The Big Media Player Player Battle - Or Just a Skirmish?
Microsoft made the announcement yesterday that it was formally releasing it's challenge to the ubiquitous Apple iPOD. The long awaited device, dubbed “Zune” by the Wizards of Redmond, is supposed to elbow its way onto store shelves next to the iPOD on November 14th. The market reacted to this challenge to iPOD's complete market dominance by trembling with fear for the poor iPOD. Well, actually, what really happened is that Apple stock actually gained $.60 on the day, and MSFT had a $.04 hiccup the other way.
You'd think the formal announcement that the Big M was formally entering the lucrative, portable player / content download market would earn it's stock a bit of bump, and it's main competitor a decline, rather than the reverse. This probably would be the case, unless the market had already accounted for the emergence of Microsoft's little gem and, when Punxsutawney Phil's little melon actually did emerge from the hole, analysts were a mite underwhelmed.
What Zune will do for the boys from the Bicycle Capital of the Northwest, aside from the entry into the hardware market, is give Microsoft a nice, little recurring revenue stream, as they plan on offering monthly subscriptions for $14.99. They must feel they've given the consumer some added value over other services, such as Yahoo and Napster, who offer download and streaming services for less cash. Microsoft has indicated they will give the consumer access to millions of songs from the get go. However, as the Zune includes a 3” LCD screen, video probably isn't far behind. The other aspect the Zune brings to the table is wireless file sharing with other Zunes, as Microsoft tries to knit us together into a big, happy family using Zune needles.
Apple responded to this by announcing they'd start offering Disney content for download through iTunes. Will Microsoft's entry into the portable media player engender a fundamental change? Will the revolutionize it the way they did with the PC 20 years ago, and Apple has done with the iPOD? No, not a chance, but they are just looking to get their piece of a pie that was estimated by research firm Mindbranch to be well over $400 million in 2005 and will only get bigger.
Throughout the consumer electronics industry, many firms are offering docking stations that allow iPODs to be jacked into user's home stereo or whole house audio systems. No other player has this type of connectivity being offered by other consumer electronics manufacturers. If, and when the Zune achieves something close to this type of popularity, indicated by broad support of many other players in the CE industry, they will have made meaningful inroads into the market. Until then, no matter the cool innovations the Zune may have tucked away in it's plastic innards, it will be just another also ran in the “Look How Cool I Am” personal media player market.
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