July 27, 2006 12:17 PM PDT

Microsoft sees Zune effort as a long haul

REDMOND, Wash.--Microsoft plans to spend hundreds of millions of dollars to catch up to Apple Computer in the music business, but expects the effort to take several years, a top company executive said Thursday.

The software giant plans to have one music player in the U.S. this year, expanding into other devices and regions next year, Robbie Bach, president of the Entertainment and Devices Division at Microsoft, said at the company's financial analysts meeting here.

"We think of this in the hundreds of millions of dollars of investment" over several years, Bach said. "It is something that is going to take time. This is not a six-month initiative."

Microsoft confirmed its plans for its Zune-branded player and service last week, but has offered scant details beyond the fact that it will have a hard drive-based music player with a built-in Wi-Fi connection on the market this year.

The move is a radical departure for the software maker, which has until now tried to take on Apple with a partner approach, in which many devices and services used Microsoft's technology. Although the devices and services were by and large compatible, the experience hasn't been what Microsoft hoped.

Bach said Microsoft is not abandoning its partner-oriented PlaysForSure program, even as it looks to build its rival Zune approach.

"PlaysForSure continues as it is today," he said, addressing a question from analysts. "We're going to continue to support that," he said.

Bach didn't offer new details on Zune but said creating a sense of community and making it easier to find new music are central to it. "We're not just introducing Zune to do the same thing other people do," Bach said. Still, he said, the company expects it to take three to five years for the effort to really pay off.

Zune will tie into other Microsoft efforts, including Xbox, Media Center and the company's Live Anywhere gaming effort, Bach said.

"It enables us to complete the picture," he added.

Bach said the company won't need to invest as much as it did with Xbox; the company needed to significantly subsidize the consoles to compete with Sony. In the music business, though, it is the hardware that is profitable, and the service is not a huge money maker.

That said, catching up to Apple will cost money, he said.

"We have to drive a new brand: Zune," he said. "We have to drive people who think about iPod as the brand to think about other things."

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56 comments

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How about an Optical Card instead of Hard Drive ?
<a class="jive-link-external" href="http://www.colossalstorage.net/home_optical_card.htm" target="_newWindow">http://www.colossalstorage.net/home_optical_card.htm</a>
Posted by grey_eminence (153 comments )
Reply Link Flag
Optical card?
You do know that these things have to exist before they can be
deployed, right?
Posted by Hep Cat (440 comments )
Link Flag
Longer!
It'll take longer than that, and more money - what Microsoft doesn't seem to get is that their UI and engineering processes result in a terrible end user experience - they just don't get design. It's all done by committee, and it lacks coherence as well as style. The software usually works, but not intuitively. It's a fundamental part of Microsoft, and I've never understood why people still just swallow all the mediocre stuff they put out.
Posted by kylegas (81 comments )
Reply Link Flag
Even Palm is using Windows mobile
the only thing shallow and mediocre is the BS your peddling. It seems most people, however, seem to see things differently then you.
Posted by catch23 (436 comments )
Link Flag
MS Strategy = EEE
EEE = Extend, Embrace, Extinguish.

They have used this strategy time &#38; time again to expand their monopoly.

XBOX: MS spent millions to develop it,losing money hand over fist without any profits, for one sole purpose...EEE
They do not care if they make any money on the game box, as long as they put all the other gamer out of business. THEN, the monopoly expands &#38; profits roll in.

XPod-Argonauts is attempting the very same thing.
Plays-Fur-Sure Partners are in the cross hairs &#38; Citizen Gates will lose billions until they are all extinct. Then there will only be the Apple iPod/iTunes Store/iTunes software for Win/MAc AND the Argo-nogo-iWannaBePod.
THEN the profits will roll into the monoplist robber barron's coffers.

Can you here that? "Cah-ching!, Cah-Ching!"
MonopolyLandPark is expanding &#38; rolling in mulah.

Microsoft: Where do you want to go today?
EEE
Posted by Llib Setag (951 comments )
Reply Link Flag
2016, what I think....
This EEE I understand, but this EEE could also back fire.

MS just comitted it's self into buying back like $40 billion worth of it's own stock. Meanwhile they are loosing millions on the Xbox 1, and Xbox 2 (or 360), now ZUNE. And if they make a mistake with Vista and Office 2007, and the revenues don't come in as expected, and they still are loosing millions/billions, making less.

Redmond Real Estate expansion will end, layoffs and the stock will be beaten up with people fed up.

Sure MS stock made a lot of people rich, but it also made MS rich, and Wall Street doesn't forget or allow for stupidity for too long.

You make these mistakes, and what Wall Street gave you, it will take it back even faster.

That's what I think.

**** off the masses, and you'll see what will happen.
Posted by rmiecznik (224 comments )
Link Flag
I wonder how many $Billion MS will lose on Zune?
Forbes says MS has lost over $4 BILLION on the XBox through the
end of 2005 - and isn't the XBox Microsoft's most successful
hardware project to date?

Must be nice to be able to p*ss away billions and not get fired.
Posted by rcrusoe (1305 comments )
Reply Link Flag
But it worked
It drove Sega over the edge, and Nintendo are on the last role of
the dice with producing consoles (rather than handhelds).

If that's what it takes, that's what it will take. As computing moves
away from the desktop MS can't afford to miss a market. It's worth
counting how many non-Microsoft operating systems you have in
your home compared to 10 years ago. (Embedded Linux is fast
becoming popular
Posted by JulesLt (110 comments )
Link Flag
Question for 2016
What's an iPod? :-)

I "dunno". I'm just paying tunes on my Zune.
Posted by john55440 (1020 comments )
Reply Link Flag
Another question for 2016
Do you think Vista will ship before Christmas?
Posted by rcrusoe (1305 comments )
Link Flag
Sorry John ...
I fear you have that backwards. Conversation in 2016 will go more
like this:

"What's a Zune?"

"Who knows. Let's look it up on my iPod. Hey what do you know, it
was yet another misearable failure by those people who brought us
viruses and insecure operating systems. I'm so glad they finally fell
by the wayside ..."
Posted by Dalkorian (3000 comments )
Link Flag
Cracking open a Zune soon
If MS is losing $$ on the player it may be cheaper to crack the Zune
for its internals, if the SD card inside is a usable one that is.
Posted by Peter Bonte (316 comments )
Reply Link Flag
Zune = The Next BIG Failure
Next to CNET, Zune will be the second biggest
<a class="jive-link-external" href="http://www.techknowcafe.com/content/view/603/43/" target="_newWindow">http://www.techknowcafe.com/content/view/603/43/</a>
failure in the technology industry.
Posted by (156 comments )
Reply Link Flag
Dude!
Stop peddling random links at the end of your posts! They're not relevant in any way shape or form. The link in your last post took me to a page about and external DVD writer! What is the point?

Ok most of your posts consist of Cnet bashing and links to 'techknowcafe'.

If you don't like Cnet don't post!
AND unless you have a relevant link don't post one at all
Posted by grandmasterdibbler (78 comments )
Link Flag
Thats only obvious..
but it will never takeoff like the IPOD did three years ago.. the
success of the IPod was combined with good engineering, stellar
marketing, alot of luck and being at the right place at the right
time. Given Microsoft's track record.. there timing leaves alot to
be desired, and I highly doubt they will be able to pull this off..

They want a device that promotes community?? The IPOD already
has that. Actually all of Apple's products have that and they ain't
going to stop at the IPod. Their are alot more devices,
computers and software in store from Apple. Apple ain't going
to simply role over and die, their on to much of a role.

They also want a service that will tie in Media Center and Xbox??
Again that will never fly, they've just made it complicated
already. Their attempts to flood the market with Xbox and Media
Center is absurd. I think Microsoft is forgetting their core
audience - blue collar workers -. Microsoft and whatever brand
they come up with is just not seen as being techno-cool. No
matter how much they dilute the brand. Why? I keep picturing
Ballmer and Gates celebrating their victory with Windows 95. So
much hoopla and fake fan fare, that made me sick. Gates
especially what a total geek. No insult intended but Ballmer and
Gates quite posisbly could do a sequel to Revenge of the Nerds.
Don't you think??

Either way you cut it.. they've run out of good ideas. They
haven't a clue on how to bring in more revenue so they take an
obvious strategy and copy their competitors. They've never lead
by example. I just hope they don't call this innovation. What a
joke..

Its going to be a flop just like Origami. I just hope they'll go
through with it and decide not to back out last minute for
entertainment value. I just want to see Ballmer weasel his way
out of this one..hehe
Posted by ServedUp (413 comments )
Reply Link Flag
As only a monopoly can
Microsoft will enter yet another market, and if their service which has fewer artists and more egregious terms doesn't kill Apple then they just release an OS update to generate a few billion dollers so that they can effectively remove Apple's ability to compete by using their huge cash horde and temporarily eliminate the "market" entirely. Why off course your microsoft OS powered phone works just like an iPod now, of course your desktops get the music for "free" noew, of course your set top box will only play Zune tunes. And on the ashes of iPod/Apple Microsoft will get one step closer to becoming a data monopoly.

Force Zune to be a separate business with its own P&#38;L? Never happen.

I've seen the future, and it is this: "all your data are belong to Microsoft." The non-technical community doesn't realize how irrelevant governments become when that happens.
Posted by cmcmanis (17 comments )
Reply Link Flag
Zune Meme Has No Public Awareness
There's virtually no public awareness of Zune -

<a class="jive-link-external" href="http://www.realmeme.com/roller/page/realmeme?entry=apple_ipod_vs_microsoft_zune" target="_newWindow">http://www.realmeme.com/roller/page/realmeme?entry=apple_ipod_vs_microsoft_zune</a>

Run Your Own Meme -

<a class="jive-link-external" href="http://www.realmeme.com/Main/miner.jsp" target="_newWindow">http://www.realmeme.com/Main/miner.jsp</a>
Posted by Broward Horne (88 comments )
Reply Link Flag
MS has lost any focus
All they seem to be doing is looking at the current trend and
trying to copy that. This is a major RED flag that a company has
lost all its focus.

They need to focus. Their two main cash-cow products are dying
on the vine. Vista and Office continue to suffer from delay after
delay. As Balmer might say: "FOCUS, FOCUS, FOCUS, FOCUS,
FOCUS, FOCUS, FOCUS, FOCUS, FOCUS, FOCUS... FOCUS, FOCUS,
FOCUS, FOCUS, FOCUS, FOCUS"

But perhaps they believe they can get this out before Vista ships
-- then again, what CAN'T YOU GET OUT BEFORE VISTA SHIPS.
Posted by m.meister (278 comments )
Reply Link Flag
Zune - One of a Thousand Cuts!
How will MS die? A thousand small cuts tossing billions at markets they don't understand and can't bully into submission while the Vistapocalypse ends in a hurricane of cracks that will completely destroys the OS, turns MS into a global laughing stock, inspires law suits from its own customers and make the company the most shorted stock in the history of US equities. Already analysts and traders are publicly asking why MS is selling at any multiple at all given the company's slackjawed incompetence. This is really the beginning of the end. MS's only move left is to end support of XP or send out an update that will turn off the OS and force the user to buy and download the Vista upgrade which they can't attempt without getting sued by their own customers. No one ever wanted anything made by Microsoft and more than ever before users will find excuses to avoid Vista and being swept up in the Vistapocalypse. Ballmer can run around throwing chairs, head-butting buses and making good sport of avoiding the animal control officers trying to catch him but in the end he will go down in history as the grunting pinhead that dismantled the biggest software company in the world. He will go down with blinking idiots like Fred Wang, Dr An Wang's kid, the guy who rode Wang Laboratories into its grave.
Posted by Sumatra-Bosch (526 comments )
Reply Link Flag
It Will Take "Years" To Make It Insecure
What Microsoft meant to say is that it will take several hundred million dollars and several years to make Zune just as insecure as the rest of Microsoft's platforms. A truly insecure product is a work of art, and cannot be hurried.
Posted by maxwis (141 comments )
Reply Link Flag
I'm jamming to iTunes
why the hell would I want to use Zune? iTunes and my iPod are awesome together!
Posted by microsoft slayer (174 comments )
Reply Link Flag
Unstoppable Zune Business Model
Just force all large Windows PC makers to "bundle" a free Zune with
each Windows PC they sell.

Sure it's illegal, but they can just claim it's a hardware extension to
Windows. "Yeah, Windows Zune Edition. We're innovating again.
That's the ticket!"

Worked before! LOL ;-)
Posted by open-mind (1027 comments )
Reply Link Flag
Glad I have a Mac
I'm happily locked into Apple and iTunes. :) Who cares about Winbloze!
Posted by microsoft slayer (174 comments )
Link Flag
zune and xbox
Microsoft has a real chance with the zune, because it shares the same target audience as the xbox

<a class="jive-link-external" href="http://www.zunescene.com" target="_newWindow">http://www.zunescene.com</a>
Posted by isodork (13 comments )
Reply Link Flag
Directs you to Zune promotional site
One of the few even remotely positive postings about the Zune
article directs you to a site that is clearly associated with the Zune
promotional machine. It reads like someone's parents trying to talk
like and be cool like their teenage kids. Age-inappropriate behavior
and the Zune are equally repugnant.

Have a nice day!
Posted by lesfilip (496 comments )
Link Flag
Right Down The Tubes
Yeah M$ is really hurting. I'm sure they're just a bad decision or two from going down the tubes.

Get real. M$ makes so much money each quarter, they have no use for it. They have many solid products and millions of loyal followers.

Could they start to lose momentum slowly and have profits drop? Sure. That's why they invested billions in XBox and now in Zune.

Don't just milk the cow, because the world might get tired of milk. Make butter, cheese, whip creme, yogurt, and lots more money.
Posted by regulator1956 (577 comments )
Reply Link Flag
Where is the evidence?
COuld someone point me to something 'rock soild' that indicates that the Zune will have anything to do with games. The early portable xbox stuff was speculation and everyone seems to be clinging to it, there was nothing I could see in the press release about games.

They've lined themselves up for difficulty already by announcing some vague ideas about what it will do and people will take these hints and go wild, and then be very disappointed when it doesn't match up.
It looks like Apple have the right idea by not releasing any information until the product is ready to go on sale, that means when it comes out people will be wowed by the features. That happens mainly because they have no idea what's coming. Whenever there is an announcement Apple gives no hints about what they're releasing. That results in no disappointment as usually rumours are just educated guesses and the wow factor.

It's like if you go the cinema and have read all the plot spoilers for the movie as opposed to knowing very little, there's no surprise, no excitement. That is the problem with releasing sketchy details.
Posted by grandmasterdibbler (78 comments )
Reply Link Flag
This goes back to couple of months ago article
This goes back couple of months article that microsoft was trying to provide a bridge to IPOD through usb 2.0 interface specs are something and it did not provide user the experience they wanted.

Xbox live is getting popular with xbox users. Xbox live has been a successful delivery channel for microsoft.

Imagine zune docked to xbox and is able to communicate with xbox live site to download songs or even videos!!! who knows.

I am sure microsoft that there is money to be made eventually!! and that why they are in.
Posted by Tanjore (322 comments )
Link Flag
Check this link for IPOD and XBOX
Check this link for IPOD and XBOX link. This has not worked great so far.

<a class="jive-link-external" href="http://www.betanews.com/article/iPod_to_Connect_with_Xbox_360/1116012979" target="_newWindow">http://www.betanews.com/article/iPod_to_Connect_with_Xbox_360/1116012979</a>
Posted by Tanjore (322 comments )
Link Flag
Insecurity & Jealousy
Just another example of Microsofts insecurity &#38; jealousy of all things tech related. Any tech company who experiences success, makes Microsoft feel threatened. They are constantly entering markets they have no business entering, just because they have the money to do it.

If they would spend those resources on improving their OS, browser, Productivity software, we would be using them because we want to, not because we have no other choice.

<a href="http://imguessingblog.blogspot.com" target="_new">Im Guessing</a><br>
<a class="jive-link-external" href="http://imguessingblog.blogspot.com" target="_newWindow">http://imguessingblog.blogspot.com</a>
Posted by imguessing (14 comments )
Reply Link Flag
Markets are not static!
They change all the time and no one owns them.
It has nothing to do about jealously.
It is only about making money. Microsoft believes that it will be able to make money in this way. It does not believe that it will make money in investing those resources on improving their OS, browser, productivity software and so on. That is the message I get. Actually, they are increasing competition by entering this market.
Björn Lundahl,
Göteborg,
Sweden
Posted by Björn Lundahl (253 comments )
Link Flag
Microsoft's modus operandi
I saw this post on the Mini-Microsoft blog and thought it was
insightful and relevant to this discussion:

"Here's the problem- the only way to grow the business this
company knows is to be an 800 pound gorilla (who gets to sit
wherever he wants). That's why you have Zune muscling in on
PlaysForSure partners. That's why Microsoft is horning in on
Adobe (with the expressions stuff), IBM, Oracle, anyone else.
Basically, unless you're seliing Microsoft's stuff for them in the
channel, beware the talk of 'partner', if you develop on their
platforms- because the fact is Microsoft will eventually want the
money YOUR company is getting to fund THEIR growth."

Here's the link:

<a class="jive-link-external" href="http://minimsft.blogspot.com/2006/07/we-are-fam-ily-" target="_newWindow">http://minimsft.blogspot.com/2006/07/we-are-fam-ily-</a>
links.html#c115402433908523810
Posted by Thrudheim (306 comments )
Reply Link Flag
Most people call zune a failure for no good reason
Most of you guys are considering Zune a failure. It is possible that it will be a failure but making judgement even before the product is out is kinda silly and ridiculous.

Afterall it is a consumer product!! and consumers will decide with their wallets. If microsoft fails to provide what consumers need then it will be a failure. What if it exceeds expectations?
Posted by Tanjore (322 comments )
Reply Link Flag
If it exceeds expectations...
"What if it exceeds expectations?"

...then zealots (of any group) will claim it as:
a) An anti-competative practice, MS should be sued, etc.
b)Them just forcing their way into a market, it will never last, etc.
or my personal favourite, "Microsoft is spending too much money to gain an entry into a massive, lucrative market. They're falling apart..."
Posted by Tomcat Adam (272 comments )
Link Flag
Good Comment!
You are right! If it exceeds expectations? Well, then Microsoft will be called a monopolist!
Björn Lundahl,
Göteborg,
Sweden
Posted by Björn Lundahl (253 comments )
Link Flag
"MS has no business" is STUPID
I hate it when these people say that Microsoft has "no business" entering this market. What would the world be like if this statement were applied to other industries.

Fox had "no business" entering the 24 hours news circuit because CNN got it right. Um, check the Neilsen ratings...

Turn it on ABC, NBC, and CBS on Tuesday or Wednesday night, and you will see shows that are obviously modeled after American Idol (whose finale is now a Hollywood red-carpet event). Some are successful. Some are not. Using the Microsoft MP3 analogy, these networks have "no business" entering the "America Votes" talent show market.

The networks had "no business" entering the reality show market trying to catch on to MTV's "The Real World" popularity. Now, it probably sucks to try to pursue TV acting, because everything is a "reality show"!

Apple's making a cell phone? Well, Apple has "no business" entering this market because Motorola, Sony Ericsson, and Nokia have obviously gotten it right all of these years.

The cable and phone companies had "no business" getting into the ISP market, because AOL, CompuServe, and Earthlink had right. (Compu Who?...isn't AOL losing money and now giving almost everything away for free?)

Target has "no business" adding grocery stores to its stores because Wal-Mart has gotten it right...

Wal-Mart has "no business" opening stand-alone grocery stores in Florida because Publix and Winn-Dixie got it right. (Winn Dixie keeps closing stores!)

I could go on...and on...

Competition is good. Maybe Microsoft will be successful. Maybe not. Maybe a threat from MS will push Apple harder to continuously improve its products over time. It's all GOOD!
Posted by darrius3365 (98 comments )
Reply Link Flag
30% is not enough for MS?
MS is greedy, 30% of the global online music market isn't good
enough, they always want it all. Why isn't MS entering the phone
market? Because they will never own it all.

MS is desperately looking for new ways to earn big dollars, for
that they need to control the complete market it enters. Its only
with market dominance that a company can get 300% profit on a
product like it is doing now with Windows and Office. The
billions that MS is going to lose now to conquer this market will
be paid double by the consumer once the battle has been won.
Apple will win this IMHO but a 40 GB Zune for $100 will be hard
to beat, it all depends how much money MS is willing to lose on
the whole deal.
Posted by Peter Bonte (316 comments )
Link Flag
Yes, no one "owns" a market!
Everyone is free to enter and to leave. It is up to consumers to decide.
Björn Lundahl,
Göteborg,
sweden
Posted by Björn Lundahl (253 comments )
Link Flag
farther away...
All I read about Microsoft's player doesn't get me closer but farther away from what I want. When am I going to see:

- 60GB flash memory.
- phone.
- organizer.
- broadband internet.
- music.
- pictures.
- wi fi.
- bluetooth.
- tv.
Posted by cleibowicz (4 comments )
Reply Link Flag
MSVista Chokes on Redmond One Campus
Windows Vista Voice Recognition software demonstration in Redmond at Microsoft more like a "voice - wreck"

<a class="jive-link-external" href="http://www.youtube.com/watch?v=2Y_Jp6PxsSQ&#38;%20eurl=" target="_newWindow">http://www.youtube.com/watch?v=2Y_Jp6PxsSQ&#38;%20eurl=</a>
Posted by Llib Setag (951 comments )
Reply Link Flag
 

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