The Problem With Zune

Tomorrow, Microsoft will launch new Zune music players, update the firmware of older players, release new versions of the Zune Marketplace and media software, and kickoff a beta of the new Zune Social Website. But Apple's iPod is so hugely successfully, so iconic, who will really notice?

The iPod is the problem with Zune. It's a problem broader than market share; it's one of comparisons. Too many reviewers, too many potential buyers compare Zune with iPod, without looking at Microsoft's music player for what it is.

I like Zune. My question: Why don't you? Zune isn't a bad portable media player. It's quite good, in fact. Next to iPod, Zune offers the best portable music experience of any other player—at least in my testing. Sure, the original Zune shape harkens back to 2004 iPods. But Microsoft's music player is sturdier, more resilient to scratches and has a sportier, weathered appearance. Zune doesn't have to be iPod—and surely about a dozen Microsoft Watch commenters will say how much Zune is no iPod.

Microsoft's Entertainment & Devices division is doing much more right than wrong with Zune. Sure, the newest iPods are tiny weeny cute. The new Zunes, while design improvements, don't compare for size or cuteness. That concession granted:

• Existing Zune users will get a full firmware upgrade, so that features of newer and older devices will be feature equivalent. By contrast, Apple improves newer iPods but doesn't pass along the new features to existing device owners.
• The new Zune commercials are excellent, and Microsoft plans some major marketing for the new player. I've long contended that iPod's early success is rooted in marketing. Apple advertised iPod as if it was the only music player on the planet. For a long time, iPod might as well have been the only portable media player, given how little advertising there was for competing devices. Microsoft will never catch Apple without lots of marketing.
• Microsoft's "discovery" priority is the right one. From the built-in radio to the subscription service to the new Zune Social Website, Microsoft puts more emphasis on discovering new music, which according to JupiterResearch's music analyst, David Card, is a top consumer priority. I've got no verdict on execution short of using the new Zune store and device, but the approach is right on.
• Related is Microsoft's social network approach to music discovery and sharing. Social networking resonates well with Windows Live and online market trends. Microsoft's basic approach is better than Apple's, but, again, execution will make or break the difference. "Welcome to my social" music sharing didn't work well for Zune v1 because people needed at least two Zunes, and in what circle of friends would there be two? Microsoft has extended the concept—and music discovery—through the Zune Social Website.

I remember when Sony Playstation was the unstoppable game console leader. Now where is Playstation—pwn3d by Xbox and Wii. The iPod is by no means invincible, even though it has reached, I must admit, iconic status. Apple shouldn't fret much about Zune v2. But what about v3 or v4? Apple can only make iPods smaller and cuter for so long.

Microsoft can do much better. Today, the company announced engraving for Zune. Yeah, but Apple does engraving, too—big deal. Actually, it is a big deal. Microsoft is focusing even more on the personal, individual, "express yourself" aspects. The engravings are works of art and big improvements over what Apple offers. The point: As long as Microsoft is seen as following Apple, Zune will continue to be compared to iPod. Microsoft must differentiate.

Speaking of following, how will Apple respond to Zune? Tomorrow would be a fine day to announce either an iTunes movie or music rental service—or both—as a way of stealing Zune's thunder. Who's going to write about Zune if Apple goes subscription—and, in the process, kills one of Microsoft's biggest differentiators from Apple? Surely Apple plans some kind of distraction.

If a company launches a new product and no one is around to hear it...

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• Is That 1 Million Zunes Shipped or Sold?, Microsoft Watch, May 29, 2007
• McCartney: Zune Scores, iTunes Misses?, Microsoft Watch, May 22, 2007
• Zune: It's Not a Fire Sale, Yet, Microsoft Watch, April 30, 2007
• What Apple DRM-Free Means to Microsoft, Microsoft Watch, April 2, 2007
• Jobs Calls for DRM Freedom, Microsoft Watch, Feb. 6, 2007
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• Microsoft's Connected Lifestyle, Microsoft Watch, Jan. 7, 2007
• Whoa, Zune Is Social, Microsoft Watch, Jan. 1, 2007
• Welcome to My Social, Microsoft Watch, Dec. 25, 2006
• Zune Chips Away at iPod, Microsoft Watch, Dec. 18, 2006
• Microsoft's Music Madness, Microsoft Watch, Nov. 27, 2006
• Zune Goes to War, Microsoft Watch, Nov. 14, 2006