Robbie Bach, president of Microsoft's Entertainment & Devices Division, told the San Francisco Chronicle in an interview published Sunday that the company has no plans to put up a Zune phone to compete with iPhone.
Robbie Bach, president of Entertainment & Devices Division.
(Credit: Microsoft)On the eve of Apple's Worldwide Developers Conference, where a new iPhone is rumored to be unveiled, the man who is charge of developing Xbox, Zune, and Windows Mobile began his question-and-answer session with the paper by touting the success of Windows Mobile.
"We will outsell the iPhone," he told the newspaper."We will outsell the BlackBerry."
"We don't make phones ourselves. We don't have any plans to make phones ourselves," the told the paper. "Our focus is on the belief that a phone is a very personal thing. Different people want different types of phones. We think that is going to continue, and we think Windows Mobile is in a great position to service all those different opportunities."
He went on to say that the phone itself is just one component of smartphones' success.
"It's about browsing. It's about music. It's about video. It's about e-mails, text messaging, and photos."
On the topic of mobile browsing, Bach also addressed the issue of the lack of advertising success in mobile Web browsing, saying that it's still a work in progress.
"The business model for browsing on a phone has not gotten itself completely clear yet," he said. "In the PC space, the way people monetize the Internet is through advertising. Now in the phone space, we believe that advertising will be a part of that experience, but it's a different form factor."
Bach also touched on entertainment issues, including Microsoft's backing of the now-largely extinct HD DVD format, pointing out that many consumers say they can't see a substantial picture quality improvement with next-generation discs.
"You have to look at how fundamentally compelling the difference is between a progressive scan DVD player and the picture that it can produce and what you get on a high-definition player. The reality is there is some difference, but most people look at it and say, 'I am not going to pay extra for that.'"
And can we expect to see the company embrace Blu-ray in the next version of its Xbox game console?
"There is nothing to even talk about right now with regard to the next generation. That is so far out that there isn't anything to talk about."
However, CrunchGear is reporting that a tipster with "close friend who works at Microsoft" said they were told that Microsoft will try to upstage Apple on Monday with the announcement that an Blu-ray Xbox 360 will be available by the Christmas holiday shopping season.
Here's an interesting post on how to save the Zune over at digital lifestyle blog Last 100. The blogger is Michael Pinto, creative director of Very Memorable Design, a design company that specializes in youth marketing.
To summarize: Microsoft needs a super-cheap Zune--maybe $25--to compete against the $50 iPod Shuffle, and should create limited-edition Zunes associated with fashionable brands, artists, comic books, and sports heroes. He also suggests preloaded content, including selling cheap Zunes loaded with concert recordings immediately after the show ends, as some artists are already doing with flash drives.
Customizable Zune Originals (shown here) are a good idea, but limited-edition Zunes emblazoned with popular brands would be even better, according to one commenter.
(Credit: Microsoft)Memo to Microsoft: offer this guy a job if you haven't already.
That said, I disagree that Microsoft needs to focus more on the form factor and the fashion instead of the technology. It needs to work on both simultaneously.
I was a fan of the company's original goal of reaching out to hard-core music lovers, similar to how the first Xbox tried to appeal to hard-core gamers with a built-in hard drive and Ethernet port, two features that the PS2 lacked at that time.
But I think that focus got blurry last year when Microsoft tried to move down-market with the flash-based 4GB and 8GB Zunes, which were neither cheap enough to capture the casual youth consumer that Pinto's talking about nor sophisticated enough to take market share away from the high-end iPods.
So yes, cheaper Zunes would be great. But I still think there's room at the high end of the MP3 player market for Music Freak Zune, with features such as a gigantic hard drive (160GB to match the biggest iPod Classic), more EQ choices and volume balancing, support for more codecs (Apple Lossless, Vorbis, and FLAC, for instance), a line-in or built-in microphone for capturing live shows, and an analog recorder in the software for ripping tunes from vinyl, DVDs, and other sources.
They could even build out a competitor to GarageBand and offer it as an add-on to the Zune software--imagine users putting their own tunes onto a Zune then exchanging them wirelessly with other users or posting them on the Zune Social site. Hard-core.
Then sell the high-end device below cost--maybe $300, which is $50 less than the 160GB iPod Classic--and continue to deepen the catalog of music on the Zune Marketplace (3.5 million songs so far, with two-thirds of those now available in DRM-free MP3 format), and I think they'd start to build some serious market share.
The MP3 player market is one where logic is thrown out the window and as long as the player is manufactured by Apple, it'll perform quite well. Although there have been a number of solid alternatives, none have gained ground. And by the look of things, the Zune is up next on the chopping block.
According to GameStop, it will stop selling the Zune in its stores due to insufficient demand from customers. And although it may not matter to, oh, 99 percent of you, the fact that GameStop is ditching the Zune tells you that Microsoft's media player is on its way out.
"We have decided to exit the Zune category because it just did not have the appeal we had anticipated," said a GameStop spokesperson. "It (also) did not fit with our product mix."
GameStop's decision to remove the Zune from its store shelves reflects an increasingly prominent notion among retailers that suggests that only the iPod is a viable product regardless of the fact that Microsoft has sold more than 2 million Zunes and its other competitors have fought valiantly.
So what's the deal? Is it really true that iPods are the only MP3 players that matter? You better believe it.
... Read moreDon Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
Update, 5/21: I talked to Microsoft's Mark Kroese this afternoon about this program, and he reassured me that Microsoft understands the potential for angering customers by delivering unsolicited ads, especially to a portable device where none have appeared before. He promised that any such advertising would be opt-in--the scenario he demonstrated yesterday would require users to choose to become friends with the musician, then choose again to have that musician's Doritos-sponsored playlist synced to their device. He also pointed out that only the musician's social card would contain the Doritos branding--when you played those songs within your own library, they'd be brand-free. Finally, he said that Microsoft understands the importance of appropriate branding, and would look for advertisers who music listeners would actively want to associate themselves with--I thought of Gibson or Fender, for example. So I'm not as uncomfortable with the concept as I was. And judging from the comments below, some of you are happy to accept some limited advertising in exchange for free music.
Original post starts here:
For the last several years, I've attended Microsoft's conference for advertisers--this year, it's called Advance '08--and it's always a bit like walking through a portal to an alternate universe.
Maybe it's because I grew up watching TV, but I've always looked at advertising like homework or lima beans--you have to accept it to get the stuff you really want. But whenever I attend this conference, I'm struck by how advertisers are big on the idea that end-users will not only accept, but gleefully embrace advertising if it's relevant, entertaining, and sufficiently subtle. There's certainly evidence to support this, like all those TV commercials posted on YouTube.
Part of Microsoft's pitch to advertisers is the ability to reach end-users on a wide variety of applications and devices.
(Credit: Microsoft)Anyway, part of Microsoft's pitch to advertisers is that because the company has so many different products and services for consumers--MSN, Windows Live, Live Search, Xbox, Xbox Live, the Mediaroom IPTV system, Windows Mobile, and so on--it can help advertisers reach end-users in more places with commercial messages they'll actually embrace rather than ignore.
On stage Tuesday, Robbie Bach, president of Microsoft's entertainment and devices division, and one of his reports, Mark Kroese, demonstrated how a single advertising campaign could cross several different types of screens, including PC, TV, mobile phone and--gasp--Zune.
The demonstration involved a music festival sponsored by Doritos. A musician participating in that festival might create a Zune Social profile containing a small advertisement for Doritos. Users could then become "friends" with this musician, allowing them to see his playlist and perhaps even download free songs on that list (paid for by Doritos). They'd also see a little Doritos logo embedded in the musician's profile, which would appear not only in the Zune software, but also on the actual Zune device whenever they visited that profile.
Microsoft also demonstrated users e-mailing a link to this musician's profile to other friends, who'd then retrieve it via Hotmail or their mobile phone, and perhaps play a Doritos-sponsored Asteroids-type game linked from within the e-mail. Pretty whizzy.
This was just a demonstration. It's not a real offering today, although the Seattle P-I's Todd Bishop is reporting it will soon be launched as a pilot program. Today, Microsoft does show advertisements in some Xbox games (provided by technology gained in their 2006 acquisition of Massive), but only where it makes sense--billboards on a race track, for example, which mimic real life. But mixed in with my music? Advertising is one of the reasons I seldom listen to the radio anymore. To me, it'd be a shame if advertising appeared on my MP3 player as well.
I'm curious about what you think. Am I being needlessly grumpy? Would you accept commercial messages on your Zune (or iPod) in exchange for free content? Or is your personal music collection somehow sacred?
(Credit:
Zune.net)
UPDATE (12:35 p.m. on 5-03-08): To include reference to possible ties to Zune VideoX.
A reader of a site dedicated to Zune news has posted photos of what are claimed to be new features at Zune's Marketplace, including flash animation and a new video section.
The photos were posted at Zunerama.com and are said to be of flash animation and two new tabs. One of the tabs is called "video" and the other is "listeners."
Speculation on the site is that Microsoft is possibly preparing to update Marketplace and is testing some new features.
A Microsoft spokesman said that the company's policy is not to comment on speculation. He added that Microsoft has not announced any upcoming changes at Marketplace.
The person who posted the photos questioned whether the "listeners" tab may be some kind of social-networking feature. If you have any information, we'd love to know.
UPDATE: Mary Jo Foley over at ZDNet e-mailed me and said she wonders if the photos found on Zunerama are tied to "the coming-out party for Zune VideoX" she has written about lately. Foley has a source who told her that Zune VideoX is "a Video store that bridges Xbox, Windows, Zune and Pink."
According to Foley's source, Microsoft wants to play it up it's video, which it sees as better than iTunes' offer. Go here to read more.
Rob Bennett knew people were going to be angry.
Bennett is the Microsoft executive who notified former customers of the now defunct MSN Music service on Tuesday that the company would no longer issue DRM keys for their songs after August 31. This means that, while former customers can listen to their music on authorized computers for as long as the hardware lasts, they won't be able to transfer songs to a new PC after that deadline.
In an interview with CNET News.com, Bennett said that continuing to support the DRM keys was impractical, that the issue only affects a "small number" of people and that focusing exclusively on Zune was the best way to go. He also noted that it wasn't Microsoft's decision to wrap music into digital rights management.
The reason for shutting down the DRM-licensing servers was "every time there is an OS upgrade, the DRM equation gets complex very quickly," said Bennett, general manager of entertainment, video, and sports for MSN. "Every time, you saw support issues. People would call in because they couldn't download licenses. We had to write new code, new configurations each time...We really believe that, going forward, the best thing to do is focus exclusively on Zune."
Microsoft shut down MSN Music in November 2006, following a failed effort to turn the site into a legitimate iTunes challenger. Redmond threw its resources behind the Zune digital music player and its music store, Marketplace.
For the past 18 months, Microsoft has continued to enable former customers of MSN Music to move their song libraries to new computers. Discontinuing that service has been widely criticized. Critics have long said that DRM was a means to control legally purchased music at the expense of consumers. To them, the current situation with MSN proves it.
Bennett defended Microsoft. He said the company never wanted DRM on its songs.
"Had we had the ability to deliver DRM-free tracks at the time, we absolutely would have done that," Bennett said. "We talked to the labels at the time about that. As a company, we have continued to push for this. Zune has a subset in their catalog of DRM-free MP3s. Now, the industry is making progress. The labels are understanding the downside of DRM when its used the way they wanted to use it, they end up punishing the users who bought music legally more than those who want to circumvent the system."
Bennett added that Microsoft believes in protecting intellectual property, but the company also wants people to enjoy their media without unreasonable restrictions.
"No one ever foresaw being in this situation," Bennett said. "It's not something we like to do. We want to make it easy and as painless for our customers as possible. We really feel, in the long term, what's best for people who want to buy music from Microsoft is to move to Zune."
Bennett said that former MSN Music customers can back up their songs by burning them to CDs. But what about the loss of sound quality should they decide to rerip the music?
"We (delivered) music at 160 kbps," Bennett said. "In my personal (experience), you're not going to lose that much fidelity."
"Integrated innovation" was a Bill Gates mantra, and may leave the building when he retires. But even without Bill's blessing, outsiders often imagine Microsoft quickly stitching different products together into a more coherent whole. For example, why can't Microsoft operate a single download marketplace offering music, video, and games, and make that marketplace accessible from the Media Center interface, Xbox Live, Zune PC software, and its Mediaroom IPTV system? And come to think of it, Netflix CEO Reed Hastings joined Microsoft's board of directors last year--why not offer movie rentals as well?
The trouble with such scenarios is that they're easy to draw on a whiteboard but complicated to execute. Say you combine the Xbox Live Marketplace and the Zune Marketplace--how do you cut the 10 million current Xbox Live customers over to the new service without interruptions? How do you tailor the interface and featured content to the device accessing it? How do you convince owners of movies and downloadable video games, who thought they were licensing content to a relatively closed system (Xbox Live) to offer that content to millions of Internet-connected PCs, where the risk of piracy is higher? Worse yet, if you decide to take the tough road of integration, by the time you've coordinated development between all the different product teams, alerted partners and the sales channel to the new strategy, and finished the long march, the market may already have moved on to the next big thing.
Two fellow Microsoft-watchers, Todd Bishop of the Seattle P-I and Mary Jo Foley of ZDNet, have both commented on the move of former Media Center leader Joe Belfiore to the Zune team, which Directions on Microsoft noticed in our latest tracking of the Microsoft organizational structure. (Todd called me for comment and quotes me in his blog posting, but I haven't talked to Mary Jo about this, and am not the anonymous source she cites--I have no knowledge of the initiative she's blogging about.) Belfiore oversaw Microsoft's eHome initiative, which created the Media Center PC, and his background in video could indeed mean that Microsoft is considering building a video marketplace for Zune.
Then again...Rick Thompson, who at one time worked in the same broad business group as Belfiore (looking at "advanced scenarios" for Windows PCs) and has a background in the Microsoft Hardware division, is also a vice president in the Zune group, having moved there last October. Does that mean that Microsoft wants more hardware expertise on the team? Xbox guru J Allard continues to be involved as well, and we know that Microsoft's looking at developing games for the Zune. Then there's the whole Danger acquisition and rumored Zune phone.
Meanwhile, we haven't seen Microsoft trumpet any NPD figures for the holiday season, which leads me to believe that Zune 2.0 didn't sell very well, and is probably not in the No. 2 spot that Microsoft was aiming for.
In other words: Zune as a music-focused player is not competitive, and Microsoft has a lot of cooks in the kitchen trying to make something new out of it. We could see a bunch of Zune-branded devices with slightly different feature sets--the "traditional" Zune might add video content and simple games, but we could also see Zune-branded devices focused on portable gaming (competing with the Sony PSP and Nintendo DS) and with telephony functions (competing with the iPhone), but all featuring music playback and using the Zune software. Or, the brand might disappear entirely and be replaced by the next greatest thing ever. Whatever the precise brands and products look like, Microsoft isn't giving up on the portable entertainment space, and music will continue to be a part of that initiative.
One of the first things Microsoft did when launching the new Zune was kill the 2-year-old MSN Music download service.
The business reasons were plain: MSN Music was a PlaysForSure service, but the Zune wasn't PlaysForSure-compatible, and it came with its own music download service, integrated into the Zune software.
Sure, there's still something with the brand name MSN Music, but it's basically a shell--a few music videos, some promotional tie-ins with Zune (through a program called Ignition), and a radio station powered by Pandora.
If Microsoft's smart, it'll keep LaunchCast around.
(Credit: Yahoo)So what might that mean for Yahoo Music, if Microsoft's proposed acquisition of Yahoo clears? Probably not much, at first.
Microsoft's Kevin Johnson, who leads the group responsible for online services and Windows, mentioned in a conference call that the company would get the quickest benefits from combining their advertising platforms, particularly paid search: "scale economics can kick in fairly rapidly when you just look at the simple step of just combining the search-related ad inventory on a single ad platform."
Translation: as soon as the acquisition closes, Yahoo Search would be folded into Microsoft's Live Search, and Panama would be folded into AdCenter.
Eventually, though, Microsoft would go through all the other Yahoo divisions, looking for overlap or strategic misfits. Here's where Yahoo Music could feel the heat. Selling PlaysForSure-protected files does nothing for the Zune, and even if Yahoo goes with DRM-free MP3 files, it would seem to be redundant with the Zune Marketplace.
Now, if Microsoft were smart, it would recognize the popularity of the combined Yahoo Music and LaunchCast (see Aribtron's online-radio ratings). But often, decisions in acquisitions are driven by politics and emotion rather than actual business logic.
Editors' note: Yahoo on Monday announced that it is discontinuing its Yahoo Music Unlimited subscription service, transferring its customers to RealNetworks' Rhapsody service.
I've always preferred prognostication to nostalgia, so rather than replay the best of 2007, I'll use these late December doldrums to make 10 predictions for the coming year. Some editors will warn you that this kind of list is suicide--it's too easy for everybody to look back a year later and see where you were wrong--but it hasn't hurt Cringely, so here goes. In no particular order.
DRM will die. The trendline is clear--Apple's been selling DRM-free tunes on iTunes since May, Amazon's DRM-free MP3 store has three of the four majors signed up, and eMusic has become the second-most-popular music download service (after iTunes) thanks in part to its longstanding insistence on selling DRM-free MP3s. A year from now, DRM will be irrelevant and hardly used in digital music. All four labels will agree sell their songs without DRM on Amazon. Nearly every iTunes audio (but not video) file will be DRM-free, and Apple will get rid of the "Plus" designation. Some music subscription services like Rhapsody and Microsoft's Zune Pass might retain DRM so that users can't cancel their subscriptions and keep the songs they've downloaded, but they'll be the last holdouts--and some of them might try eMusic's approach of limiting monthly downloads rather than limiting compatibility and usage with DRM.
3G iPhone and iTunes. A 3G iPhone is a fairly safe prediction, given that AT&T CEO Randall Stephenson already let it slip, but I think there'll still be a small surprise embedded in the announcement: iTunes 3G, a service that will come with the phone and give users anytime-anywhere downloads of any audio content in the iTunes Music Store. Impulse buying will go through the roof.
No Zune phone. Microsoft won't release an iPhone competitor this year--at least not one with hardware designed by Microsoft. The company might release some sort of software update or client application that allows Windows Mobile users to play songs from the Zune Marketplace and transfer them from the Zune PC client software to their phones, but even that probably won't happen until 2009. And it'll sink like a lead balloon against v3 of the iPhone, at which point Microsoft will bend to the inevitable and start building its own phone from scratch.
GarageBand will win a Grammy. Not the program itself, but somebody will make a record using Apple's Garage Band--which comes included with every Macintosh sold--as their primary recording and mixing tool, and that record will win a Grammy award. There's already been a critically acclaimed movie, Tarnation, made exclusively with iMovie, so now it's time for all those bedroom musicians to get into the do-it-yourself spotlight.
Mashups will go mainstream. Have mashups already jumped the shark? The controversy about The Grey Album, in which DJ Danger Mouse combined lyrics from Jay-Z's Black Album and The Beatles' untitled white album, is almost four years old. There was a burst of experimentation from big-time artists like David Bowie and Beck around the same time, but not much since 2005. Nonetheless, I predict that artists and even some labels will begin re-releasing their back catalogs as standalone instrumental and vocal tracks, and fans will recombine like crazy using programs like Garage Band and Splice. At least one mashup will get significant radio play, with the complete approval of the original artists. (Although you might say that Puff Daddy accomplished this 10 years ago.) They might even be incorporated into video games like Rock Band--imagine the challenge of having to sing Abba while the rest of the band plays Judas Priest. By the end of 2008, putting a mere song on your social-networking profile will seem hopelessly old-fashioned.
The campaign--don't call it "marketing"--that preceded Nine Inch Nails' Year Zero release will become the gold standard for building audience engagement for tours, albums, or new artists.
Year Zero will become the precedent. On the plane trip home from visiting family over Christmas, I read Eric Davis's analysis of Led Zeppelin's fourth album, part of the 33 1/3 book series. While a lot of it seemed like a stretch--as is the case with any highly intellectualized deconstruction of rock music--it did remind me of a certain sensation created by certain artists and albums, a sense that the listener is more than a mere consumer, but is in fact an active member in a secret club that only other members fully understand, a sort of musical Masonic society. Think of that Zeppelin album, the Grateful Dead, the Residents, or Secret Chiefs 3. In 2007, Trent Reznor, working with 42 Entertainment, took this kind of mystical clubbishness and updated it for the digital era. USB drives with leaked tracks from the upcoming Year Zero record were surreptitiously placed in bathroom stalls at concert venues. Phone numbers with frightening secret messages were encoded in bursts of static or out-of-phase audio signals. Cell phones were distributed to fans who figured out some of the clues; a phone call placed to those phones summoned them to a secret concert. In 2008, we'll see more of these kinds of musical events that use digital technology to break down the wall between audience and artist.
The world's best offline record store will go online. There's nothing else like Amoeba Records. Its three locations in Berkeley, San Francisco, and Los Angeles offer unsurpassed selection--including cellophane-packaged vinyl I've never seen anywhere else--and seem to be curated by music fans with amazing depth and breadth of knowledge. In 2007, Amoeba took its first tentative steps into digital distribution, releasing exclusive recordings from Gram Parsons and Brandi Shearer in both MP3 and CD formats. In 2008, I predict Amoeba will finally go online in a huge way, offering an unsurpassed quantity of MP3 downloads from every imaginable source: major labels (like Amazon MP3 and the other high-profile stores), independent labels (like eMusic), and do-it-yourselfers (like CDBaby). Look for the nascent Amoeba label to offer distribution on terms never before seen in the recording industry--more of a non-exclusive commission model like CD Baby than a typical all-inclusive marketing-recording-publishing-distribution deal like most labels have favored--and for several high-profile artists who've recently quit their labels to sign on.
The loudness wars will end. It's been repeated so many times, it's become a cliche: today's recordings are mastered too loud, eliminating dynamic range and making it hard to listen to a complete album. In 2008, artists and producers will finally begin to demand a return to proper mastering, and radio stations and record execs will be in no position to contradict them.
The concert business will follow the recorded music business down. It's a bad time to be a big rock concert promoter like Live Nation. According to a recent story in Pollstar, the concert business actually declined in 2007, despite high-profile reunion tours by The Police and Van Halen and David Lee Roth--two acts with so much internal strife that nobody expected to see them on stage again. I say the 15 percent drop in ticket revenues from 2006 to 2007 will be followed by the same or greater drop next year. Music fans are fed up with exorbitant ticket prices, false scarcity, and quasi-legal scalpers, and there are only so many more nostalgia acts to trot out. Where are the young bands that can sell out 20,000-seat arenas for the next 5, 10, 20 years? (And before you call me out on the Arctic Monkeys, let me just counter with Oasis. Huge in the U.K., briefly popular in the U.S., and irrelevant to all but the die-hardest of fans 10 years later.) In other words, the concert business is about to suffer from the main problem that's hurting the recording industry--not MP3s, not piracy, but lack of interest and investment in artists with long-term (as opposed to instant) commercial potential.
Led Zeppelin will play again, but not tour. Speaking of nostalgia, it won't be 1973, but the reunited Led Zeppelin will play a handful of shows in the U.S., focusing on a multi-night stand at New York's Madison Square Garden timed around Robert Plant's 60th birthday on August 20.
PlaysForSure was a Microsoft logo program, launched in 2004, that identified devices (portable and networked) that were compatible with online music and video stores.
Essentially, the logo identified a store as using the latest version of Microsoft's Windows Media DRM scheme and ensured that a device could play content with that same DRM scheme. While the program was an improvement over the previous situation of no system at all, it wasn't as simple as Microsoft implied. For instance, there was one logo for subscription content, another for per-download content, and cross-compatibility wasn't guaranteed.
When Microsoft announced Zune in mid-2006, a lot of onlookers (including me) suggested it spelled doom for the company's PlaysForSure partners--the Zune team made no guarantee that the devices would be able to play PlaysForSure content, and material from the Zune Marketplace definitely does not play on PlaysForSure devices. Most of the company's former partners found alternatives--Samsung building its own music store, MTV teaming up with longtime Microsoft rival RealNetworks--even as Microsoft publicly insisted that the initiative was not dead, just pining for the fjords.
Today, one of my colleagues pointed out that Microsoft's no longer maintaining the facade: PlaysForSure has officially been rolled into another logo program, Certified for Windows Vista. The old compatibility guidelines and tests for device partners are still in place, but the brand will quietly disappear into the annals of market failures.
