Yesterday, Microsoft CEO came to our news room to talk about Microsoft's plans across a variety of fronts. The one that interests me is the company's plans for its forthcoming Zune. After Microsoft's first stab at taking the licensing route (as it did with Windows) failed to slow down the the Apple juggernaut (with iTunes software, the iTunes Music Store, and iPods), Microsoft's Zune basically duplicates Apple's one-stop shop approach. Content is purchased from the Zune Music/Movie Store (we'll call that ZMS) and it only works on the software (eg: Windows Media Player) and portable content players (eg: Zune Players) that Microsoft lets it work on. Just like Apple.
One reason the Zune strategy is so relevant (and one that most people don't realize) is that the vendor who dominates the digital rights management market (as Apple is currently doing) is the company that may end up in control of a lot more given how telecommunications (particularly on the mobile front), entertainment, computer technology, and the Internet are so rapidly converging. Left unchecked, Apple could end up calling the shots for way more than just the record labels (Apple put them in their place earlier this year). For example, should Apple ship an iPhone (whch it's fully expected to do in 2007), the appeal of that phone, particularly if it solves the usability problems that most multimedia smartphones including Motorola's Q face today, could have Apple calling some shots for mobile operators like Sprint, T-Mobile, Verizon Wireless, and Cingular that they'd rather not have Apple calling.
In the interview (viewable via video here), News.com's Ina Fried asked Ballmer some Zune-related questions that I've taken the time to transcribe:
News.com: With Zune, you guys are trying to take on a pretty big leader in the iPod. It seems like you're making the bet that connecting with other users and wireless is going to be a big deal. How does that take off when, essentially today, there's no one that can talk to anyone?
Ballmer: We're going to come with Zune with 802.11 built-in. Of course, all PCs have 802.11 built-in. Of course, no iPods have 802.11 built-in, so there's certainly no disadvantage. We starting from scratch to build a community of entertainment afficianados both from the PC, from the XBox, you'll see that increasingly, from the Media Center, as well as from the portable music devices, the telephone, the mobile phone, etc. So, we start, but we're building on industry standard connectivity so we can go a lot of places.
News.com: Zune for now is all Microsoft doing the service, the software, the hardware. Does it stay that way? Is that the goal?
Ballmer: You'll see as we get into things next year, that there will be more and more opportunities for third party innovation in kind of a managed and orchestrated way. Certainly, we're reaching out actively to partners who are in the phone business, the retail business, etc.
Microsoft has been coy about how exactly third parties will get to partcipate in the Zune ecosystem and Ballmer clearly isn't dropping too many hints in his interview with Ina. Partners in the phone business? What that means is that Microsoft recognizes that mobile phones will not only have to be able to play ZMS-purchased music, they'll have to be able to acquire it through the mobile operators' networks. The implications, some of which have to do with Microsoft's Windows Mobile operating system and some that don't, are many. The retail business? That's a harder one to put a finger on. Clearly, Zune will be available through retailers. But that's nothing new from a third party participation point of view. One possibility is that if you're a Zune owner, you'll be able to walk into a record store, sample some music, and download it to your Zune right there (with the retailer getting a cut of the sale). This would differentiate Zune from the iPod.
Another differentiator getting some press in the last couple of days has to do with how Zune players can share music via their Wi-Fi connections. After an Internet rumor originally made the rounds saying that you might get ZMS credits if the person you share your music with buys that music, it's now clear that that isn't the case. But, going back to what Ballmer said, there is certainly some confusion about the role Wi-Fi will play, aside from connecting to other Zune players. Ballmer clearly pointed out the Wi-Fi is a standard form of wireless connectivity that is found on Zune as well as PCs. But earlier today, my fellow blogger Phil Windley wrote:
Zune players have Wi-Fi, but you can't use it to sync the player with your computer or even buy tunes at the Zune marketplace.
Needless to say, I'm confused as I'm sure the market will be.
But, to be honest, Zune's technical prowess will very likely not matter for two reasons. First, it's simply the cost of admission to the game against Apple. Either you've got certain basic functionality, or you don't. Second, if Apple isn't doing it, it's not because Apple didn't think of it. For example, adding a Wi-Fi radio to a portable media device won't do any wonders for battery life and battery life is absolutely a critical factor with portable audio players. But even if the Wi-Fi feature appears to be getting traction (or any other feature for that matter), rest assured Apple will have it too before Zune erodes even one percent of Apple's marketshare. It's not as if Apple is simply going to stand still.
Which brings me back to the headline of this post. Beating Apple, if that's possible, means realizing that this is a fashion play. It's not a technology play. To win, Microsoft will have to convince people like Robert Scoble's son and all of his buddies that a Zune is cooler to have than an iPod. That's like convincing Marlboro smokers that smoking some newfangled pink cigarette is cooler than smoking Marlboros (not that I think smoking is cool). Marlboro's cowboy mattered. A lot. As do Apple's white headphones and the iPod's association with the rock and roller that not only defines cool, but crosses generations in the process: U2's Bono. Microsoft will have to match that which raises the question: Who should be Zune's Bono? Here are some choices. If I'm missing a biggie, let me know through the comments or by emailing me at firstname.lastname@example.org and I'll add him, her, or them.