Let's skip right to the conclusion to this post: Microsoft is blowing their chance to beat Apple's iPod because they are duplicating the iPod's only weakness instead of offering a better alternative. Because of this, consumers will compare the many strong points of the iPod to the features of the Zune and the Zune will lose in the consumer's mind (and heart and wallet). To make things worse for MS, the many consumers who have been spending their time and money to support "Microsoft's side" of this war via "Plays For Sure" and MS's hardware (SanDisk, HTC, etc) and software (Yahoo!, Napster, Rhapsody, etc) partners will feel like their loyalties (or at least money) has been wasted because all of these supporters will now be deserted with no thanks nor reward for their support. By not offering the masses a real improvement over the iPod and by upsetting their supporters in this battle, Microsoft has effectively guaranteed Apple's victory.
That is a pretty big pile of accusations, predictions, and what some would call argumentative negativity, isn't it? I really do believe these things and because of my studies and experiences in this area, I have no other choice but to come to these conclusions. I will now attempt to explain why.
1. The iPod/iTunes Combo Has A Huge Leader Advantage in the Market But Has Weaknesses
The iPod makes Apple a good bit of money not only from sales of the device but also from the advertising boost they gain thanks to the fact that iPods act as advertisement for Apple computers both to the iPod owners and to those around them. The iPod does not require an Apple computer, only iTunes, but when people tend to develop a brand loyalty to companies who make things people use and enjoy. So when Mary uses Apple iTunes on her Microsoft Windows computer to load music onto her Apple iPod, the pleasure she gains is associated with Apple, not Microsoft, and this acts as a small bit of advertising that may one day cause her to replace her Windows PC with an Apple Mac. Advertising is a game of chance but if iTunes and the iPod work for her, she will certainly feel positive feelings toward Apple as a brand. She may even attribute problems she encounters with the process to the fact that she is using Windows instead of a Mac. Call a friend who runs only Apple hardware and software and say "I am having troubles with my iPod and iTunes on Windows XP" and please let me know if they mention "You should use a Mac" or "it was made for a Mac" or "it runs better on the Mac" or if that never comes into play at all. I could be wrong here. Regardless, for a Windows user, a great experience from an iPod is great Apple advertising.
There are, however, some places where the iPod/iTunes combination is less than ideal. These areas of weakness leave room in the market for a competitor to take both existing iPod users (Apple expects users to upgrade yearly, for those who want to have 'the latest and greatest', or ever 2-3 years; this forces the choice between the iPod and the iPod competitors each time) and user who have never bought an iPod (due to refusal to give in to what they see as unsatisfactory conditions of the current iPod/iTunes state of affairs or because they just don't want to buy a portable music device at this time). For the sake of brevity, I will address only one weakness. This weak point is the most important to myself and to others but there are other points of weakness. I will not go over the many strong and successful points of the iPod, also for the sake of brevity. I will mention them again in a later section. Do not let my concentration on the iPod's weak points make you think I don't see many good, strong points about the iPod. I do In order to beat someone in a battle, you should attack their weak points, not their strong points. This article is about a competition, a "war" of sorts, so detailing weaknesses will be be more important here.
2. The Main Weakness of the iPod/iTunes Combination Is That It Is An Exclusive, 1-to-1 Combination
First off, I want to say that I understand why Apple sticks with their "if you use an iPod, you need to use iTunes" strategy. The numbers so far argue against changing this strategy. As long as the number of iPod users continues to lead the market along with the number of iTunes music (and now TV/Movie) purchases, maintaining this exclusivity will serve to increase the Apple footprint so that when the inevitable competition begins in earnest, Apple will have a strong base to fight from. Even if they do a complete about-face and allow all competitors' devices and services to play nice with the iPod and with iTunes, delaying that moment as long as possible will almost certainly benefit Apple.
However, this is the main weakness in the iPod's quest for total (portable media player) world domination. Almost every computer user listens to music but many of them use programs other than iTunes. Some of them even refuse to use iTunes. After auditioning no less than 5 versions of iTunes, I count myself in that group. I occassionally install iTunes again to give it yet another try but I always end up uninstalling it with a bit of disgust or anger. I am not an Apple Mac user and I just don't use my computer the way Apple's developers want me to. I doubt they'll ever change their minds so, for now, I refuse to use iTunes. And so I also refuse to use an iPod because without iTunes, the iPod is basically worthless. I know there are programs that work around the iTunes/iPod marriage but Apple doesn't like (and tends to break) these hacks and I refuse to have to resort to such a thing out of principle. Instead of being stuck with an iPod that can only completely work with 1 iTunes-equipped computer, I use a Windows Media PlaysForSure device instead. I have used songs via legal purchase and subscription services including Napster, Rhapsody, Virgin, and Yahoo! Music unlimited on my device, about 4x the number of online services iPod supports. The PlaysForSure device would be kicked to the curb if I could buy an iPod with that same freedom. There aren't any other real drawbacks to Apple's iPod. So when will a competitor of significant power exploit this weakness? No time Zune, apparently.
3. The Main Strength of the iPod is Apple's Marketing Dominance
The iPod works, yes, but that isn't enough to gain 85% of any market. Not even being the best product in a given field gets that kind of market share. That slice of the pie can only be achieved by appearing to *be* the pie. In 1985, you didn't ask your friend about their portable cassette player, you asked about their Walkman. Today, you say "iPod" whenever you talk about portable music players (unless you are addicted to syllables). I know that other portable media players have been advertised in print, on TV, on billboards, and in other media but right now: pull out a pencil and list every television ad you've seen for a portable music player besides the iPod (gaming systems do not count). I saw one for a Dell that is now discontinued but I can't recall any others. That kind of marketing makes the iPod seem to be the market. In 1985, you would ask the clerk about buying a Walkman. Today, your mom is going to ask the clerk where the iPods are located. The advertisements showing the iPod Shuffle instantly made it the "must have" accessory of the month. Without any real competition, this was easy. Well, Apple makes that sort of thing look easy. Add a competitor to the mix with a huge marketing campaign and there would be room for someone else to lay claims to a slice of the pie. Consumers are like that: they do what they're told. Nobody ever told them to buy a "SanDisk 1 GB MP3 Player" but Apple constantly told them to buy a Shuffle. So they did.
The distinctive white headphones were also a great marketing move by Apple. The lanier with the shuffle was even better. This instantly turned every iPod user into an advertisement in addition to helping the iPod's role as a status symbol. This type of "crowdsourced" marketing is brilliant, cheap, and very effective.
4. The lesser strengths of the iPod will be hard to beat; the lesser weaknesses will hardly matter.
There are many areas where the iPod excels and beating those points will be next to impossible. Even if a device is actually "better" designed than an iPod, it will still be different and therefor not as good. Device makers realize this. The iPod design has room for improvement as long as you still look like an iPod. That includes competitor's products moreso than Apple's.
The lessor weakness of the iPod give competitors openings to 1-up Apple's pod of gold but until missing features such as bluetooth, wifi, universal connectors, larger screens, and 16:9 aspect ratios become standard, very few users will notice or care.
5. To Beat the iPod, 3 things must happen:
A. The Marketing Dominance must be met with a respectable marketing push. You bring a marketing push that will put the competitor's device in front of the eyes and ears of the market. Few companies can do this but Microsoft can.
B. The lesser strengths must not be forgotten and the lesser weaknesses can help push the competitor up to the level of iPod quality. MS can add a few "cool" features to help soften the fact that even a very well designed device will not rival the iPod's high water mark of industrial design and usability.
C. The main weakness must be exploited. You offer a device that will work with as many of iTunes competitors as possible, bringing support from Apple's business competitors and from users who refuse to buy an iPod because of the iTunes restriction.
6. This all seems so simple but Microsoft isn't going to do it. Instead exploiting it, they duplicate the iPod/iTunes weakness.
How did Microsoft mess this up?
They can make the marketing push. The device is "good enough" to match the iPod's features and design but without tackling that iTunes weakness, how do they expect to win?
The Zune will only work with their service and will not support the handful of PlaysForSure services they have long tauted as freedom from the iTunes ball and chain. WHAT? Microsoft is duplicating the iTunes weakness? Yes, but with an extra crippling feature: iTunes runs on Windows and Mac, Microsoft's version probably won't.
Things are worse for the Zune than just becoming another "also ran", though.
7. The Zune will result in a backlash from Users who have supported Microsoft's PlaysForSure devices/DRM instead of Apple's.
Millions of us have bought (and/or rented) Janus DRM'd music and video from Napster, Rhapsody, Yahoo!, and other services have always had a bit of jealousy in our hearts because we wished that we could use an iPod with our service of choice. The hopes of Microsoft finally delivering a device as good as the iPod have now been dashed and we see that Microsoft, instead of stepping to the front and handing us a cool device we've wanted, has left us stranded. They are releasing their cool device but we don't get to use it!
Instead of "thanks for buying all that PlaysForSure music" we get "hey, sorry you believed in us!"
8. The Zune will cause a backlash from the companies who have supported Microsoft in the Music/Portable Media/DRM war.
Microsoft finally releases a cool device but Yahoo! Music Unlimited subscribers will need to switch away from Yahoo! and join Microsoft's service instead. Napster users, Rhapsody users, Virgin users, and others will have to choose between the cool new device and their current music services. Those services aren't going to be happy with that.
Surely they, like we users did, expected Microsoft to release a device that would drive *more* users to Napster, Rhapsody, etc, not drive current users away.
I don't have any reactions from Yahoo, Napster, Real, or others getting stiffed on this deal but I can't imagine their reactions being different than the users' reactions. Unless they know something we don't know...
The Zune is going to cause a rift between Microsoft and their supporters at a time when MS can't afford that. When you upset your supporters, you end up in a worse position than before. Right now, Microsoft isn't really in a good position. They have a device that is competing against an industry Goliath but they aren't aiming at the weak spot. So when the giant doesn't fall and their supporters no longer feel like part of the cause, what does that say for the future of this war? Will Zune v2 come to save the day? Will Apple's position grow further? Will Richard Branson decide to put money into a Virgin Music Player instead of wasting it on reducing greenhouse gases? What do you think? I just don't know, but I do know this:
Microsoft is blowing their chance to beat Apple's iPod because they are duplicating the iPod's only weakness instead of offering a better alternative. Because of this, consumers will compare the many strong points of the iPod to the features of the Zune and the Zune will lose in the consumer's mind (and heart and wallet). To make things worse for MS, the many consumers who have been spending their time and money to support "Microsoft's side" of this war via "Plays For Sure" and MS's hardware (SanDisk, HTC, etc) and software (Yahoo!, Napster, Rhapsody, etc) partners will feel like their loyalties (or at least money) has been wasted because all of these supporters will now be deserted with no thanks nor reward for their support. By not offering the masses a real improvement over the iPod and by upsetting their supporters in this battle, Microsoft has effectively guaranteed Apple's victory.