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J. Allard gives us some insight on the concept behind Zune

With all the news swirling around the official announcement of Microsoft's answer to Apple's iPod, it's good to get some commentary straight from the source. The fellas over at Engadget had 20 minutes to sit down and chat with Microsoft Corporate VP J. Allard to discuss all things Zune.

Some of the matters discussed include what Microsoft envisions for the Zune platform and its place in Microsoft's digital media product strategy. They also discuss PlaysForSure and Zune compatibility with existing music services. Here's J. Allard on the Zune's wireless functionality:

That's the beauty of having 802.11 in every device: we can do that. We can do more device-to-device, or we can do more PC-to-PC, so the combination of the device, the PC software that we're doing, and the online service is going to allow us to really shape how the community and the social aspect of Zune marries with the music experience. It also helps in terms of moving the music industry's way of thinking about integrating social networking and peer to peer in a really healthy way that works for them.

It should be interesting to see how the Zune user experience grows over the life cycle of the product. The large, widescreen display, wireless connectivity and social networking aspects of the device are promising and should be enough to give Apple something to think about when it fully redesigns its flagship iPod models.

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RE: Arrrrgh matey!
By slashbinslashbash on 9/14/2006 6:07:46 PM , Rating: 2
No doubt there's some cool potential, but my point was more that for any of this cool stuff to happen, a whole bunch of people are going to have to ditch their iPods or whatever else they use and switch to Zune. It's got to have pretty huge market penetration before it gets to the point where people can even have the chance to use this cool stuff.

I think this might be possible if 1) MS severely undercuts the iPod on pricing (like $150 for a 30GB Zune) or 2) the Zune had some above-and-beyond capability like gaming or something. But as it is, it pretty much plays movies and music, with the capability to download this stuff over WiFi from other people's Zunes being the only real upgrade over an iPod.

I know that this increasingly networked path is the way the market will trend, but right now I don't think it's enough of a benefit to get people to switch, particularly when creating a product from scratch like this. The network effect is a double-edged sword. Once you get big enough, more people will use the product just because other people are using the product, and all users benefit from more people using the product. However, in the initial phases, any network-related benefits to the product are negated because there isn't that critical mass of users.

RE: Arrrrgh matey!
By Ralph The Magician on 9/14/2006 6:47:49 PM , Rating: 2
$150 for a 30GB player? What would the point be in that? If Microsoft takes a loss on every player, what's the point of even making it? Just to stick it to Apple?

Remember, Apple and Microsoft make virtually nothing on media. In fact, they probably generate losses from time to time for that sector specifically, because they have to pay infastructure costs for their music services.

The new iPod is already $249. Apple can cut the prices down like that because they KNOW they'll sell volume. I wouldn't be surprised if the Zune costs the same. I suppose they could cut it down to $199...maybe.

RE: Arrrrgh matey!
By slashbinslashbash on 9/15/2006 6:46:54 AM , Rating: 2
Actually, yes. Think about Xbox vs PS2 and GameCube. It's well known that the Xbox lost money for several years (not just on hardware) in order to break into the videogame market versus these established players. MS recognized that they had to lose major bucks in order to establish Xbox as a viable competitor. MS was actually one of the few companies that could afford to do so, and it was their stated strategy at the outset ("We're going to lose money on Xbox, but it's crucial for long-term positioning"). I can easily see MS doing the same thing with Zune, if they've truly decided to dedicate the company to it. And I'm actually kind of getting that vibe from the rhetoric in the J Allard interview.

RE: Arrrrgh matey!
By slashbinslashbash on 9/15/2006 1:21:27 PM , Rating: 2
Just found an article about this....

Summary: MS's gaming division lost $1.26 Billion in fiscal 2006 and has been hemmoraging hundreds of millions every year since the Xbox. It is only predicted to make a profit in 2008. The Zune is expected to be a loss-maker.

"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken
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