Microsoft's Bach: We'd do Zune differently

I tuned into Thursday's conversation between Microsoft's Robbie Bach and financial analysts at CES. Bach is the president of the company's Entertainment and Devices division, which includes Xbox, Windows Mobile, retail channel relationships, and most of the other fun stuff. It also includes the Zune, which, given its lack of financial impact on the company, didn't merit much of his time.

Toward the end however, one analyst (not identified on the recording) suggested that the company's foray into MP3 players had been a waste of time. Today, Microsoft talks about providing software and services on "three screens"--the PC, the TV, and mobile devices. So why did Microsoft make a foray into hardware, which alienated its device-maker partners (remember PlaysForSure?), and probably cost the company tens or hundreds of millions so far.

Bach insisted that music was a required component of the "three screen" experience, and that Microsoft had to be a leader rather than a mere technology provider in this space. If Microsoft hadn't built the Zune, it wouldn't have been able to create the Zune software and Marketplace, which have become pretty solid after a couple false starts. But he admitted that if the company were to enter the space again with perfect hindsight, it would do things differently.

How, exactly? He didn't say. But he did say that regardless of whether Microsoft had built its own MP3 player, it would have changed its relationship with every OEM and "caused just as much disruption." In other words, the Windows Media strategy wasn't working. Consumers didn't want a confusing array of devices and stores and formats and DRM schemes that didn't always work together. They didn't want to think about this stuff at all! They just wanted to rip their CDs, maybe buy a few tracks online, and take all this stuff with them.

My guess: PlaysForSure would have been just as dead. Microsoft would have created a new music brand, a new logo program, new hardware specs for the devices, new client software to replace the Media Player for syncing and library organization (like the Zune client), and a new store that could only be used with this new software and these new devices (like the Zune Marketplace). In other words, there still would have been a clean break between old and new. The only difference is that Microsoft wouldn't have manufactured and marketed the actual Zune devices, and consumers might have had a greater choice of hardware from the get-go. This might have led to quicker innovation--for instance, some forward-thinking OEM probably would have created a touch-screen "Zune" by now.

The only question: after the PlaysForSure debacle, who would have gone along? Which is probably why Microsoft built the Zune hardware in the first place.

[aerotjk]

When are people going to accept that the Zune is a true player in the MP3 market. Just over 2 years and people expect them to take over the IPOD. MS has said from the get go that this is a long term project and from experience, the Zune blows the IPOD and Itunes out of the water. (i.e. Zune Pass, mix view, hardware, etc) As Apple has more yawn events compared to MS's continuous compelling updates which I remind people are free to people with the older hardware. Like Xbox, MS has developed a remarkable product.

[kcotham]

Why is it that Microsoft fans feel the need to put every Apple product in all capital letters?

[kelmon]

We might accept the Zune as a true player if they sold it outside of North America. I live in Europe and every other company seems capable of selling their players here. Apparently Microsoft finds this difficult to do for reasons that no one understands and therefore the Zune continues to be a joke.

Oh, and what is with selling stuff with Microsoft Points?

[ballmerisanape]

It only took 2 years for the iPhone to rule.... why shouldn't we expect that a bigger company.. with more resources.. could come up with a player that was innovative enough to dethrone the tired iPod. My guess is that Apple did a one-up with the iPod touch... and because MS was playing catch-up as usual, the Zune was outdated before it came out.

[estateplanner]

MS has other agreements outside of the US that prohibit it from offering services there. From what I have heard, breaking these agreements would likely result in anti-trust issues. The ?points? is probably part of its larger strategy with the Live brand and rebates for online purchases.
The iPhone was going into a different market with different positioning than the Zune. The IPOD is positioned to charge a premium for the product based on perceived quality and features. So when the IPHONE was launched it was able to get a lot of the IPOD juice. Plus they were going into a market that was desperate for this type of product.
I personally use a Samsung MP3 and replaced my daughters broken IPOD with Zune. While I never had the desire or drive to replace my player with IPOD, I have fallen in love with the Zune (and so has she so no trade option?). I just wish that MS would use some money and muscle and get more docking options.

[Get_a_life_Leo]

Zune's are not at all bad but they suffered from the fact that they are not innovative enough and relied on differences (such as the Social - peer to peer beaming) that depended on critical mass. Silly idea. Something Apple might have come up with after selling 10 million iPods and gotten away with. Updating over wireless is a good innovation but lost in the general scheme of things. Microsoft hardware simply isn't that fashionable, it should stick to what it does best - sell and resell software.

[tomorryzc]

Microsoft would have created a new music brand, a new logo program.
Does you mean the zune new?
As apple annouce that itunes music free from DRM, how about the new zune?
There are converters for zune such as http://www.convert-video-dvd.com/dvd-to-zune-converter.html#115 Will Microsoft make new zune program?

[estateplanner]

I would suspect a change soon. DRM issue are driven by media companies.

[Jonathan]

I would love to move from the iPod to the Zune....when MS gets their head out of their @&&es and realizes that a rating system isn't black or white; or in their case a heart or broken heart. Until that changes I'm stuck on the iPod. Virtually NO rating system in the world is 0 or 1. Hell even Ebert and Ropert (SP?) has 2 thumbs up, 2 down, 1 down & 1 up.

[terminalblue]

seriously...thats it? man, thats klnd of a silly reason not to use the zune.

[rapier1]

Actually there are three 'positions' for rating. Neutral, positive, and negative. Mapping this to a 5 star system this gives you 3 stars for neutral, 5 stars for positive, and 1 star for negative. For most people this actually ends up being enough. While some may prefer to have finer granularity it actually does work reasonably well. Its also important to note that internally the ranking system can allow for more granularity but you run into issues with the amount of screen real estate versus the UI control being that they had decided against a spreadsheet like interface you get with iTunes and the like. I don't necessarily agree with this design decision but it is supportable.

[estateplanner]

I read about this before buying my daughters Zune and was a little disappointed. But then looked at how I use the 5 star system. 5 for what I love, 3-4 for good but not on daily play list, 1-2 would be deleted if space is needed.

[Pishkado]

One specific, though minor, thing Microsoft could have done differently is not make them in brown.

Unfortunately - my insight into this comes from daily contact with students at a public university - most of the rest of their overall system architecture was equally clueless.

The overwhelming majority of Microsoft revenue is because "everyone uses it," not because its product is best. They have become experts at the fine art of milking their installed base - that's their real strength, not product development, which they do only as necessary. Apparently they didn't realize that approach wouldn't work in the MP3 player market.

[CDubber]

"Consumers didn't want a confusing array of devices and stores and formats and DRM schemes that didn't always work together."

Hmm, you mean like Windows Mobile? Or like Windows for the desktop?

Microsoft can't seem to keep its messages straight.

[Hep Cat]

"Today, Microsoft talks about providing software and services on "three screens"--the PC, the TV, and mobile devices."

And that's the problem. Customer delight is not a formula.

Ironic that Zune users are in exactly the same situation that Mac users were in during the OS 7/8/9 days - marginalized, technically unfavorable hardware, differentiated software that most people don't see the big deal in...how's it feel?

[rapier1]

Actually the 2nd gen zunes are pretty sweet. Nice form factor, good design, the software is stable and easy to use, etc. I do agree that the Zune 30s were rushed to market though.

[msjonker]

I have a Zune and, for the most part, love it. Maybe if Microsoft involved some real-world users in the design process, the user experience would be a little better and innovative, though.

I think the reason Zune hasn't caught on isn't necessarily the Zune, but Microsoft's history of dropping support for things that aren't necessarily "hot" anymore. It doesn't give a consumer very much confidence in what they are shelling their money out for. I will have to say that that is one thing Apple has done correctly. Now, that said, Microsoft HAS in fact provided pretty good support for the Zune since the first generation; more so than I ever expected. For example, firmware upgrades available for ALL generations.

If Microsoft continues to innovate with the Zune, I think they will eventually start pulling market share from Apple. But at that point, the profit margins will probably not be what they are now. Hopefully Microsoft will look beyond direct profits from the Zune and see the overall picture and the role the Zune could play.

[rcardona2k]

You have a good point about MS dropping support for 'legacy' (nee yesterday's product), quickly. I wonder if Zune is profitable at the current level of adoption, not accounting for past investment, just on-going production and operations. That's what would drive my decision to buy one, is this thing going to be around going into a recession if it isn't making money. That and now iTunes is DRM-free.

[MaLvaDo39]

The zune is a me-too product. It has no imagination and is a weak attempt. Microsoft needs to stop their photocopiers that are set on "Apple".

Plus, with the iPod Touch, the zune is playing in a dwindling market and has no answer.

[ducttape36]

ipod touch is barely an mp3 player. its got only 16 gb tops for storage and is as big as a hard disk player. yes its an awesome device for all the other features, but if you just want a solid music experience, zune is the way to go. they have subscription music, a more advanced music discovery engine, the 'social' which only adds to music discovery aspect, FM radio, etc. the ipod touch is a fancy pda, they have sacrificed music for other features like the web.

[MaLvaDo39]

ducttape36, catch up to the times.
The social has no value.
FM radio built in provides terrible reception, plus radio is a no sale for most users.

The iPod Touch excels as a player and much more... that is the future and vision that Apple has shown the world.

[ducttape36]

the FM radio has great reception, in fact i use it over the one built into my car. And for an avid NPR listener I would never give up FM. As for the social, what is your evidence that it has no value? There are tons of people on it already, including me. And i sync all my friend's music with mine and its a great way to share new music. Apple's vision for the world is jsut hedgemony, they tell you what you want and you will want it. Well guess what apple, I want a radio, i want subscription music, i want more space for music, i want a music player! not some mini do it all computer. i just want to listen to my music.

[shane--2008]

"We'd do Zune differently"

You mean you wouldn't make it the poorest excuse for a player ever built? You wouldn't make them all crash over a date change? You wouldn't make them be an iPod from 3 generations ago but with with buggy software and ugly colors?

Tell ya what MS, the day you make a product that actually works, I will care...

.....oh wait, you do make a good mouse.

Shame that is only product since about 1990 that you have made that is worth owning.

Don't worry, I am sure windows (delayed for at least) 7
(years) will fix all your trouble. Looks like a theme pack for windows vista so far. Typical of what you mindless drone customers will buy. Should sell well!

[8301]

You know why I continue to scroll down to see the comments on every CNET article? It's the insightful, well-written, intelligent, and unbiased comments such as this one. Bravo, sir. Bravo.

[TheUnknownComic]

You say "Typical of what you mindless drone customers will buy." Hmmm, isn't if amusing how Apple pushes that "think different" angle except when it comes to MP3 players? The iPod is the biggest "drone customer" product in the world! And why isn't Apple too worried about giving up DRM? Because the files will still be the silly non-standard ".acc" format. People have invested thousands of dollars in files that are locked down and in a silly off-standard format.

[Jens_Baumeister_586]

@TheUnknownComic:

I don't really care which player you like best, but please get your facts straight:

1.) The format is called "AAC", short for "Advanced Audio Coding"
2.) It's not a proprietary Apple format but an open MPEG standard (only Apple's DRM was proprietary).
3.) The Zune is perfectly capable of playing unprotected AAC files - so are other players, PSPs and many phones and PDAs.

For more on AAC: http://en.wikipedia.org/wiki/Advanced_Audio_Coding

[chapibol]

warning. ! Apple butt-licker in the Horizon!.....yeah ... I'm refering to you shane..

[Maccess]

1) Are there more Zunes than iPods among Microsoft's employees' households today ? I don't mean Zunes bought or used by employees because they were told to do so, but including MP3 players bought by MS employees for their family members.

2) Why didn't MS think about making a really good MP3 player ecosystem-the portable part of which would be software running on Windows Mobile, which has an installed base running into the millions? Nokia and Sony Ericsson may not be known as MP3 player makers, but there are more portable audio devices running on Symbian than there are iPods.

3) Why did they have to kill off the the PlaysFor Sure Program? Couldn't they have built on that, and have had millions of players for their ecosystems