Microsoft’s Third Strike – Zune Hyped, Lessons Learned

Over the last six months, we’ve sat back and watched as Microsoft tried its best to build hype for Zune – a portable multimedia device touted variously as an “iPod killer,” a “first-generation” step for Microsoft into the digital media player market, and most amusingly, Microsoft’s David to Apple’s Goliath. Since Zune officially launches today, we wanted to publish a short editorial noting just a few facts regarding the device, Microsoft’s marketing efforts, and some lessons we think should be learned from the whole Zune exercise – hopefully, but not likely, so all involved can avoid repeating them in the future.

Contrary to some claims, this isn’t Microsoft’s first-generation iPod killer. Or even its second. In order to convince journalists and consumers that Zune was worth taking seriously, Microsoft has cultivated the impression that Zune is only the first generation of an extended attack on the iPod + iTunes, which will continue indefinitely until it wins. Sounds pretty tough and dedicated, right? Problem: anyone with a decent memory or ten minutes of Google access would recall that Microsoft is actually on its third anti-iPod campaign; it has funded two prior failed attempts to knock Apple off the mountain, one in the form of 2004’s “Portable Media Centers,” and then in the form of 2005’s “Plays For Sure” campaign. Both were concerted efforts backed heavily by Microsoft, with company executives specifically naming the iPod as their target. Both were touted as long-term initiatives, and claimed to be iPod-beating because of their ties to the Windows operating system and Microsoft’s supposedly superior proprietary standards. Both flopped, and flopped hard, eventually burning the people who bought compatible devices.

Does Microsoft’s third-generation offering, Zune, deliver on the “iPod killer” hype? No. And there’s virtually no disagreement on this point. After months of showing off Zune to mostly friendly audiences – music bloggers and techies who were willing to be convinced that Microsoft could possibly offer a solution to some amorphous problem Apple had supposedly created – the Washington-based company delivered demo units at the very last minute to mainstream reviewers, who to their credit have roundly described Zune as yet another forgettable iPod wannabe. Just as is the case with every year’s iPod challengers, Microsoft has been offered tepid praise for one or two features, but most writers have pointed out that Zune lacks at least ten of the iPod’s capabilities, ranging from the obvious (the ability to be used as a hard disk, and play games) to the subtle (volume limit, and alarm clock). The few reviewers who have actually tested the battery have discovered that it doesn’t meet Microsoft’s promise of even matching the standard iPod’s 14-hour run time, which is now actually the shortest continuous play time of any iPod model. (Apple’s latest shuffle handily beats the company’s estimates, routinely delivering 16-hour play times.)

At this point, no one with any degree of credibility believes that today’s Zune has a prayer of unseating the iPod in any regard. Even Microsoft’s spokespeople have been disclaiming any suggestion that the device will be a big success, which leads to an obvious question: if you didn’t think this was good enough to beat the iPod, why bother releasing it at all? Microsoft would suggest that it’s building a dynasty or trying to offer consumers choice, but really, that’s just more hype.

Is Zune good in any way for consumers? In the abstract, yes. Competition will make Apple work harder to improve the iPod and iTunes, and most likely lead to better pricing, too. But no matter how friendly it attempts to appear, Microsoft’s no true friend of consumers. Put aside the dozens of lawsuits that have held the company responsible for billions of dollars of Windows and Media Player-related harm. Just look at the company’s actions over the last year: after stabbing all the buyers of Plays For Sure music players in the back by abandoning its support for their devices, the company is now shifting its efforts to a Zune Marketplace music store where you can only buy songs in $5 or greater blocks. You can’t use a credit card or other payment service to buy one song at a time. Zune and the Marketplace aren’t consumer-friendly – they’re just here to generate money for Microsoft.

If Zune and its store aren’t iPod killers, why didn’t everyone in the media just ignore them, like they do with all the other flops out there? One word: money. Microsoft is waving advertising and other promotional dollars in people’s faces, and unfortunately, it’s succeeded in buying the attention that more deserving companies couldn’t afford. To be clear, we’re not saying that Microsoft is directly bribing people – if it was, it must have run out of cash, given how bad the Zune’s press has been lately – but it’s greasing the wheels with promotional dollars and viral marketing/astroturfing tactics. Did you notice how abruptly a number of web sites turned on Apple back two or three months ago, and suddenly began to talk up the Zune? How suddenly vicious anti-iPod comments started to appear online, often with Zune references and URLs? Or this last Sunday’s newspaper advertisements, where Zune magically received first page, full page or similarly large, attention-grabbing sections of the ads from almost every major electronics retailer? If you think that Microsoft wound up there – or in Toys ‘R Us ads – by virtue of merit rather than coordinated flows of cash, think again.

Microsoft isn’t David and Apple isn’t Goliath. Over the last few years, Microsoft has gone from portraying Apple as a weak also-ran to a lucky, one-time victor, and most recently as some massive villain in need of being brought down. Let’s be honest here: Microsoft has wanted to see Apple fail with the iPod and iTunes since the beginning, and no matter how the Redmond-based company tries to make Apple look, the reality is that we are talking about two huge corporations here, one that has fought tooth and nail to rise up from a diminutive market share with excellent, innovative products, and another that has been sniping at and downplaying its competitor’s success while releasing products no one seems to want. As a digital music player family made to appeal on pricing, features, and design to literally everyone, regardless of age or computer skills, the iPods have brought Apple tremendous success, despite every attempt by Microsoft and its partners to see it stumble or fail. If anything, Apple was and remains David to the larger Microsoft, and deserves all the more praise for having prevailed in a perpetually skeptical environment.

With the iPod now in its fifth year and enjoying sales in the 70 million unit range, there’s really no question any more that the digital media player battle is over, and Apple has won. As noted in a Backstage article yesterday, Apple sold more than 100,000 iPods every day – a total of over 39 million – during its 2006 fiscal year, and will probably sell closer to 200,000 every day during the last three months leading into calendar year 2007. Other than a handful of technology columnists who still harbor weird grudges against Apple products or want to create a horse race where none exists, the only people who want to see the iPod “killed” are those who haven’t been able to profit enough from its success. To these people, and to others, we’ll repeat what we’ve said before – the way to profit is to join the iPod bandwagon, not fight it.

Readers, what do you think? Your comments are welcomed below.

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