Opinion: Can Zune survive?

  • Columbus (OH)  - Since its unremarkable launch in November, the Zune has failed to capture significant market share in the MP3 player arena.  It has managed to hang around, though, partly because competition around it has been stale.  With the long-awaited move of digital rights management (DRM)-free music to iTunes, however, Microsoft has fallen even more behind the curve.

    Aside from the Microsoft fanatics and the impulsive early adopters, the Zune has failed to make any demographic shout out loud in support of the device.  That's highly different from what Apple can say about the iPod, which has hordes of loyal devotees.  

    Part of the fanatacism with the iPod is because Apple has poured a huge amount of resources to stay on top of new content, customer service issues, and most importantly a user-friendly online store platform.  Meanwhile, the Zune Marketplace confuses consumers with dollar-to-point conversions, a completely different DRM platform from MSN Music, and a difficult-to-navigate digital storefront.

    That is no doubt part of what has led to Apple being able to nab initial exclusivity of DRM-free music from EMI, one of the "big four" music labels.  While tech-savvy consumers have been able to remove these restrictions freely and easily since the beginning of DRM, high-volume consumers who don't have time to unlock all their songs will find DRM-free downloads very appealing, even at a 30 cent premium.  Digital audiophiles also will enjoy the increased bitrate potential from the unrestricted MP3 format.

    The question that invariably arises is about consumers who won't pay the extra 30%.  That's going to be a big hurdle for most people.  However, what's really at play here is the fact that simply by offering DRM-free music, Apple continues to prove its initiative to consumers that it strives to have the best service.  Conclusively, it ties that to the iPod device, where the company really makes money.

    The iPod has really never been the first innovator for any portable media player (PMP) technology.  Video playback capabilites were around years before the first video iPod, and additional functions, like wireless access and digital cameras, still don't appear on the iPod feature list.  An enormous part of what has made Apple so successful is its ability to innovate its online store to more easily manage all the different forms of media that can be transferred from a computer.  The addition of DRM-free music for sale, which also already exists to some degree, will be another innovation to the iTunes platform.  It's the online store that drives sales of related devices. And far and away iTunes is the leader here with nearly 400 million music downloads.

    The Zune, meanwhile, has a DRM problem of its own. Overprotective Universal Music Group is contractually guaranteed a cut of every Zune sale after the group disapproved of the device's wireless music sharing feature.

    What Microsoft needs to do is breathe some life into the failing Zune.  We need to see Microsoft become more aggressive with getting DRM-free music on its platform, branching out beyond EMI, or offering a WiFi feature that's actually worthwhile, or even that "portable Xbox" capability that was once rumored.  Actually, we believe that Microsoft should have been the one to convince the music industry to agree to DRM-free music, not Apple. Microsoft is the one who has to build the more attractive device and service to lure people away from the iPod, not the other way around. Seriously, we're talking about the company that revolutionized home computing, and it can't even offer one exceptional feature on its portable music player? 

    The Zune was never expected to overtake the iPod, but it was planned to be Microsoft's defining entry in the elusive MP3 player market.  If the software giant doesn't get its act together, Microsoft could well just end up running this thing into the ground.