Zune vs. iPod: Microsoft’s Third Strike

You know, I was all ready to write a really long article comparing the new Microsoft Zune to the Apple iPod. But then, some guy I don’t even know (Jeremy Horowitz) went and wrote up the exact article I was thinking about… and even did it better. So read his.

Microsoft’s Third Strike: Zune Hyped, Lessons Learned

I found another blog, hosted in Japan, that just rips Zune pretty hard.

Personally, I completely understand why Microsoft built the Zune, and rushed it to market. Microsoft is not used to being on the other end of network effects, and while they’ve been focusing on Google as their new enemy #1, Apple has somehow locked up the digital media marketplace around music. Worse, they seem to be in a good position to leverage that monopoly into other areas of the digital home.

In digital media, it’s like the Bizarro planet, where the planet is square and you say goodbye when you enter, hello when you leave. Apple has the entrenched monopoly, tied together with a powerful alliance of hardware, software & digital rights management. Microsoft is the underdog here, because they can’t really leverage their strength in the enterprise, and their consumer marketshare doesn’t help them much either since the iPod & iTunes are cross-platform.

It really is strange through the looking glass, because in this world Apple has the broad product line and thousands of third parties, including auto manufacturers! Microsoft has just a few models, and insignificant ecosystem support.

I’m not sure I understand why Microsoft abandoned PlaysForSure with Zune. One of the things I learned from Michael Porter about corporate strategy is that you need to build your moat around your unique value proposition – not try to and just mimic your competitors. The Zune smacks of a bit of desperation, and I’m not sure hundreds of millions in marketing dollars will change that.

Still, Microsoft has deep pockets, and they are going to be in the game for the long term. My prediction is that they’ll lean towards tighter integration with the Xbox, and use that as the lever into the digital home. I do wonder, however, whether they could have just embraced the iPod, and worked to make the Windows Media, Xbox, iPod ecosystem flawless, thus containing Apple to what will eventually be a small piece of the overall digital home. It would have been a lot cheaper, and would have spared them another round of embarrassment.

Embrace & Extend. Whatever happened to that oldie but goodie?

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