RIP Zune: How Microsoft could have succeeded

Posted by Rob Enderle

It appears Microsoft is pulling the plug on Zune hardware. I actually had a lot of hope for the media player when it was first announced in 2006.



But then I saw the product in brown and all I could think of was, compared to the iPod, it looked like a turd. In short marketing speak, the ugly beast was going to be a bitch.  

I remember commenting to the executive who presented this to me only to have him laugh and respond "you know, it takes Microsoft 3 times to get things right." That probably remained funny until the guy was fired. 

I think the Zune could have succeeded but Microsoft made some rather impressive mistakes in launching the device. 

For example, Redmond chose speed to market over quality of product, and failed to properly market or develop a real demand for the Zune.

Against an already dominant Apple, the media player became a waste of money and largely mirrors what befell the initial Windows Phone platform.

 Of course, this could all happen again with Windows Phone 7 and a future tablet if Microsoft repeats the same mistakes. Let's look at each.

Timeliness over Quality

The first Zune was clearly rushed to market. Co-designed by Toshiba (typically known for its sleek designs), the robust device appeared well differentiated from the iPod - boasting additional features and a superior display.  

However, it was butt ugly. Plus, Microsoft hadn't worked out the video delivery side of the product so the screen quality didn't actually matter - as no one was screaming for additional features which substantially increased marketing requirements.

Similarly, the Windows Phone 7 platform was sent to market without multi-tasking, cut and paste, or Flash support.  Each expected to be differentiators but, to date, they have acted as the source of criticism for the nascent platform. 

The Motorola Xoom clearly showcases similar problems from another vendor, while illustrating the lesson of making sure the product is both timely and complete. These are critical points - neither is optional.

Feature Focus

People don't scramble to the product with the most features. When Microsoft tried to compete with Palm in PDAs with more features it didn't work and everyone who has tried to compete with Apple on a "features level" has ultimately failed.



Really, people just prefer simplicity. Indeed, simple wins over massive features; just look at the iPad vs. Windows which is dominant in its space. Even against a locked in and top vendor it wasn't features that won, but rather, simplicity and a tight focus on problems with the Windows platform centered on weight and battery life. 

Apple iPad 2Now, the Zune's defining features were two: subscribing to a library of music/flat rate pricing and sharing music legally. Nevertheless, it wasn't easy to transfer playlists from the iPod to the Zune.

Meanwhile, folks already had already purchased or ripped lots of music to their iPods and the sharing feature only worked between two Zunes. 
So, if 99.5 out of the 100 people you know have iPods or some other player, the feature wouldn't work.  

In addition, Steve Jobs pronounced subscription music to be stupid and Microsoft didn't effectively move against that impression. Oh, and initially, though the devices had Wi-Fi, they would only connect to each other via a cable and wouldn't sync wirelessly.

Marketing

Apple entered the smartphone market with an unproven design, ran up against a set of dominant phone companies, and kicked their asses.  

Windows was untouchable, Microsoft failed with the Windows tablet, Apple created the iPad and Microsoft CEO lost his bonus, and AMD's CEO, COO, and head of strategy were fired.  

What is the key?

Awesome, well-funded marketing. Had Apple brought out the iPhone without marketing they would have picked up a lot of the Mac faithful but little else. And of course, an iPad without marketing is like a netbook with a touchscreen and no keyboard.

It is marketing that gets people excited about what a product can do, it is marketing that showcases its advantages, and it is marketing that generates demand. This is what technology vendors seem to forget, as most tend to under- execute and under-fund marketing.  



Microsoft Windows Phone 7When Windows 7 got a top flight marketing team and a budget it screamed back into the market successfully. When Verizon pushed the Droid well it sold well. Yet, marketing can't make up for an incomplete product so it hasn't helped the Xoom as much.

Similarly, Apple didn't really market its AppleTV and the device hasn't done all that well. Still, when Apple markets, it typically succeeds. When it doesn't, they generally fail. Even Cupertino can't overcome bad products and even a good product needs strong marketing.  

Sadly, the Zune never received the level of marketing as the Xbox. Even when it was eventually positioned against a more popular and near standard iPod, the marketing bar was huge. Microsoft didn't step up and so the Zune is history.

Wrapping Up: Beating the iPod

To beat the iPod, Microsoft needed to enter the market with a competitive product that was both differentiated well against the iPod in terms of design and capability. It also needed to have those advantages well marketed.   

If Redmond had come up with the Nano or even the Shuffle first, it could have taken share, as both products were well differentiated and skillfully marketed.

iPod NanoAs we all know, they came from Apple first. 

If Microsoft had, at the end, come out with the Zune phone before Apple released the iPhone, they would have caught the company short. But Apple saw the risk before Microsoft did - even though the ROKR clearly showed the direction well in advance.

Nonetheless, Microsoft didn't see or execute on the opportunity. Even when the iPhone came out Microsoft, with a much larger share, could have likely blocked it with the right effort. Instead they laughed at the iPhone, but obviously aren't laughing so much today. 

The mistake that most companies make when taking on Apple, or ironically Microsoft, is they don't fully assess the cost or fully fund the effort - then seem surprised when they fail. In the end, the Zune would only have won if Microsoft was willing to do what it took to win. Clearly, Microsoft wasn't, and the rest, along now with the Zune, is history. 

If they aren't careful, HP with their TouchPad, Pre, and Evade, and Motorola with their Xoom along with every other Apple challenger including Google, will relearn this very expensive lesson in the most expensive way - through experience.  

Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently, he provides his services to most of the major technology and media companies. The opinions expressed in this commentary are solely those of the writer.