Microsoft officially introduced the Zune a couple of days after Apple announced it’s 5th Generation of iPod, along with new lower iPod prices. Rumor has it that Microsoft was originally going to announce a price for the Zune at it’s introduction, but Apple’s lower prices took Microsoft by surprise and so a quick decision to delay the price announcement was made.
That would support that Microsoft originally intended to sell the Zune at a higher price, probably around the price point of Apple’s iPod’s prior to the price reduction.
A recent study has shown that the new generation of Apple iPods have a higher profit margin then ever before, even with the lower sales price. Therefore Apple will be making more money off each iPod while Microsoft will be loosing money on each Zune sold. Under these circumstances maybe Microsoft is secretly hoping the Zune will not become too popular too quickly.
Microsoft does have a couple of advantages with the Zune. It has a larger screen and WiFi. The jury is still out on how user friendly the software is and what kind of battery life the Zune gets. One of the more difficult things it will have to overcome is an uninspiring design. While they copied the general form of the iPod they definitely left out all of the cool factor. It simply looks like a very cheap imitation…and who picked that “turd” brown color?
I think it’s going to be tough for Microsoft to make inroads anytime soon.
Microsoft Corp. said Thursday its new Zune music player will be sold at a price matching Apple Computer Inc.’s market-leading iPod and, as a result, lose money this holiday season.Microsoft’s 30-gigabyte Zune will retail for $249.99 — 99 cents higher than the iPod with the same amount of storage…
Microsoft said it needed to put a comparable price on Zune, even if it meant that the company will suffer a loss from the device’s sales this holiday season.
CNN.com – Microsoft sets price for Zune – Sep 28, 2006
technorati tags:ipod, zune, microsoft, apple
While I’m not big on the whole mobile audio and video thing, (It’s just not something I use) I’m not sure I’d be so quick to dismiss MS’s efforts. If they can match or beat the iPod pricing (and sustaining a loss to grab market share would be something MS could easily do) and provide the technology (if not the legal means) to share songs via wifi then they’ve got something potentially interesting. I don’t think it’s reasonable to expect them to crack Apple’s lock on the market right away, but if they did something like bundle Zune’s with XBox’s then they could pick up even more share. And don’t forget that there has been some talk about a Zune phone as well.
As far as DRM goes, they’re both terrible solutions in my book. But at least if the Zune provides the technology to enable wifi sharing, undoubtedly someone will figure out how to crack the DRM sooner or later and then they could spread like wildfire. You don’t even have that option with the iPod.
But like I said, I don’t see myself being in the market for a portable media device at the moment. ;)
Richard:
I don’t disagree with you that with time MS’s could well make substantial inroads into this market. They have shown they are willing to accept substantial initial loses to gain market share, as they did initially with the X-Box. I would expect them to stay the long course in this as well. I’m actually glad to see MS come to market. Innovation, at least in part, is driven by competition and Apple with it’s huge market share has not been as innovative with it’s recent iPod’s and iTunes as it should of been. I would expect to see Apple “down shift” now that Microsoft is in the game. It should be interesting and better for all consumers.
We share the same opinion of DRM.
I’m undecided on the benefit of Wifi. I’m not sure how useful it will really be and what will be allowed legally under DRM. Of course as you stated the DRM will be hacked…no doubt. But Microsoft must assume a position to preserve it or risk the displeasure of the Record Labels. Then with Wifi there’s the question of battery life. One big complaint Apple’s always had to contend with was that the iPod battery life wasn’t long enough. When you add Wifi requirements I expect there will be some serious issues I have a Palm that has Wifi and if I’m using Wifi it can cut my battery life by 2/3’s. Has Microsoft been able to overcome this? I don’t know. Personally, I would prefer bluetooth so as to support wireless earphones.
Good hearing from you.