Zune HD faces uphill battle vs. Apple?s iPod touch - report
Despite hardware and software improvements, Microsoft's newly launched Zune HD may be too little, too late in the face of the iPod's commanding market share, a new report has concluded.
In a note to investors this week, Mike Abramsky, analyst with RBC Capital Markets, said that Microsoft?s newly released Zune HD will have a neutral impact on Apple's current position in the portable media market. Although the Zune HD now offers a similar experience to the iPod touch, the iPod's current install base of 220 million coupled with iTunes' nearly 70 percent market share is simply too large to allow Microsoft a solid foothold into the market.
Abramsky admitted that a high switching barrier exists given the convenience of Apple?s iTunes/iPod "ecosystem" which deters users from jumping ship to other products. The report goes on to say that Microsoft faces further roadblocks to gaining market share due to the declining standalone media player market.
Some of this decline can be traced to the fact that users have begun switching to smartphones as their media player of choice, and the iPhone offers a seamless transition from Apple's iPod line -- something that the Zune HD simply does not offer in its current state.
The Zune HD launched Wednesday, in the wake of Apple's refresh of the iPod line the previous week.
In a note to investors this week, Mike Abramsky, analyst with RBC Capital Markets, said that Microsoft?s newly released Zune HD will have a neutral impact on Apple's current position in the portable media market. Although the Zune HD now offers a similar experience to the iPod touch, the iPod's current install base of 220 million coupled with iTunes' nearly 70 percent market share is simply too large to allow Microsoft a solid foothold into the market.
Abramsky admitted that a high switching barrier exists given the convenience of Apple?s iTunes/iPod "ecosystem" which deters users from jumping ship to other products. The report goes on to say that Microsoft faces further roadblocks to gaining market share due to the declining standalone media player market.
Some of this decline can be traced to the fact that users have begun switching to smartphones as their media player of choice, and the iPhone offers a seamless transition from Apple's iPod line -- something that the Zune HD simply does not offer in its current state.
The Zune HD launched Wednesday, in the wake of Apple's refresh of the iPod line the previous week.
Comments
The Zune HD does not, in fact, offer a "similar experience" to the Touch. It offers a competitive subset of the Touch's functionality-- a point subsequently made by this analysis when it mentions the lack of an ecosystem as a barrier to adoption. At this point, the "ecosystem" is most certainly part of the "experience", when you consider that said ecosystem includes a vast array of applications and integration with third party hardware.
Secondly, the whole "smart phone/MP3 player" thing is where it starts to get interesting. Apple has a single mobile OS, and that OS is a flavor of its desktop OS with a touch optimized UI.
MS, on the other hand.... well, let me repost this bit from an interview with the Zune's head of marketing, Brain Seitz:
Q: Will it open up for third-party app developers?
A: It's hard to say right now. If you look around the company at other places where things like this are important, Windows Mobile rises to the top. They have devices which are always connected, which make applications like maps really cool and important.
On a sometimes-connected device, what people are using them for are games. So what we didn't want to do was build two parallel app store experiences that didn't work together.
Right now our product roadmaps didn't line up perfectly for us to snap to what they're doing or vice versa. That being said, we know people want things like this on their devices so we're going to build them ourselves, they're going to be super high-quality, and they're going to be free.
Down the road if there's a way we can work with Windows Mobile or another group inside the company that's building an app store and take advantage of that, that's something we'll look into.
And again, as John Gruber translates: "No, because our mobile strategy is a convoluted mess."
That is, MS has these silos of development and a corporate culture that seems to encourage intradepartmental competition. Is the Zune OS the new phone OS? Apparently not. Will the WinMo 7 incorporate the Zune functionality as an app? Who knows?
Compared to the clarity of Apple's strategy, MS seems to be just flinging stuff out there in a kind of frenzy, and it's not clear whose job it is to make it all more or less work together or integrate.
I mean, look at those remarks, again. Seitz is basically saying "The Zune team made this without any interaction with the phone team, who are doing their own thing, so we couldn't poach on their turf, which obliges me to defend vastly reduced functionality as a "feature."
I can't see where this isn't going to become more and more of a problem for MS in the mobile space, going forward. It's hard enough to work with devs when your phone handsets have vastly differing form factors and specs, but now your PMP/PDA/handheld thing isn't even on the same page? Hmmm.....