Coming of the Zune

Microsoft’s Zune player will hit the shelves on Nov 14 retailing at $249.99 and to set it apart from the ipod it will have a radio as well as WiFi capabilities to interact with other Zunes. A few interesting things about the Zune:

  1. It is very similar to the Portable Media Center devices, however, it is purpotedly different from the core out.
  2. It comes in brown, black and white. I believe this is to help it establish its own image and achieve a balanced product differentation in the style category without going for a total cultural shift in design.
  3. The Zune player will retail for $249.99. There were rumors that it might undercut the Apple iPods on pricing, however, this price seems more apt–a cheaper price might lead some to believe it’s cheaper quality and that would start Zune off on the wrong footing. At $250, most people won’t be swayed in their decision by the $10 savings in either case.
  4. Zune Marketplace will compete with iTunes but instead of having a pay-per-song model, a $14.99 monthly subscription for Zune Pass will give subscribers unlimited access to millions of songs. I don’t like the tune (unintentional pun) of this for fears that if the DRM gets compromised, users will be able to unlock the thousands of songs they download off the music service. The counter-argument is that if users wanted to get free songs they could just get them off existing P2P networks.
  5. Existing iTunes users who have purchased songs on iTunes will get those same songs for free on Zune Marketplace (since they have already purchased those songs). However, existing DRM’d Apple Fairplay songs can’t be loaded on to the Zune. User’s who have loaded their CDs onto the iPod/iTunes software will have to reload them to the Zune software–there is no trivial migration solution supported by Microsoft due to legalities around DRM.
  6. Zune’s WiFi capabilities in the v1 release will be limited to sharing songs (probably videos as well) and pictures with other Zune users. Due to DRM issues, the songs can only be played 3 times or for 3 days–whichever comes first. Future generations of Zune I assume will extend the WiFi capabilities to more interesting use-case scenarios. At present even the trivial scenarios such as staying in sync with your PC using WiFi aren’t supported. From a technological standpoint it makes sense to get the basic model right and then build upon it with subsequent revisions.
  7. I am speculating that Zune will also act as a SideShow device which could open it up to some really cool scenarios but I don’t expected this to happen until the third or fourth generation of Zune.
  8. Quite a few existing Portable Music Players in the market support Microsoft’s PlaysForSure technology which allows them to integrate with online music stores. Zune will not support PlaysForSure and not be a part of that ecosystem. Instead it will have it’s own exclusive Zune Marketplace for downloading songs and its own new proprietary technology for DRM/storing/playback on the Zune. It will simply do away with all the confusion and just provide a tightly integrated iTunes/iPod type model that works end-to-end.

Zune’s WiFi capabilities will pose some initial concerns around privacy (you can auto-discover other users in range similar to bluetooth) and possibly security but more importantly there will be quite a few interesting DRM and licensing issues which is partially the reason why any songs transferred between devices are limited to 3 days or 3 plays. The DRM restrictions, I imagine, will probably hold true even for free songs (and podcasts) so as to prevent Zune from being reduced to a physical version of a Napster like P2P filesharing network.

2007 will be a tough year for portables. RealNetworks and SanDisk have partnered up to strengthen their position and create a vertical offering. At present SanDisk commands 10% of the Portable Music Player marketshare with an added edge due to its core business in flash memory, while RealNetwork has a small chunk of the audio market with its Real Player product, making these two powerful allies. However, I consider Microsoft to be a dominanting force due to its stronger brand, marketing experience, global reach, deep pockets, and software, platforms and strategic experience which will allow them succeed where others like Sony and Rio have failed.

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