Today's Zune News - First Take

Michael Gartenberg | September 13, 2006, 03:55 PM

Well, we heard from Apple earlier this week (but don't think that's the last word. Last year Apple followed up the Nano announcement with the 5G iPods just a few weeks later) and now it's Microsoft's turn. I spent some time recently with the Zune as well as the Zune team and here's what we know about the device and service.

The Device – Take a dash of Toshiba Gigabeat, add an updated version of Portable Media Center Software (PMC isn't dead, it's just gone to a better place), add in WiFi and you pretty much have Zune. It's a little bigger and thicker than a 5G 60gb iPod and barely pocketable. Like iPod, the battery isn't removable. The case is a plastic and the overall fit and finish seem more durable and less scratch prone than the iPod. Three colors at launch, White, Black and Brown. Yep, Brown. Control is with a D-Pad disguised as a scroll wheel. This was apparent every time someone showed a unit and said, it looks like a scroll wheel but it's not, it's a D-Pad. *sigh*. Overall, not bad but hardly an iPod killer.

The key differentiator is the sharing feature. I can share any song on the device to any other device in range. DRM content or plain MP3s but don't get too excited. I can share the same song with the same device only once and it can be played three times or expires after three days, whichever comes first. It's an important feature that isn't in the iPod and will likely have some appeal to the target demographic of 18-24. We know that sharing files legally device to device is of interest to about 11% of consumers and in the 18-24 range jumps to about 18%. The device can also share pictures but not video.

Pricing – Unkown at this time for either device or the store. Expect this to come in priced at what a 30gb media player with WiFi should go for. Likewise, store downloads will likely reflect market prices (if there's above $.99 there's an issue and no real benefit below $.99 unless they really want to lose money with $.50 pricing). Purchases will be via points (similar to and interchangeable with Xbox live points). No word on whether pricing will be variable or not.

The Service – The same two million songs we've come to know and love available for single song purchase. There's also going to be an option for subscription pricing (similar to what's offered with Plays for Sure services like Napster or Rhapsody) both types of files can be shared. Also, it's a music only experience. The device will play non DRM WMV video but there are no video offerings from Microsoft for now.

So what's it all mean? First, a lot depends on how well all this works technically and whether Microsoft has really hit parity with the Apple experience in terms of device, marketing and messaging. And those are just table stake, they don't assure victory but that's bare minimum Microsoft needs just to play in the game.

Overall from what I saw, Zune isn't an iPod killer. Frankly, it isn't gpong to give the iPod a bad case of the sniffles in current form but it does offer some compelling features that Apple currently lacks. It still looks like short term market share will come from other device vendors, not Apple. The question is, will it matter? Apple's done a good job of keeping the market focused on their features even when competitors have offered better specs, at least on paper. It's not clear how Microsoft will counter the ability of Steve Jobs to control the message to the market. It's also a step backward. Unlike PMC, there's no integration to recorded TV shows, no downloaded movie or vide offerings. At a time that the market is moving beyond music to video, lack of a good video story seems to be a big minus. The overall experience is hard to gauge since my time was limited. How good will things like migration from iTunes be? History with WMP says not so good and Zune is built on WMP. What about battery life? To really get use of the sharing feature, you need to leave wireless on and that will clearly hit battery life. While we know more, it's still a little too early to make a call here. One reason Apple has succeeded is by showing attention to minute details that add up. This is going to be an important lesson for Microsoft to emulate if they want to achieve parity, much less move beyond iPod. Bear in mind that this is a marathon, not a sprint and how Zune does in Q4 doesn't really matter. The key will be how fast they can iterate, rev, and seize control of the message and the marketing. Or, cede control of digital media to Apple.