Poor Microsoft! Its abandonment of PlaysForSure partners and other strategies related to its solo iPod killer efforts have been mercilessly attacked before the company can even get the new device into the hands of users.
On top of that, it’s also facing stiff competition in pricing. However, according to proponents of Ten iPod vs Zune Myths, the Zune is technically superior, with brilliant wireless sharing features, and will be able to compete with Apples iPod as a cheap loss leader. Ahem. They’re wrong, here’s why.
Myth 1: The Zune has a larger screen that’s better for movies.
The iPod’s 2.5 display is smaller, but the 3 Zune and last year’s iPod both offer the same resolution. The Zune’s slightly larger display is still showing the same number of dots; they’ll just be more obviously pixelated because each dot is larger. The lower pixel density of the Zune’s screen means its display can only be less sharp.
This flaw is exaggerated by Microsoft’s Vista-esque choice of using soft alpha transparency throughout the Zune interface. This makes for nice marketing photos, but makes it harder to navigate through screens when focusing on other things: walking, driving, exercising, riding a bike, or other things iPod users do.
While neither the iPod nor the Zune provide a cinematic movie experience, there is no benefit to having a slightly larger screen at the same resolution in a handheld device, apart from possibly lower battery life.
Viewed comfortably in the hand, the tiny iPod screen is the same relative size as a 27" TV viewed from across a small room. The difference between the tiny iPod screen and the small Zune screen is relatively equivalent to viewing the iPod an inch or two closer–hardly the big deal Microsoft is trying to make it out to be.
In comparison, the display resolution of the 15" MacBook Pro is the same as the first 17" Powerbook. The same resolution on a smaller screen simply looks better. For a competing handheld display to offer a better viewing experience, it would have to provide a higher resolution display. The Zune doesn’t.
Myth 2: The Zune screen has a horizontal display mode for viewing movies in a wide aspect ratio.
Widescreen movies do look better when presented on a wide screen, but the Zune doesn’t offer a wide aspect display; it has to stretch or letterbox the screen to show wide aspect movies just the same as an iPod or standard definition TV would.
It doesn’t gain magic dots of new resolution by being held sideways! It just distorts the display to show it in a stretched 3x4 aspect ratio, at the very same resolution. Microsoft carefully avoids calling it a wide aspect display because it isn’t.
A wide aspect ratio screen might not even be a great idea for a handheld device, because a wide display would be wasted when watching content designed for TV, which is probably a more likely and practical use for a portable device than watching cinematic movies designed for presentation in a palatial 70 mm Cinerama theater. What’s next, a handheld IMAX? Handheld cinema lacks a certain je ne sais quoi.
I’ve watched a number of movies on my iPod in airplanes, and I find the size of the screen isn’t as important as its brightness or annoyances with reflective glare, particularly since I’ve scratched up the screen and haven’t gotten around to polishing the nicks out yet.
I’d rather watch a movie on my iPod than pull out a laptop, simply because it affords more privacy and is less obtrusive. I also rip content to my iPod to watch on TV, which I find a more practical use than watching movies or TV on its small screen, unless I’m stuck on a plane.
Lately, I’ve gotten hooked on playing iPod games, which make more sense as a handheld diversion when stuck waiting a few minutes or during a subway commute than trying to watch a movie or even a TV length program.
Myth 3: The Zune will play movies… or any video at all
According to a CNet MP3.com interview with Microsoft executives from two weeks ago, “the Zune won’t immediately have video playback capability.” Yikes! Its supposed to be out the middle of November.
Rather than spinning this news as an understandable delay in putting together a complex product, Microsoft made other comments that suggested the company wasn’t working hard to deliver video playback, but rather discounted video playback as a feature all together…what the heck?!
In an interview with Bryan Lee, the VP and CFO of Microsoft’s Entertainment and Devices Division, paidcontent.org quoted Lee as saying:
“Youre right that theres not a lot of emphasis on [video playback on the Zune] and that really kind of goes to maybe a big vision difference and competitive difference that we see with Apple right now. Our goal right now is to celebrate music. Our goal is to make that celebration a communal celebration and not a solitary celebration and our goal is empower both the artists and then the consumers of that art. Thats really what its about. Thats the big use scenario; its what people are doing. Yes, there are some interesting headlines that come out every now and then about licensing 75 movies from your closely affiliated company but the usage around that, when youre looking at the screen sizes, etc., its not a big focus.”
Wow, what a desperate spin! Microsoft is choosing to “celebrate music” because there isn’t anything else to celebrate.
By downplaying Apple’s movie programming from Disney, the “closely affiliated company,” as merely some “interesting headlines,” and completely ignoring a year’s worth of TV programming in the iTS, Microsoft revealed that it isn’t just slightly behind schedule in getting video perfected, but that it actually doesn’t have video on the company’s radar. Oops!
Its not just a lack of content and media partnerships, but rather a lack of technology, vision, and focus to deliver video playback as a feature. No movies, no TV programming, no video podcasts, but the Zune does come with a few music videos users can at some point watch repeatedly for hours of fun.
Additionally, the Zune features changeable desktop wallpaper. Why? Because having the 3 display light up to look at a static image is a great way to conserve battery life, while applications like video are simply “not a big focus.” Clearly, Microsoft has done their homework in knowing what consumers want: celebrations of synergy.
Myth 4: The Zune will do most everything else the iPod does at the same price
Well no, Microsoft isn’t supporting Audible audiobooks, nor providing any support for podcasting, nor has it announced any support for notes, tasks, calendars, contacts, or games. So all it does is play music.
Myth 5: The Zune offers similar hardware to the iPod at the same price
Well no, it doesn’t have a clickwheel, just a round button designed to look like one. That means there’s no circular input to spin through long lists of songs. The Zune is also thicker and longer. There’s also no support for importing photos from digital cameras like Apple’s iPod camera connector, no any option for sound recorders, and of course no Nike+.
There’s also no Microsoft equivalent to a 80GB iPod, the nano or shuffle. Without any selection of players, Microsoft will lose any sales from consumers who want both a large capacity player as well as a tiny accessory player that syncs with the same music collection. What existing players can Microsoft rebrand to deliver a comparable range in product offerings?
What value is Microsoft offering at the same price? A rewarmed WinCE PDA, packaged as the PlaysForSure Gigabeat music player which failed in the marketplace, and then rebranded again as the Zune. How many layers of failure does it take to deliver an iPod killer?
Myth 6: Wireless features on the Zune provide a compelling new feature.
The radio of a wireless device demands a lot of battery power, as anyone who’s ever used a mobile phone knows. Why put wireless features in a handheld device? While I can think of some interesting sharing or multiplayer game scenarios similar to those offered by handheld systems such as Nindendo’s DS, the Zune’s radio is only offering DRM wrapped exploding media.
Microsoft has only announced support for the ability to slowly upload individual tracks between players, and such a “sharing” always involves a DRM wrapper that destroys the song after three uses or three days, whether it’s a commercial track or not. Additionally, studios will be able to opt out of the sharing feature, so it won’t even work consistently.
Even more oddly, despite all the talk about sharing and community, a received song can’t be forwarded on to others, so there’s no real community involved at all, just a single buying recommendation. Of course, given the scant likelihood of three Zunes being sold within the same county, this may never come up as an issue.
Who thinks this tepid non-feature will do anything beyond frustrating users while destroying their battery life? Microsoft could have built in support for actual sharing and community features, but instead has reserved the technology solely to spread DRM infections and advertise its own store. Will customers be amused by Microsoft’s crazy hijinks?
Lee compared this wireless sharing advertisement with the “social experiences around a YouTube or a MySpace” and “what theyve done to reinvigorate a lot of things.” Despite the sharing and caring, the community only exists in the wireless world between Zunes.
There’s no sharing in the Microsoft Zune Marketplace to “reinvigorate a lot of things,” just the same demand for money and the hard sell on a $15 a month rental fee for exploding media. The reward for sharing tracks is simply assisting the collective in assimilating new users.
Given the choice between a) being pressed into service as part of the Microsoft Borg collective and b) having a chair thrown at them by the Borg Queen, it’s hard to imagine which option consumers would find more appealing. I’d rather have a bazillionare hit me with a chair, because it would be much easier to sue for the wounds of assault and battery than for battery loss and salt in a wound.
Myth 7: Microsoft will deeply discount the Zune as a loss leader to gain marketshare
When WalMart leaked its $289 discounted price for the Zune, it appeared that Microsoft hadn’t anticipated that Apple would cut the price of its similarly sized 30GB iPod to $249. Prior to Apple’s repricing, the Zune would have been ten bucks cheaper. That’s not much of a price difference, but due to human psychology, it would appear to be a meaningful discount.
After Apple unexpectedly dropped prices across the board, the Zune’s original street price was left at a 15% premium over Apple’s. Microsoft has since bit the bullet to bring the Zune down to the same price as the iPod: $249. Microsofts accessories are just as premium priced as Apple’s; in fact the prices are copied across the board, from $100 AV cables to a $30 dock; no discounts or competitive prices to be found anywhere.
Even so, a few industry wags inexplicably suggested that Microsoft would discount the Zune to $99 in order to get people to use it. They have since been proven wrong; clearly they didn’t realize the extent of Microsoft’s hubris.
Not only are customers expected to pay the same price for the Zune in its version 1.0 release, with inferior hardware and limited software functionality, but Microsoft is also hitting people up to pay a $15 music subscription for exploding media on top of that.
Myth 8: Microsoft will deeply discount the Zune as a loss leader to gain subscription income
If cell phone carriers can subsidize mobile phones to get people to sign up for airtime calling plans, why cant Microsoft do the same with the Zune? Glad you asked! Music and cell phones aren’t as complementary as analysts seem to think, as I described in Why Mobile Phones Make Bad iPods. Additionally, the market for each is very different.
Cell phones are not worth much without a service plan. We call them “PDAs,” and they simply don’t sell well. To use a mobile, you have to pay per minute. The cheapest plans are around $40 per month, and typical users pay closer to $75 a month, unless they talk on the phone a lot. The minutes that cell providers bill represent a rental charge for radio networks that would otherwise sit idle.
Cell providers have billions invested in their networks, so if they don’t have customers, they have expensive equipment in place that’s just growing obsolete and going to waste. Every customer they can sign up is more revenue with minimal cost.
Cell providers also oversubscribe their networks, betting that most users will be widely distributed and rarely using the system. During a crisis, cell phone networks quickly go out of service as an unusual number of subscribers all try to go online at once.
The costs of finding new customers, and maintaining enough new users to sustain maintenance of their expensive cell networks, is so high that service providers demand that users sign annual contracts. These contracts offer end users an upfront discount on a new phone, financed as part of an ongoing contract.
None of those factors are related to the mobile music business. Unlike phones, players are useful without any subscription; players actually benefit little from paying for a subscription. Why pay monthly charges to rent access to music, when for the same price ($180 a year!), you can collect a significant amount of your own music?
Thats not idle speculation; consumers have simply not supported the rental music model. It has been an ongoing failure for years, and the tide is certainly not turning toward music subscriptions of exploding media rentals.
Not only are music subscription plans optional and unpopular, but they also don’t involve nearly as much profit. Subscription music plans are in the $20 or less range per month, with no opportunity for any added sale of extra minutes or side plans.
That’s a fraction of what cell providers charge, and its not just extra revenue for a system of sunk costs. Music subscriptions involve royalty payments to the artists, or at least the labels that produced the content.
A new $50 a month Cingular customer is enriching the cell company with pure gravy. A $15 music subscription is not pure revenue, but shared with the content owners, in addition to system overhead. Microsoft isn’t selling access to its pool of royalty free content, it’s paying for every subscriber.
Clearly, the profits on subscription media are nothing compared to the gravy train of phone service providers, who can afford to subsidize phone costs in ways no music player company can.
At the same price as the iPod, Microsoft’s Zune isn’t making a hardware profit. Apple has long term hardware contracts for components and massive volume discounts based on the 60 million iPod units it has already sold.
Apple also has been selling hardware for thirty years. What comparable experience does Microsoft have in consumer hardware? Consider that Microsoft has sold 24 million Xbox units since 2001; despite being cheaper than the iPod, Microsoft has only sold 40% as many across the same five year period.
The Xbox is the only significant consumer hardware Microsoft has ever sold, apart from keyboards and mice. Microsoft has only ever managed to use their monopoly to kill competition in software. Hardware sales are a new game, and Microsoft has track record full of failures in hardware; even the Xbox, its brightest prospect, has lost the company billions of dollars.
Apple also has hundreds of stores that are selling new iPods so fast that they require roaming sales people with handheld sales devices to manage lines. Ironically, the millions of iPods being sold in Apple stores are often rung up on handheld devices that are apparently WinCE based!
So Apple has built-in sales and a huge installed base of demand for its product. It regularly sells complementary iPod models to existing users, and its Made for iPod ecosystem is so profitable for third party partners that even rival Creative joined. Apple is also selling the iPod at a sustainable profit, not a loss leader price that it has to eventually make up for by selling enough accessories or subscription sales.
Microsoft has no sales infrastructure to sell Zunes to end users directly. They’ll sit on shelves next to the PlaysForSure devices Microsoft now has to compete against, including the existing Gigabeat that already isn’t selling. They’ll also be competing against iPods on those same shelves, along with other music players such as Creative Zen and the number two SanDisk Sansa.
People who want an iPod, or already have an iPod, are likely to buy an iPod, so the remaining 25% of the market will be competing largely against each other for the customers who arent already sold on Apples player. Creative and SanDisk arent likely to lay down for Microsoft.
Microsoft also has no tie in with either the Xbox or Windows; neither is going to auto-sell the Zune. The Windows monopoly is as powerless to force Zune adoption as it was to force PlaysForSure adoption. Users will have to drop $250 on a Zune to get one, and then they’ll get a hard sell for expensive accessories and media subscriptions because Microsoft originally expected to sell the Zune for 15% more than it’s currently priced.
There you have it: there’s no deep discounts, no competitive pricing, and no subsidized windfall happening for the Zune, although there might be a fire sale at some point.
Myth 9: The Zune has excited a lot of users already
Could there be more bad news? Of course! Even Paul Thurrott isn’t impressed with the Zune, calling its pricing strategy the makings of a disaster. Misery! Not only has the Zune suffered a horrific wreck of a product introduction, but Annie Wilkes is at the foot of the bed saying she doesn’t approve of how things are going.
If your number one fan is sending you hate mail, you have a problem. So what’s with all the Zune related web sites carefully repeating the same talking points? It’s called astroturfing.
Instead of inspiring actual interest in a grassroots fashion, Microsoft has resorted to spreading fake grass, crafting each site to suggest the appearance of something other than the advertisement it is.
This is similar to the scam Microsoft pulled with its own imitation of Apple’s Switchers ad campaign. Titled Confessions of a Mac to PC Convert, the ad portrayed a professionally dressed woman complaining about her Mac, but ended up being a canned picture pulled from stock photography and voiced by a professional writer.
Similarly, Greenpeace staffers have assigned to post Im a Mac user and gosh darn it I think that Greenpeace is alright with all their concern about the ecology!
One would expect a certain level of interest and excitement out of Microsoft’s own users, but that isn’t really happening. Nearly every Zune site on the web is carefully stepping around the piles of problems to spend a lot of time on Microsoft supplied bullet points, including the “celebration of music,” the slightly larger or at least stretched display, and how wireless DRM sharing is such a brilliant idea.
To paraphrase Rodney Dangerfield: the only way Microsoft could get a dog to with the Zune would be to tie a porkchop around its neck.
Myth 10: Available in Brown
Haha, actually this myth is true, if any retailers actually choose to stock it. Brown! What was Microsoft thinking? It’s not even a nice brown.
Honorable mention Myth: Zune PlaysForSure
Microsoft managed to make its weak PlaysForSure brand even more meaningless. What a bummer for Napster and all of the other Microsoft partners, as well as anyone who invested in PFS songs.
Of course, given the nosedive in subscriptions Napster reported, by the end of the year, most of that content will already have exploded.
The PFS dead horse will rise from its own ashes to become the dead horse of Zune Markeplace subscriptions. How long will Microsoft beat this one?