USA: Microsoft attempts to compete with the ubiquitous iPod with the release of "Zune", its new digital media player

Record ID: 825386

  • Title: USA: Microsoft attempts to compete with the ubiquitous iPod with the release of "Zune", its new digital media player
  • Date: 15th November 2006
  • Summary: (W5) NEW YORK CITY, NEW YORK, UNITED STATES (NOVEMBER 14, 2006) (REUTERS) THE DIGITAL MUSIC SECTION IN A BEST BUY STORE IN UPPER MANHATTAN, CUSTOMERS LOOKING AT ZUNE VARIOUS OF CUSTOMERS TRYING OUT ZUNE VARIOUS OF ZUNE DIGITAL MEDIA PLAYER VARIOUS OF THE ZUNE SCREEN AS A USER FLAGS ONE OF THE SONGS SO IT CAN BE SHARED THROUGH THE ZUNE WIRELESS SERVICE WITH OTHER ZUNES
  • Embargoed: 30th November 2006 12:00
  • Keywords:
  • Location: Usa
  • Country: USA
  • Topics: Arts / Culture / Entertainment / Showbiz,Industry
  • Reuters ID: LVA2OYVG0U1LD8XYB79ELHYLY7EK
  • Story Text: "Welcome to the social" -- Microsoft is hoping that catch phrase catches on and makes their new Zune player relevant in a world dominated by Apple's iPod. Timed to the holiday shopping season, Microsoft has launched the Zune music player along with an online Zune store like iTunes.
    Microsoft launched the Zune at a series of flash concerts, the first of which in Seattle saw Microsoft Chairman Bill Gates taking the stage and demonstrating the use of the wireless zune-to-zune sharing service.
    Microsoft is emphasizing the wireless music sharing option that the Zune incorporates, enabling it to share songs and photos with other Zunes within a close range, an option not yet offered by iPod.
    Research Director at Jupiter Research, Michael Gartenberg said the Zune was Microsoft's answer to the iPod but added it was a long way from posing a real challenge to the iPod.
    "At this point it's not really an iPod killer, it's not even going to give the iPod a headache at this point but to underestimate Microsoft in the market would be a mistake. Microsoft tends to view these battles as marathon races not sprints, so the real question is what is Zune going to look like in 2007 and 2008 and how will Apple continue to innovate their platform in order to retain their dominance," said Gartenberg.
    While the Zune clearly borrows a lot from the iPod, key differences such as the wireless sharing service as well as in-built radio are aspects that Microsoft is trying to highlight to their advantage.
    Critics say the Zune is bulkier than the iPod. At 3 inches the screen is bigger than the video iPod's 2 and a half inch screen. It has what looks like the signature Apple wheel, but is actually a 4 way touchpad. Some critics are also saying that the download options for the Zune are more complicated than those for the iPod.
    Gartenberg pointed out a drawback in the wireless sharing service that Zune provides -- the fact that it is temporary.
    "It has some wireless connectivity built in, so if you have a Zune and I have a Zune, I can send you a song but with restrictions. You can only play that song either three times or within three days, whichever comes first, so it's very limited sharing capabilities and at the moment, that's the core differenciation. That's one of the reasons why it's not necessarily going to be enough," said Gartenberg.
    The Zune web service offers fewer songs than ITunes ---2 million vs.
    5 for i Tunes but it does offers a music subscription service, something Apple does not. Microsoft acknowledges iPod's dominance -- it's got 75% of the portable music player market and has sold nearly 70 million devices -- but is hoping that iPod's very popularity could actually give it an edge with consumers who want to be seen as outside the mainstream.
    Vice President of Entertainment at Microsoft Corporation, Bryan Lee said there might be consumers who would want to carry another music player as a way to stand out.
    "It's (the iPod) kind of cool today and a lot of people carry it but in a weird way the broad nature, the almost ubiquitous nature of it, could be for a few people a little bit of a negative. You know when your little brother carries one or your aunt carries one, if you are that cool 20 year old, it may not feel quite so cool," said Lee.
    The Zune is not Microsoft's first foray into the digital music space-- the company's Plays for Sure technology was supposed to allow different companies to play on a universal platform but the Zune and music bought for it is not compatible with any other player, including iTunes.
    Microsoft won't say exactly what percentage of the market that they are targeting, only that they want to be a relevant player and use the Zune as a starting point for a bigger business:
    As for Apple - the company has done nothing to dampen persistent industry rumours that a new iPod may be on the way. Microsoft admits Apple is likely to match the new features Zune brings to the market, and some analysts believe Apple will build on its lead by developing new devices, like an iPhone.
    Meanwhile customers at a Best Buy store in upper Manhattan gave their first impressions of the Zune after it went on sale for the first time on Tuesday (November 14).
    After reading about the Zune online, Omar Naji, 24, from Brooklyn decided to buy it on the very first day of its release. He said it was not a difficult decision to make.
    "I like the interface, I like the fact that the screen is a little larger, I just want something different from the iPod. I like the fact that it has built-in Wifi, lot of features that you wouldn't see in the iPod and who knows when you would see them on the iPod," said Naji.
    Mihir Joshi, 28, said, "It kind of seems like the iPod first generation but a little better in terms of the feel of it. The hardware is a little clunky but the software is pretty good. I am very impressed with that. I like the video, I like the way it's got the radio in there, that's very good. I was looking forward to the iPod getting that but for ages they haven't."
    Microsoft acknowledges that the Zune investment may take years to bear fruit.
    Zune comes with a 30-gigabyte hard drive for saving music files and connects to an online music store called Zune Marketplace, which will compete with Apple's iTunes. The player sells for $249.99, the same as an iPod with a similar-sized memory. It's available in black, brown and white and has a three-inch LCD video screen that works in portrait or landscape mode to view pictures and videos.
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