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| Zune Portable Media Player Unveiled |
| Sep. 18, 2006 |
The first Zune device, officially unveiled in Sept. 2006 after months of rumors, will be a fairly straightforward portable music player with some unique features, such as the ability to transfer material between devices wirelessly. By concentrating on performing a few core functions well, rather than overburdening the device with features, Microsoft hopes to establish a strong position among portable players while leaving room for expansion. However, the company's decision to create an entirely new digital media system, including playback software and an online service, could spell tough going for some of its existing digital media partners. Why Microsoft Created Zune Microsoft's decision to build a portable music player and associated online store, after years of leaving these markets to its Windows Media partners, was spurred in part by the runaway success of Apple's iPod and iTunes Music store. The iPod consistently hovers around 75% market share for digital music players, and the iTunes Music Store, with more than 1.5 billion song downloads and more than 80% of the market for legal music downloads bolsters Apple's position because content purchased from it cannot be played on any other portable device. Left unchecked, Apple's continued dominance would hamper Microsoft's overall home entertainment strategy, which promotes the Windows PC and other devices running Microsoft software as the best tools for creating, storing, editing, and playing audio and video content. However, according to Bryan Lee, the vice president of Microsoft's Entertainment business unit, concern over Apple's lead was not the only reason Microsoft entered the market—the company also views Zune as an important business opportunity. For instance, in the year ended Sept. 24, 2005 (the most recent period for which Apple reported iPod revenue figures), Apple took in US$4.54 billion on sales of 22.5 million iPods. Microsoft believes the portable player market will eventually grow from about 50 million in 2006 to several hundred million units per year. If Zune captures a reasonable share of this market, it could contribute significant revenue and profits to Microsoft's Entertainment and Devices division, which has suffered more than US$4 billion in losses since 2001, primarily because of the Xbox business (in which Microsoft loses money on the hardware and earns profits on games). Eventually, Zune could also help Microsoft cross-market the Windows PC as a home entertainment device, as well as other products. For instance, a future iteration of Zune might be able to sync content wirelessly with a PC or Xbox 360, or Microsoft might create a Zune client for Windows Mobile phones. To enable these types of connected scenarios, however, Microsoft believes it must have more control over the components involved—not only software but services and hardware as well. Regardless of Microsoft's reasons for creating Zune, the company's insistence on controlling the entire experience means that Zune will come with its own PC client software and online music store and will not be part of the PlaysForSure logo program. Microsoft introduced PlaysForSure in 2004 as a way for consumers to identify compatible Windows Media devices and online stores, but it was an imperfect solution, with consumers continuing to face compatibility problems. By leaving Zune out of PlaysForSure, Microsoft raises questions about the level of its ongoing commitment to its PlaysForSure partners, as well as the future of some parts of the Windows Media platform. (For more on Zune versus other Windows Media products, see the sidebar "Zune Breaks with Windows Media Past".) Focus on Music Microsoft's Sept. 2006 announcement detailed Zune's features and laid some widespread rumors to rest—for instance, Microsoft will not offer users free replacements for songs they purchased from Apple's iTunes store, even though these songs cannot be played on Zune. However, the announcement's impact was blunted by months of leaks, including accurate screen shots depicting the device, while many important details, such as pricing and release date, were not revealed. To establish Zune, Microsoft is taking a cautious approach: instead of packing the product with features that users might have difficulty figuring out, Microsoft has tried to create a stylish and user-friendly portable music player, client software, and online store. At the same time, Zune includes several unique features, such as wireless transfer among devices, and its built-in wireless data transceiver could open the device to other uses in the future. Hardware and User Interface Like Apple's iPod, Zune's packaging is simple and uncluttered—Microsoft avoided burdening the package with text and logos, a corporate tendency that was spoofed in an internal Microsoft video that was widely distributed outside the company. The device itself, designed by Microsoft and manufactured by Toshiba (other manufacturing partners may be added later) has a 30GB hard drive and three-inch color screen that offers 320x240 resolution. It's close to the standard iPod in size and weight, but larger than the iPod Nano. Microsoft aimed for a more casual look and feel than iPod, with a soft-textured surface, and it comes in three available colors: white, black, and a brown-and-green combination. Battery life for the Zune will be up to 12 hours for music playback and 3.5 hours for video—slightly shorter than the equivalent 30GB iPod. However, these maximums will be shortened when the user has the wireless capability turned on. One important iPod feature that Zune does not duplicate is the clickwheel, which is useful for scrolling through large libraries of content but is protected by patents. Instead, Zune has a circular navigation panel with directional buttons. To help users scroll through thousands of songs, scrolling accelerates as the user holds down the buttons, and large letters are superimposed on the screen to remind users of their alphabetical location in the menu. In addition, like the Portable Media Center and Windows Vista Media Center user interface (UI), Zune has both a vertical menu in the middle of the screen and a horizontal menu across the top that changes contextually. Although more complex than the iPod's hierarchical menus, this allows users to access a greater variety of content more quickly than on the iPod. By orienting the screen vertically, Microsoft was able to give Zune a larger screen than the iPod, making an attractive display for album art or other images while music is playing. At the same time, the orientation of the screen means that users must turn the device sideways to view pictures and video. Zune's designers have made this transition fairly easy—the device's controls automatically switch orientation as the device is turned, and an indentation in the back of the device subtly helps the user's thumb stay in the correct position. (For an illustration of the device in the horizontal position, see "Sideways Zune".) Content: Sharing, Multiple Formats For acquiring and playing content, Zune has most of the features that users have come to expect from the iPod and other players, such as the following:
Like Apple's iTunes, but unlike the large family of Windows Media devices that use the Windows Media Player, Zune has its own PC client software. This software is used to transfer content from a PC (where content is acquired, stored, and organized) to a Zune device, and it can be used for other purposes, such as organizing and playing playlists. The Zune software includes links to an online store, the Zune Marketplace, where users can purchase songs and video content. Zune also has some features that Apple's iPod and iTunes lack: Content sharing. Uniquely among portable music players, Zune will allow users to transfer music and photos directly between players using a built-in wireless (802.11g) transceiver. Songs take about ten seconds to transfer, while photos take one; videos cannot be transferred wirelessly. Regardless of source (e.g., a ripped CD or the Zune Marketplace), when a song is transferred between devices, Zune appends digital rights management (DRM) technology to the file that causes it to expire after three days or three plays, whichever comes first. (Photos have no such restrictions.) This restriction is intended to appease content owners worried that Zune-to-Zune transfer would be used to duplicate entire libraries for free, but makes the feature less useful than it otherwise would be. In the near future, the software on the Zune device might be updated to add a "DJ" setting, in which users can stream (but not transfer) songs to up to four other Zunes within range. This feature was noted in a regulatory filing that Zune manufacturer Toshiba filed with the U.S. Federal Communications Commission (FCC), but was not mentioned in initial demonstrations. Updates to the Zune device software could be delivered fairly easily via the Zune PC client (as Apple does for the iPod). Multiple formats. Zune will natively support audio and video in not only Microsoft's Windows Media formats and the widely used MPEG-2 family of formats (MP3 audio and MPEG-2 video) but also in the Advanced Audio Coding (AAC) and H.264 video codecs used by Apple. It will not, however, support Apple's proprietary DRM technology, so music purchased from the iTunes Store will not play on the Zune device. Even so, this format-independence is an advantage over the iPod, which doesn't play Windows Media files at all. It also marks a major shift for Microsoft, which has previously taken great pains to promote the Windows Media platform by offering a greater level of support for it than any other format. According to Zune Product Manager Matt Jubelirer, Microsoft took this new approach to ensure ease-of-use for consumers, many of whom already have libraries of files in multiple formats on their PCs. Subscription store. Unlike iTunes, but like many PlaysForSure stores (such as Napster and MTV's Urge), Zune will offer both per-item downloads and a subscription service, called Zune Pass. With this subscription, users will be allowed to download an unlimited amount of content to their PC and Zune player in exchange for paying a monthly fee; if the user stops paying, DRM technology will disable the content on both the PC and Zune device. Points, not currency. Unlike iTunes and other online music and video stores, the Zune Marketplace will sell content denominated in Microsoft Points rather than currency. Points can already be used to purchase content on the Xbox Live Marketplace, providing a possible cross-marketing opportunity. The use of Points also helps Microsoft by letting it use a single billing system across products and geographies. However, it could annoy consumers, who will have to purchase points in a separate transaction and remember how to translate these points into their local currency. FM radio. Unlike the iPod, but like some Windows Media—based players, Zune will have a built-in FM radio. The radio supports the Radio Broadcast Data System (RDBS) protocol, which lets stations broadcast information such as their call letters and the name of the song being played. No free replacement content. One prelaunch rumor suggested that Microsoft would offer free replacements for material purchased from iTunes, which will not be playable on Zune, and from other Windows Media Stores, which might not play on the device. (This is because of DRM technology, not format incompatibility.) This rumor is false—Microsoft will ship some songs, videos, and photos on the Zune devices for free, but is not offering any replacement downloads. Accessories Microsoft will be creating 10 accessories for Zune, including a PC dock, wired and wireless remote controls, and a radio transmitter that allows users to play Zune through a car stereo (the transmitter has an AutoSeek function, allowing it to find blank radio frequencies automatically). Some of these peripherals will be bundled into packs for specific types of users: for instance, a Car Pack will include a charger and radio transmitter. Like the iPod, Zune will feature a proprietary connector, and Microsoft will license the right to create add-ons. A thriving third-party ecosystem has helped the iPod retain its popularity, and in hopes of creating a similar level of support, Microsoft has enlisted companies such as Altec Lansing, Belkin, Harman Kardon and JBL, Klipsch, and Logitech to create Zune peripherals. Future Directions Microsoft purposely kept the first Zune device simple. However, the technology included in the player, along with the breadth of other consumer products offered by the company, provides many opportunities for expansion. The company has already acknowledged that it is building a less expensive (and presumably smaller) flash-based Zune player to go up against Apple's iPod Nano and Shuffle. Other likely future directions include the following: More wireless scenarios. At launch, the Zune's 802.11g transceiver can only be used for Zune-to-Zune transfers. In the future, this connection could be used to enable wireless synchronization of content between Zune and other devices, such as PCs or Wi-Fi-enabled phones. In addition, Zune could theoretically connect to the Internet wirelessly, enabling on-the-fly downloads of content. This would be particularly useful for the Zune Pass subscription service, as it would effectively give users access to a library of more than 2 million songs from any location with a wireless connection. However, because the Zune is intended to appeal to a broad consumer audience, Microsoft says it will be cautious about supporting too many wireless scenarios at first—tasks such as finding a local hotspot and figuring out which passkey to enter can be complicated, and might give Zune the image of a geek's toy rather than a device for music enthusiasts of all ages and levels of technical savvy. Content owners might also demand different licensing terms for such "anytime, anywhere" scenarios, resulting in higher-priced subscriptions. More content. At launch, there will be no TV or video content for sale in the Zune Marketplace, unlike Apple's iTunes, which has over 200 TV shows available and began selling downloadable feature films in Sept. 2006. To be competitive, Microsoft will have to add video content to the store. In addition, Zune will have limited support for podcasts, which are serialized online audio programs. With Apple's iTunes, users can find and subscribe to podcasts, and the software automatically downloads new episodes as they come online. At launch, the Zune software will not have a podcast directory or support subscriptions, although the device will be able to play podcasts like any other audio file. Connections to other Microsoft products. Zune can stream songs to an Xbox 360 through a USB connector, just as any other portable music player can, and the Zune Marketplace uses the same Microsoft Points as the Xbox Live Marketplace. But Entertainment Vice President Bryan Lee strongly hinted that links between the products will grow. One likely scenario: Zune could transfer content downloaded from the Xbox Live Marketplace (perhaps even including simple games) to the device. Integration between Zune and the Media Center interface that is found in some versions of Windows could also be improved. For instance, unlike third-party Portable Media Center devices, Zune won't play TV programs recorded on a Media Center PC. Discovery and community. At launch, members of the Zune team cited the ability to discover new music and establish communities of Zune users as important goals. However, apart from Zune-to-Zune wireless transfer, there are no features in the device or software that support these goals. Possible future directions include broadcasting (rather than transferring) music from Zune to Zune, a recommendation engine in the Zune client (e.g., "if you like U2's latest album, you might also like Coldplay"), and the ability to connect with Windows Live Messenger friends from within the Zune client in order to recommend music and perhaps exchange or stream audio samples. License to cell phone manufacturers. Chris Stephenson, the general manager of Zune marketing, says that Microsoft is looking at licensing the Zune software to cell phone manufacturers. However, Apple's deal with Motorola has not been particularly successful, as Motorola's iTunes-enabled phone is limited to 100 songs—reportedly on the insistence of cell phone carriers, which would prefer users to purchase music over the air from their stores. To succeed, Microsoft would have to convince all the parties involved to loosen such restrictions. Can Microsoft Win? Given Apple's huge market share with iPod and iTunes, Zune will be considered a success if it captures a solid number-two spot. For the foreseeable future, Apple's dominance in these areas is secure. However, Zune is only one front in the larger battle to profit from the next generation of home entertainment technology. Looking at this larger picture, Microsoft is ahead of Apple in some areas. For instance, Apple's iTV product, announced two days before Zune and slated for release in 2007, will allow users to stream content from an iTunes-enabled computer to a TV over a home network. This essentially duplicates Microsoft's Media Center Extender technology, which was introduced in 2004 and comes standard in every Xbox 360. However, Apple's approach has been to gradually introduce digital media products that are designed to work well together, while Microsoft has promoted the PC as the center of its home entertainment strategy and relied heavily on partners to fill in the gaps, such as hardware and services. With Xbox and Zune and their associated services, Microsoft's approach appears to be changing to mimic Apple's end-to-end control. Until Microsoft finishes this transition, however, the company will have a much harder time than Apple tying its disparate entertainment products into a coherent whole. Resources Microsoft's official Zune site is www.comingzune.com The spoof video envisioning Microsoft designing the iPod packaging, is available at youtube.com/watch?v=CEmZuieb7TM |
