Microsoft to Launch Zune Internationally, Without Zune HD
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If you wanted proof that Microsoft's strategy for its Zune brand involves veering away from the actual Zune HD device, look at its plans for Europe and other international markets: Starting tomorrow, Xbox owners in some 18 markets (including the United Kingdom, most of the European Union and Australia) will be able to stream Zune-branded movies to their televisions. Microsoft's emphasis on associating Zune-the-brand with cloud-based entertainment services, as opposed to the actual Zune HD device, seems to suggest two things, at least to me: a) Microsoft really is serious about its "three screens and a cloud" strategy for porting its products onto a variety of devices, and b) Microsoft realizes that Apple and other companies are unlikely to be overtaken in the portable media player arena. Let's break these out. Microsoft Chief Software Architect Ray Ozzie has spoken often of the "three screens and a cloud" strategy, which seeks to port Microsoft content onto PC screens, phone screens and TV-sized screens. Sounds good, no? But if you're going to be zipping content around something as nebulous as the cloud, it helps to group that content under a single branding umbrella; in Microsoft's case, that brand would be one it already wants associated with media, Zune. That Microsoft is doing this with the Zune name, but not actually releasing the Zune HD to international markets, suggests the relative importance of the consumer-cloud concept to Redmond's overall strategy. (Using the Xbox 360, which has sold an estimated 34 million units worldwide, basically guarantees Microsoft an audience for the new Zune service.) If you want a sign that Microsoft is ceding the portable-media-player market, though, its refusal to release the Zune HD internationally may be as good a sign as any. Almost exactly three years ago today, when Microsoft released the Zune player on Nov. 14, 2006, Microsoft CEO Steve Ballmer suggested that, "The market will have two big [music] players for a long time, us and Apple," and that, "We can beat them, but it's not going to be easy." Hyperbole aside, a Piper Jaffray analyst at the time estimated that Microsoft would take between 5 and 10 percent of the portable-media-player market in the first year of the Zune's release. But that never happened; a recent NPD Group report suggested that for the first nine months of 2009 the Zune owned about 2 percent of the market. When the Zune HD was released in September, it attracted a fair amount of media buzz but relatively low initial sales--which is unfortunate; I thought it was a perfectly worthy competitor to the iPod Touch. Microsoft is intent on creating a cloud-based music/video/games apps ecosystem, and for now the Zune HD will remain a part of that strategy--but I'm betting that, unless sales of the device pick up, Redmond will take steps to progressively marginalize the device, eventually phasing it out entirely. But then that leaves Microsoft in somewhat of an awkward position. After all, execs are calling it the "three screens and a cloud" strategy for a reason--if the Zune HD is no longer an essential part of the ecosystem, what picks up the slack on the mobile front? It could be Windows Mobile 7, due for release in 2010, but Microsoft's steadily eroding mobile OS market share makes that an uphill battle at best and a Waterloo in the making at worst. Microsoft could decide to go back to the proverbial drawing board and release another portable media player; but for branding purposes, any such device would likely need to be marketed under the Zune name--which just places the company back at Square One; it might as well pour all that money into promoting a new version of the Zune HD. And despite the marketing dollars spent on the Zune HD so far, it hasn't been able to gain much traction with regard to public mind share. In sum, Microsoft's international Zune strategy shows its progressive thinking with regard to cloud-based services and media ecosystems--but it also shows, glaringly, a potential Achilles heel for Redmond in the months and years ahead. |
Comments (8)
I just can't see how they'd take the Zune HD to market with no plans to support it. And let's also recognize the player software update of last week, and the 3D games that were just released.
I would also like to know where you fetched your data about the Zune HD sales figures? Some actual data would be nice to see.
Thanks.
Posted by Ronb | November 16, 2009 11:08 PM
i believe zune hard disk devices had over a 10% like-for-like share of the market. That was not factoring in flash models, which are now being phased out.
the xbox zune movie upgrade yesterday surprised me. Despite looking in to instant on 1080p, and seeing the iis demo page which shows it in action, i was still sceptical about it working en mass. However, the zune marketplace actually works, and has a lot of launch content to go with it. A great effort, but the zune brand means nothing to most non north American consumers. There was little point in Microsoft branding the marketplace with zune unless they truly hope to do something more with it in these regions
Posted by jrb | November 18, 2009 7:02 AM
I fail to see who Microsoft is targeting with the Zune...the youth? Show me someone who thinks Microsoft is a fashionable brand name. So it comes down to what does the Zune offer which cannot already be achieved with existing, popular alternatives.
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Just like Bing, its fine as a search engine but then how does it compete with Google which has become a word in our vocab.
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Lets not forget the bad press Zune received over the new year early 2009.
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I think this is a badly thought out move. Regardless of the figures of Zune, I don't think it can be denied that MS failed to grab the market in a serious way when it was released. Funnily enough on this very site (this time last year) we had a commenter stating that the Zune could be found in the bargain bin of his local store, whilst Apple's offering was locked behind the counter as they were flying off the shelves.
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I think Microsoft has still yet to learn it cannot be master of all things, in the meantime (IMO) its loosing its grasp on its other markets too.
Goblin.
Posted by Goblin | November 21, 2009 9:46 PM
Regarding sales figures, I have watched the Amazon Top 100 Electronics Bestsellers List off and on over the last 2 months and the first appearance of Zune is usually in the 70-100 range whereas iPods are consistently in the top 5 slots.
Right now: Zune #84 iPod Touch #2
http://www.amazon.com/gp/bestsellers/electronics/
The positive reviews seem to end in late September shortly after introduction. Most buyers seem to be middle-aged, not young. The Zune Pass with its wierd "points" system has not won many peoples' hearts, to say the least. The eco-system isn't really there. No YouTube? A handful of games and apps? I think it is going to flop, quietly.
This speculation that MS might abandon the Zune is humiliating for the loyal crowd that has tried to support MS through this ill-planned, ill-designed venture. The original brown Zune buyers were abandoned, so there is a precedent for it.
I don't own any MP3 or smart phone, myself, but follow the market with interest.
You might as well just donate $200 to MS free and clear, as buy a Zune HD. Or buy $200 of MS stock would be a smarter move. These gadgets have to be ultra simple, well-designed and chic to succeed. MS is not a brand name or company that can do that.
Just my opinion.
Posted by ross | November 27, 2009 1:31 PM
Well the hosts of Zune Insider (who are paid by MS) continue to hint that it'll launch globally.
Personally I think the hold up is caused by the need to resolve licensing issues with the Zune marketplace.
Outside the U.S., Xbox Live's Zune movie marketplace only offers a small fraction of the content that it does domestically. They can't possibly launch the music marketplace until most popular artists are available globally.
Posted by Michael | December 9, 2009 7:10 PM
@ ross:
You can't compare a juggernaut who has been dominating the market for the past 8 or 9 years, to something that just came out, barely makes it into shoppers and ads, and is only available within the U.S. while the iPod sells worlwide. Obviously it'll be on the top 5, because it is showing sales all around the world. The iPod Touch is also well established, the Zune is barely getting started. The nVidia Tegra not only has the power for 3d games, it also has the power to integrate Flash in the internet browser later on. Who said youtube isn't coming to Zune Hd? And.. are you forgetting the ipod cant load flash videos on Safari either? I assure you it will take much less time for Microsoft to add Flash support to the Zune browser, than it will take for Apple to make a Safari that supports Flash in the iPhone and iPod Touch.
As for the Brown Zune users left behind.. when the 2nd generation of Zune came out, previous users got a firmware update to match the old player to the new ones. How is that leaving out customers? In Apple's case, there have been more than 8 generations of iPods. Have you ever heard about iPod minis, iPod Nanos or iPod classics, that get upgraded for free by Apple with a new firmware release to match the latest features of the current iPods? Not once has Apple done it. They leave their customers behind completely. The only iPod that tries to stay current with the latest features is the iPod Touch, and you have to pay everytime for the updates. Apple treats their customers worse, but sadly people buy into the iCrap marketing.
When it comes to multimedia, you want the best video quality and the best sound quality. Zune HD has the best looking OLED screen I have ever seen in my life, and its sound quality trumps all iPods ever made. Someone who wants a multimedia device should want the best experience.. that is with Zune.
Posted by Israel Lopez | December 18, 2009 8:27 AM
I purchased the Zune HD 16G for my son. When you compare the ipod touch to the Zune they don't compare on video quality and sound! As Israel stated above (12/18/09 post) you can't compare sales numbers, as the Zune HD is an infant.
If you want an amazing experience w/oustanding video quality with its OLED screen and tremendous sound quality I strongly recommend the Zune HD.
Yes, there are limited apps/games...patience...He did download a driving/racing game, outstanding graphics, and a lot of fun. As for the ease of use, synching wireless worked well, wifi works great, was able to access my corp. email account.
The whole points thing isn't that bad, being that you can go buy cards and load the marketplace up and use them for movies, tv shows, or they can be used for the 360 as well (if you own one) works well for our home.
If you are in the market for a portable multimedia device I strongly encourage you to take a look at the Zune HD.
Posted by Reese | December 29, 2009 12:33 PM
I know it is a bit of time since someone last commented on this, but I will. I live in Europe and I so want a Zune HD. I love the iPod Touch, my sister owns one, and it is brilliant. I think it is just sad knowing, that just because a very high percentage og the american people has been crainwashed by Apple, they are closed.
They aren't even interested in taking a look at the Zune HD, because they have only got eyes on the touch, and the stuff Apple creates. I think Microsoft should really launch it in Europe, as I think, maybe, a higher percentage of people who are looking for a portable multimedia devide would throw themselves at the Zune HD than in America. It is better at everything, except from the app part, but that takes time, everything takes time, give them time.
MICROSOFT PLEASE LAUNCH THIS DEVICE IN EUROPE!
Posted by Alexander Bie | January 20, 2010 12:29 PM