Microsoft's Zune launched today to mixed results while Apple strikes back with an airline industry deal.
The Zune, Microsoft’s next combined hardware/software service has launched and is now available in an impressive 30,000 retail outlets, arguably the most aggressive attempt to take market share from Apple to date. Apple has responded by cutting deals with a number of airline carries to exclusively support iPods for in-flight entertainment. What makes this particularly interesting is that in both cases the two companies appear to be behaving more like the other firm than themselves.
Zune: iPod with a Twist
The Zune is a closed system/service offering much more similar to what Apple initially launched than what is typical from Microsoft. This ties the hardware to the service and while it assures ease-of-use and compatibility, it does so by sacrificing choice in hardware.
Much like Apple differentiated itself from Creative Labs when they entered the market (Creative dominated) before the iPod launch, Microsoft has crafted a solution that points at Apple’s key weaknesses. For Apple, Creative’s weaknesses included overly large and clunky hardware and poor software making the Creative offering relatively difficult to use. Apple attacked with attractive hardware and iTunes and now owns the market primarily because Creative Labs simply could not figure out how to respond quickly enough to protect their market.
Apple’s weaknesses are with the music labels who believe Apple is taking financial advantage, the channel where stores feel Apple does not treat them fairly with respect to Apple’s own stores, and the third is Apple’s limited DRM which only supports pay-per-song and not flat rate pricing. Flat Rate pricing is typically preferred by folks buying media services (like cable and satellite music and video) and it’s also common for both wired and wireless telephone services as well.
Microsoft’s Zune addresses all three weaknesses. It compensates the music labels for music sales, it does not compete with the retailers who sell it, and the Zune DRM does support flat rate pricing which also enables broad music sharing between Zune customers.
However Apple retains at least three advantages. They are the current standard with regard to accessories and there are a lot of them, they have a broad product line of attractive products from small flash to large video, and because they are the standard, differences are often seen as negatives not positives.
Zune represents the strongest offensive yet against Apple, but while the services are strong, the hardware (which favors a robust Scion like design over Apple’s Porsche like offering) may fall short of what would be needed for Zune to have the same success against Apple that Apple had against Creative Labs.
Apple’s Risky Response
When I first read that Apple had cut deals with several airlines for exclusive use of iPods for in-air entertainment I was impressed by how aggressively Apple moved against the threat. But then I’ve covered Microsoft for years and had Microsoft done something similar, all sorts of red flags would have gone up. For instance, what if Microsoft cut a deal with the Airlines so that only Windows PCs could connect to Airline in-flight services like power and network access? I think we would suddenly see a series of complaints from Apple addressing what they viewed, and probably rightly, as unfair restraint of trade. Dominant companies typically are not allowed to lock competing firms out of critical markets.
In the digital music player space Apple is nearly as dominant as Microsoft is in the desktop space and it is likely that the same problems that Microsoft had when they overreacted to the Netscape threat could pass to Apple. In the background the US Republican Congress which didn’t like taking anti-trust actions, will shortly be replaced by a Democratic led Congress who likes anti-trust actions a lot more. This could become a problem for Apple which has already had problems like this in Europe.
Two other aspects of this deal may become problematic. The Airlines are slow to deploy new technology and even slower to replace it suggesting the interface they use may need to remain stable for 15 or more years or they will require a common, second, interface that could be copied by others in turn opening Apple’s accessories market to third parties.
Now from the consumer perspective, regardless of how this turns out, the end result will be better entertainment on planes so it isn’t a bad thing and Apple may have addressed these exposures without bragging about how.
Showing 9 comments
RSSWith this name calling it is a lot like the pot calling the kettle black! Don't you think? Especially with this particular Airlines agreement in light of Microsoft's own very weird and mysterious deal paying Universal Studios a percent of every Zune sold! Now if that doesn't boggle your mind and make you wonder alittle more about the backdoor deals going on about what we don't know, nothing will.
At least Apple seems to make their deals in the open and has admitedly done a very successful job of robbing Peter to pay Paul and make it look like they're shaking hands. While making a profit at it, of course. On the other hand we never find out just what Microsoft is up to until we read in the news somewhere that a lawsuit has been launched against them. As batting averages go neither one of these hardballers have been having the success in court they once enjoyed in the slimey underworld, that makes up the daily existence of corporate thugery in this world.
For instance, Microsoft was oh so disapointed that their underhanded attack on Linux through SCO on IBM ended up like a flea flicked off their backs. And resulted in Microsoft's treachery being discovered as the Money behind the SCO attacks.
***Consequently Microsoft hurt their cause more than helped it. IBM as you know finally come to terms over the years of abuse Microsoft had been dishing out to them and let all of their Windows Licenses expire in October.
Now Microsoft is loading up a new player and that's fine, I hope they are as successful with it as their Xbox 360. But somehow it already feels tained by this name calling and having a so called outside source spread the propaganda and misinformation this time, here at Digital Trends. For the most part Digital Trends normally tries to stay clear of taking sides with their other editorials and writers. They seem to fail with this writer as he routinely sways to the Dark Side. Hopefully Mr. Enderle learns to not show such bias or at least not so openly in his work, as to make us all wonder.
But now back to the damage Microsoft did to themselves. It won't stop at the IBM abandon ship, for other companies will certainly follow suit and Microsoft's teflon armour will follow Ronald Reagan's into the grave. You simply can't shrug off lost revenues of an IBM without it affecting you deeply. But it's the fallout of lost trust that will over time wear on the inner circle of hypocrisy and a mudslinging underworld, that has become business on a daily basis at Microsoft!
So is Apple really doing anything any different than Microsoft? Afterall in this aggreement with the Airlines and some other business arrangements their both involved in, do they really seem that different? Somehow I don't think so and in this round of head butting, it's just a question of who went knocking first!
Microsoft's new point system sucks, there is no way to reduce your point count to zero, meaning there is no direct relationship between the value of the points and the dollar value of a song. It is simply a way to rip additional money off of their victims - oh, sorry, I mean "customers".
http://www.pcmag.com/article2/0,1895,2059039,00.as...
I do have to agree that Microsoft's marketing of the Zune has been a joke. It's confusing and does not make any sense.
Just wait until the 2G Zune arrives.Microsoft is going to blow apple out of the water.Just like they did the macintosh.
This deal with the airlines would have happened whether or not Ballmer and company had ever gotten their latest dead-on-arrival "ipod killer" out the door.
Apple concentrates on their customers. Microsoft concentrates on their competitors. That's why Apple sets the standard for quality and innovation, while Microsoft will never rise above mediocrity.
Zune has already failed, just like that "origami" abortion a couple of months ago.
-jcr
For my main player I use a Creative Zen Vision which is compatible with more audio and video files than the Zune. It would be nice if there was a video/music store that supported it specifically though, its nice that Microsoft has a store tied into the Zune.
Best bet IMO would be to stick with the Apple products.