Microsoft's Zune Mp3 Player: Not an obvious game-changer

Microsoft's long-awaited mp3 player, Zune, is due out tomorrow, earning some preview bouquets and brickbats.  Quick details of the expected device from Gizmodo and slashdot:

• Mp3 player manufactured by Toshiba based on Toshiba Gigabeat product
• 30Gb hard drive
• FM tuner
• three-inch screen
• video player
• WiFi 802.11b and 802.11g wireless
• Community-linked so users can 'lend' songs to friends wirelessly
• Music service
• No video service
• $300

Microsoft is late in the game, coming in five years after Apple. Therefore it needs to disrupt the market to attract consumer interest. An incrementally better product than an iPod won't be sufficient to gain customer interest. An incrementally inferior product or a me-too with no new game-changing attribute could be a disaster.

Apple, as the dominant supplier with more than 42 million users and 75% market share, needs only to add incremental improvements to iPod to continue to dominate the market for now. Yet Apple's pending iTV system looks like a potential market disruptor to the broadcast TV business.

Of all the attributes of Zune, the sharing function is the only possible game-changer. People do like to share digital things: pictures, emails and songs. How easily the Zune (and copyright restrictions) allow for sharing will determine whether it is a standout product or an iPod clone.

**Flashback **
Oct. 23, 2001: Mixed Reactions for Apple's first iPod.

**Other views **
The Disruption Group lists the results from disruption, including new revenue streams and sustainable, high return on equity.  The website also has a CEO Guide to the Benefits of Disruption (pdf)

Gizmodo offers five reasons the Zune will be a hit: Large screen, community-link, Microsoft backing, contrarian (to the iPod), like MS-Windows, better versions will come in v2 and v3.

Seattle Weekly has good insight into Microsoft's efforts and the thinking of J.Allard, the guy behind the Zune: "Microsoft hopes that its emphasis on the music, rather than just the gadget, will help set Zune apart from its dominant rival."

Comments

[BrianPhipps]

I'd have to agree that the game-changing potential of the Zune is pretty slim. In fact, Microsoft is not only "late to the game," it's late to the wrong game. The iPod/iTunes combo is Apple's pathway to the home media center market. That's where the game is being played.

I also might say that it's rare for one product to disrupt another product. It's really new kinds of customers who do the disrupting. Apple created a new kind of customer with iPod/iTunes. I'm not sure that Microsoft has the brand imagination to do so with Zune.

[Paul]

Microsoft will make a dent in the market, but not with this version of the product. Apple already has critical mass, and if I can't play the inventory of music I bought from iTunes, why would I give up the hundreds of dollars I've already spent on music to switch to Zune? It just isn't that compelling.

The one thing that Microsoft (or any iPod contender) could do that would be disruptive would be to go to market without the onerous DRM restrictions on use. Microsoft is big enough to tell the industry that they aren't going to do it, but unfortunately, they aren't bold enough to duke it out.

Some would say that they can't do this, but DRM is on very shaky legal ground, despite having won round 1 with the DMCA, and that is besides being unethical and unpopular with consumers.

see: http://thewaythingsare.typepad.com/antimarketer/2006/09/media_art_marke.html