of Zune marketing that I was exposed to focused on a feature that was crippled. And to be clear – I think the firmware update to allow the older devices to have the same capabilities of the new ones is great.

    In the case of the ipod classic – yes they did release rev of the device that was simply smaller with greater capacity. This wasn’t the only thing they brought to the party. And in the same time period released the ipod touch, iphone, and have improved their only services, and added new distribution mechanism. You’re focused on one aspect of their strategy which is the ipod classic – while ignoring the many steps they are taking outside that single sku.

    Zune has certainly improved from its initial foray and I’m sure it will eventually turn into a top notch device – perhaps by version 3 which is the grand old Microsoft custom. However I look at this device, it’s price, and what it brings to the table. And I don’t think it’s going to be widely successful. For the Zune to be successful Microsoft needs to release a device that is as groundbreaking as the IPhone is to the standard crop of cell phones in the wild. How do you do that? Start with services – There are so many cool services you can build around an ecosystem of windows enabled products. 3G enabled smart phones, game consoles, digital music players and computers – the hardware is built and shipped – but there is no coherent strategy. Build me an ecosystem of services and devices that allows me to easily manage my data and content seamlessly across devices and mediums and I’ll be the first one to turn my Apple hardware in. But the restaurant menu of loosely related products just won’t cut it.

    Microsoft for all it’s skill in building operating systems,business productivity applications, and developer tools has never been successful with consumer oriented products. The best foray so far has been the 360 and even with Halo 3 that group is awash in red ink.

    Now is Apple immortal? – certainly not. They’ve grown to a size where the content providers are not playing nice anymore. And it’s going to become even more difficult for them to bring new products online going forward. Coupled with the problem of trying to maintain their sky high customer service numbers as they grow. However even with these problems they are doing extremely well – they certainly have their share of warts (apple tv, mac mini, iphone pricing) but their computer and device sales have continued to be positive.

  8. “In the cases where I feel the device sets a new standard…”

    Fine, but I feel Zune 80 sets a new standard for hard-drive based media players vs. iPod Classic. Again: “There have been no other [disk-based] MP3 players with the features Zune [80] offers vs. iPod [Classic] when comparing hardware, software and services.” Seems like a new standard to me.

    “I can’t argue with the numbers as far as digital distribution goes” contradicts “…as a consumer I find being able to look for NEW content wirelessly more appealing” for the vast majority of the digital media player community. If I’m not *buying* NEW content how is a feature that helps one *look* for music wirelessly more appealing vs. wireless sync when syncing is something one does regularly with such devices? I’m not arguing with your opinion just pointing out that it is not widely shared.

    “Thanks to the music industry this feature was stillborn from the start.”

    Agreed. However v2 eliminates the 3 day restriction and the music industry is coming around on DRM. Both are steps in the right direction to delivering on the “Welcome to the Social” marketing tag line. It’s a multi-year strategy and is still more ‘social’ (even with its hobbled wi-fi) than any other digial media player today.

    “And in the same time period released the ipod touch, iphone, and have improved their only services, and added new distribution mechanism. You’re focused on one aspect of their strategy which is the ipod classic – while ignoring the many steps they are taking outside that single sku.”

    Actually, you kicked off the focus on the Zune 2 hardware in paragraphs 1-5 of your initial comment. My original blog post fully references the importance of hardware, software and services. Every reply I have made since has been to counter arguments you put forth. The only true innovation by Apple in the digital media player space this cycle is iPhone for its simplicity and elegance. iPod Touch is a stripped down iPhone (no net new innovations), iPod Classic is simply smaller than before, iPod Nano is stouter with a larger screen. The online service improvements (primarily wi-fi store) isn’t an innovation as Sandisk Sansas had this capability before. Zune is one. iPod is six. One would expect Apple to still be competitive, no?

    “For the Zune to be successful Microsoft needs to release a device that is as groundbreaking as the IPhone is to the standard crop of cell phones in the wild.”

    Fundamentally, in business, success is defined by profitability. Popularity may be a key accelerator but the only criteria for success from the shareholders’ perspective of a publically held corporation are profitability and contribution margin. I can’t say with 100% confidence Zune will be a successful business for Microsoft but to characterize its success metrics subjectively using terms like “groundbreaking” and “cool” is flawed. Not every release of Windows, Office, Blackberry, ThinkPad, Adidas, etc. has been deemed “groundbreaking” or “cool” but they have all been highly successful businesses. Look at Xbox. It has been tagged “groundbreaking” and “cool” but has been a horrible business.

    “Microsoft…has never been successful with consumer oriented products.”

    How are you definining consumer-oriented? All those multi-billion dollar businesses you listed are consumer-oriented — i.e., how else would Windows, for example, be a monopoly? If you mean non-enterprise: Microsoft Games Studios and Microsoft Hardware are chock full of successful consumer-oriented products. MSNBC/MSN are successful. Why do you lump Halo 3 in with Xbox 360 when they were released over 2 years apart? Perhaps to downplay Halo 3’s position as the most successful entertainment (i.e., ‘consumer’) release in history as it went on to make more in a week than iPhone made in over 2 months?

    Apple is not that big and their computer sales have been about as positive as Microsoft’s Zune sales. As of its most-recent quarterly report, Apple in 23 years has captured 6.1% of the PC market in the U.S. and 2.7% worldwide. (reference) Microsoft captured 10% of the hard-drive based digital media player market worldwide in under a year with a v1 device that was only released in the U.S. (reference) Before you say the “hard-drive based digital media player” filter is unfair, consider I did not include servers in the Apple market share numbers which would reduce the Mac OS vs. Windows share to rounding error.

    Over the last 3 years Apple has benefited from the Windows Vista delays and a ton of undeserved media hype. Case in point: Disney owns many key media assets (ABC, ESPN, Pixar), Steve Jobs is the largest individual Disney shareholder and he is a member of the Board of Directors. But no one is crying foul on behalf of everyone’s favorite software giant.

  9. Ha! Getting in the last comment then bowing out, eh? That’s cool since we have reached the “Reply to this comment” limit on the below exchange anyway. See ya later.

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