Beyond Binary

While confirming that the Zune HD now sports an Apps menu, Microsoft is being circumspect on just how extensive the collection of programs it plans to offer for the media player will be.

An eagle-eye user this weekend spotted an Apps menu on some of the devices being demonstrated at Best Buy outlets as part of a preview weekend. Microsoft suggested on Monday that the Apps menu and Zune Marketplace will be home to the types of games found on past Zunes but hedged on whether and when it might offer a broader selection of software.

Microsoft confirms its Zune HD will have an Apps menu, but is being far less clear on just what kinds of Apps it will have.

(Credit: Donald Bell/CNET)

"Games came pre-loaded on the current version of the device, but we made a decision to take them out of the firmware update and let people choose what games they want to have for themselves--and it made sense to do this via Marketplace," a representative told CNET News. "As before, games are free; the only difference is that people get to choose. Right now, we don't have anything further to say regarding Apps functionality beyond what we've already shared."

Early versions of the device seen by CNET News had a games menu, but the games were similar to the kinds of free games included in the past.

Microsoft suggested that the Apps menu, for the moment, might just be an outlet for such games. However, the company is clearly leaving the door open for much more.

"We have games on the Zune today and those will carry forward to Zune HD, but that's not where we'll necessarily stop," Microsoft said.

The Zune HD is slated to go on sale September 15, though Best Buy and Microsoft are also taking pre-orders for the product. A 16GB version will sell for $219, while a 32GB version is priced at $289.

Microsoft on Thursday confirmed several of the worst kept secrets in the industry, acknowledging the pricing, availability date, and capacities for its upcoming Zune HD.

The black 16GB version of the touch-screen media player will sell for $219.99, while a 32GB version in "platinum" color will cost $289.99. The pricing had already leaked via Best Buy and Amazon, while the September 15 launch date was noted as part of a retailer's display, reported by Gizmodo.

Microsoft will also start taking pre-orders for the device and starting September 15, it will be able to be ordered in five colors from Microsoft's Zuneoriginals.net site, with the option of adding one of 10 engravings by guest artists to the back of the device.

Among the device's features are its OLED (organic light-emitting diode) display, multi-touch Web browser and the ability to send video in 720p to a HDTV (using a dock, sold separately).

Zune HD hands-on photos

Although the prices put the Zune HD well below Apple's current iPod Touch prices for the same capacity, I would expect Apple to revamp its products for the fall, likely offering the iPod Touch at similar prices and capacities, and perhaps borrowing the video camera and other features from the iPhone 3GS.

If you can't wait until September, here's a video I shot during a brief hands-on demo I got in May (or see our slideshow above).

REDMOND, Wash.--Microsoft has long talked about a vision in which people can buy content like movies just once, and then watch them on a variety of devices. That vision will finally start to become a reality this fall, Microsoft's entertainment unit president told CNET News on Thursday.

The company's Entertainment and Devices unit president Robbie Bach said there won't be one seminal moment when users magically get the ability to take purchased content everywhere. But, starting later this year, some of that notion will start to take hold.

Bach

"I think you are going to see that steadily happen," Bach said in an interview. "It's not going to be a cut-over date...What it is more going to be is a steady pace. You already see us make some things available in multiple places. You will see more of that this fall. You will see more of that next year."

Partly in anticipation of that, Microsoft is rebranding the movie and TV show store on its Xbox 360 to use the same Zune brand as it uses with its PC-based music and movie service. Over time, Microsoft wants Zune content to also show up on mobile phones.

There are two pieces to delivering on that vision: one is the technology, and the other is getting the content owners to offer the needed licensing. In general, it is the latter that is the harder, Bach said.

"All of the things about what you can buy and what you can buy where have less to do with technology and more to do with rights negotiations," Bach said. "We'll steadily make progress on that. It's generally in the best interest of content providers and it's certainly in the best interest of consumers."

On the Windows Mobile business, Bach acknowledged that Microsoft has seen its rivals move at a faster pace.

"If your point is we haven't advanced Windows Mobile as fast as we like, I think the answer is that's true," Bach said. "You are going to see that change."

He noted that Microsoft has shifted a lot of new talent into that part of the business. "We've made a lot of changes on the team in the last 12 months and that is starting to bear fruit."

However, Bach continued to hold off on providing any details on when to expect the version of Windows Mobile beyond the interim version 6.5 update due out on devices later this year.

"My view on these topics is 'talk is cheap'," he said. "The next thing we are going to show people is Windows Mobile 6.5. There's plenty of innovation in the pipeline."

At one point Windows Mobile 7 was expected early this year, but the product has fallen way behind schedule and is now expected some time next year.

Bach, who demonstrated the company's Project Natal motion-sensing technology for a crowd of financial analysts Thursday, said the technology will help the Xbox better appeal to casual gamers and people who don't even think of themselves as gamers. It will also appeal to the hard-core gamer crowd, he said.

"Even the folks who are hard core Halo or Splinter Cell players, they are also going to want to play Natal games," he said.

The company, which first announced that Natal effort at this year's E3 gaming event, has said Natal will be available as an add-on to the Xbox 360 console. However, it hasn't said when it will be available.

"I'm not planning on being any more specific today," he said.

One thing that will be available this fall is the Zune HD, Microsoft's would-be rival to the iPod Touch. Although I had gotten a brief peek at the product in May, I didn't really get to check out the browser. I played with an updated build of the product on Thursday and was pleasantly surprised to see the browser has the kind of pinch zooming that one finds on the iPhone or in Windows 7. On the down side, I didn't see anything to indicate it will have serious gaming abilities.

As part of my chat with Bach, I did a video interview, which I have embedded below.

One of the features of the Zune HD is its organic light-emitting diode (OLED) display.

(Credit: Ina Fried/CNET)

CARLSBAD, Calif.--As D: All Things Digital wrapped up Thursday, I got a quick chance to play around with the Zune HD that Microsoft plans to ship this fall.

The software maker announced plans for the product on Tuesday and released a photo, but this is a product I was curious to see firsthand.

The most striking feature from my brief look was the device's striking organic light-emitting diode (OLED) display.

I got a chance to see most of the features, but not the one I am most curious to see--the Internet browser. I'm told it's based on Internet Explorer 6, as is the Windows Mobile browser, but the real question is whether Microsoft has made the interface better than that on its phones.

I'm also curious what Apple does with the iPod Touch in time for this fall. If they add a camera and a bunch of new goodies, it could give the Zune's HD Radio and other features a run for their money.

Anyway, without further ado, here's a quick video look at the Zune HD. (Sorry, the video trails off a bit at the end, but hopefully you get the idea.)

As my colleague Donald Bell notes, Gizmodo and Engadget have Zune HD hands-on looks as well.

Microsoft on Tuesday confirmed its plans to take on the iPod Touch with a new, touch-screen Zune that will be able to surf the Web, play high-definition movies, and tune in to digital radio.

The Zune HD, which will be available in the U.S. only starting this fall, features an HD Radio tuner as well as an organic light-emitting diode (OLED) touch screen, Microsoft said. It is based on Windows CE and will use a version of Internet Explorer customized for its touch screen, Microsoft said.

The software maker did not announce pricing or capacity, though it said the device will use flash memory and attempt to take on Apple's high-end iPod models.

"This device is created to go head to head with the iPod Touch," Chris Stephenson, general manager of global marketing for Microsoft Zune, said in a telephone interview on Tuesday. Zune buyers will also be able to play HD content on their TVs via a dock, Microsoft said.

The software maker also said that at next week's E3 trade show in Los Angeles it will announce details on a new Zune-branded video service for the Xbox that will replace the current Xbox Live marketplace for TV and movies. The company didn't announce details or specifically say that content will be playable on both Zunes and the Xbox.

Currently videos purchased via the Xbox can't be played on a Zune, although both stores use a similar back-end infrastructure to serve up content. Over time, Stephenson said the goal is to move toward a world in which content purchased once can be played on a variety of devices.

Microsoft plans to offer the new Zune video service in a number of European markets, in addition to North America.

Microsoft's Zune HD will be released this fall in the U.S. The software maker has not announced pricing or capacity.

(Credit: Microsoft )

As for the Zune HD, Microsoft is doubling down on its bet on a radio tuner as a distinguishing feature. Stephenson noted that the current Zune's FM radio is its second most popular selling point. Adding support for HD Radio, a free over-the-air digital radio technology, represents both a risk and opportunity.

Microsoft Entertainment unit president Robbie Bach fielded some tough questions on Friday.

Then, after that go-around with the crowd of high schoolers, Bach signed up for round two and spoke with a few Seattle-area reporters. In the follow-up with the reporters, Bach discussed upcoming updates to Windows Mobile as well as the company's just-announced move into retail and its Zune efforts.

Robbie Bach, president of Microsoft's Entertainment & Devices Division

(Credit: Microsoft)

I wasn't there, but enjoyed the team coverage from TechFlash's Todd Bishop, The Seattle Times' Ben Romano, and the Seattle Post-Intelligencer's Joe Tartikoff.

Bach told the reporters that the move into retail, unlike Apple's, is more about brand-building than distribution.

"Apple's approach was about distribution. People forget that when they entered their stores...they didn't have distribution for Macintoshes, so they created their own distribution,," Bach said, according to the The Seattle Times. "We have plenty of distribution. These stores for us are about building our connection to customers, about building our brand presence and about reaching out and understanding what works and what improves the selling experience."

As for the Zune, Bach wouldn't talk specifics of whether touch is coming to the new players (expected this fall), but he did talk about the overall importance of the touch interface throughout Microsoft.

"Independent of specific plans for any specific product, you should just assume over time that that's going to become part of the products that we produce," Back said, again according to the Times. "And, you know, specific timing and all those things, I'll leave aside, but it is a huge trend. And once you have something like touch or voice to interact with, you wonder why you did it the old way."

Microsoft has quietly reorganized its Zune team, splitting up the hardware and software teams, CNET News has learned.

Rodriguez

(Credit: Microsoft)

The software and services portion of the Zune team--the bulk of its staff--will be added to the portfolio of Enrique Rodriguez, the vice president who currently runs Microsoft's Mediaroom and Media Center TV businesses. The hardware team, meanwhile, will now report to Tom Gibbons, who also leads the hardware design efforts within Microsoft's Windows Mobile unit.

"We're just being very pragmatic and even more so in a world in which not even Microsoft can afford to over-invest," Rodriguez told CNET News.

The move was made on January 22, as Microsoft made its first-ever companywide layoffs--layoffs which also hit the Zune team, although Microsoft won't say how many people were cut. It also follows a holiday quarter in which Zune sales dropped by more than half from a year earlier.

In an hour-long interview on Thursday, Rodriguez said the move was not made in response to recent Zune sales, but rather as the company looks to create a more unified entertainment business and gears up to expand the Zune service to be available on more than just Microsoft's own devices.

"The goal is to make non-gaming entertainment a first-class citizen within Microsoft's business," he said. That means building better software and gaining scale "a little further out than just in Redmond."

"The other thing we are trying to do, like any other business, is to make some money," Rodriguez said.

Rodriguez wasn't ready to offer details on when the Zune service would come, say, to Windows Mobile, but he did say to expect products within this calendar year that take the Zune service beyond just Microsoft's own line of digital music players.

"Zune the service needs to transcend Zune the device," Rodriguez said.

Zune, the device, has faced an uphill battle in its effort to offer a rival to Apple's iPod. Although the company has gained some share, it has come largely at the expense of the companies that were on the market with devices using Microsoft's PlaysForSure software, which predated the Zune.

Microsoft has been saying for some time that it would expand to other "tuners" beyond the Zune player and work on that front predates the latest reorganization. Meanwhile, the company says it is not getting out of the Zune hardware business altogether and in fact new Zune hardware models are expected to come out this fall.

"You have to have a hero device," he said. "If you ask me how important is it from a numbers perspective, today it's ultra-important. If I do my job right, part of my job is to make it less important. Part of my job is to make sure the service comes into every device."

But that doesn't mean Rodriguez doesn't see a need for Microsoft to keep making the Zune.

"The reality is that will continue to be the one vertical device that we control every...aspect of it all the way to what it says on the box," he said. "So shame on us if it is not the best."

Rodriguez said that a large part of the reorganization was about bringing more heads together to work on a unified entertainment approach, one that is headed toward a more cloud-based approach.

"To write the type of software...it's a complex job, it's a Microsoft scale job," he said. Microsoft won't say how many people work on Zune now or how large the team was prior to the reorganization, however, Rodriguez said by combining teams, Microsoft has more people focused on entertainment broadly.

"The aggregate of people is more today than it was two weeks ago," Rodriguez said. "We're taking what used to be 300 people there, 300 people there, and 300 people there...into being 1,000 people all around the same vision."

(Credit: Microsoft)

There were plenty of weak spots that led to Microsoft's disastrous December quarter, but one that didn't get much attention Thursday was how badly the Zune did.

Tucked away in Microsoft's quarterly filing with the Securities and Exchange Commission, however, was a startling figure.

"Zune platform revenue decreased $100 million, or 54 percent, reflecting a decrease in device sales," Microsoft said. That's quite a drop.

Apple, by contrast, saw its iPod unit sales up 3 percent, while revenue dropped by 16 percent. It still racked up $3.3 billion in revenue, as compared with less than $100 million for the Zune.

In an interview Friday afternoon, Zune marketing director Adam Sohn said a number of factors were to blame.

"It's the category, it's the business, it's the economy," Sohn said, noting that despite a software upgrade, Microsoft entered the holidays with essentially the same hardware it had a year earlier.

In November, Microsoft chopped the prices on its flash-based Zune devices amid both competitive and broader economic pressures.

That meant that revenue was somewhat lower than Microsoft had projected, although Sohn insisted that unit sales were basically in line with what the company had figured on.

"We met our internal plan for (the) holiday," he said, adding that a year ago the company was also boosted by strong sales of a heavily discounted, older 30GB hard drive-based model.

With Microsoft announcing a variety of big cost cuts on Thursday, there were plenty of people suggesting Microsoft should just exit the Zune hardware business entirely.

This posted was updated at 4:20 p.m. PST with comments from Microsoft.

Microsoft will have a bunch of stuff to show at the Consumer Electronics Show in January, but a rumored ZunePhone won't be one of them, according to sources familiar with the company's plans.

Instead, much of CEO Steve Ballmer's focus will be on talking about Windows 7 from a consumer perspective. Microsoft is pushing to have Windows 7 done in time for the holiday 2009 shopping season, so that means this CES is Ballmer's best stage to tout its benefits.

While the desktop operating system will be front and center, sources say to expect Ballmer to talk about how Windows is moving beyond the PC and into a world of PC, Web, and phone, a refrain we also heard a lot from Ray Ozzie at November's Professional Developers Conference, where the world also got its first good look at Windows 7.

On the phone front, Microsoft may not have a ZunePhone, but it is going ahead with several other strategies--pushing phone makers to develop phones based on Windows Mobile, developing Windows Live services for phones running a variety of operating systems as well as a number of new "premium mobile services" based on its Danger acquisition.

The company has also talked about extending its Zune service beyond the company's own dedicated player and mentioned the phone as a logical place to access the service. We may hear more about timing of this at CES, I'm told. In an October interview with CIO UK, Ballmer mentioned the possibility of accessing the Zune service on Windows Mobile phones.

The Xbox will certainly get its due as well during Ballmer's keynote speech and, as is typically the case, expect Microsoft to announce some new partnerships at the show. A funny video and celebrity guest are usually safe bets as well.

So that's what I've heard, but if tipsters know any more, I'm all ears.