Apple after the bell 07/27/06: What does Microsoft's Zune offer that might kill the iPod?

Posted Jul 27th 2006 8:15PM by Tobias Buckell
Filed under: After the Bell, Press Releases, Products and Services, Competitive Strategy, Apple Inc (AAPL), Marketing and Advertising

Apple ended the day down 47 cents, finishing at $63.40. Today's big news for Apple to pay attention to was that Microsoft indicated at its analyst day that it was going to compete with the iPod long term, and was willing to spend 'years' on the Zune without profits in order to grab the market. A serious threat, considering that Microsoft just only now announced making a profit on the Xbox and stayed committed with it until now.

But Microsoft's Zune player has a hard hill up ahead, as Apple is filing patents on 'no touch' iPods that sense when the fingers are close to respond to the user, as well as wireless synch iPod patents, all of which would give the iPod a compelling feature set against the Zune. The Zune competes with the current iPod, Apple is working on the next.

Furthermore, while Microsoft is comparing the Zune rollout to its successful attempt to enter the videogame market with the Xbox, there is one big distinction that must be made. Xbox offered a unique title that Sony couldn't offer: Halo. What will Microsoft offer that Apple can't?

Will Microsoft convince media executives to offer certain songs only through Microsoft? DRM is something people oppose about the iPod, but you can bet Zune will use DRM as well. So far Microsoft has not offered up a compelling reason that people might want to switch to a Zune.

Tags: apple, drm, ipod, microsoft, xbox, zune

Print this

Reader Comments (Page 1 of 1)

7-28-2006 @ 12:31PM

Ivan said...

This is an extremely one-sided view of the world. DRM isn't the only problem with iTunes/iPod. Its that the DRM is only usable one one device, the iPod. MSFT is most likely going to change their DRM scheme but they've proven that they believe in providing the DRM scheme to other sources (PlaysForSure).

The Zune isn't only likened to the rollout of the XboX, its potentially linked.

A no touch iPod is novel but not really useful. The click wheel they have now is overly sensitive and ridiculously inaccurate. And I think MSFT has an advantage in the data sync area ... ActiveSync anyone?

7-28-2006 @ 3:34PM

Rod McElroy said...

MS is commiting suicide. With the problems with Vista they think they can make some impact with a new MP 3 player? Whatever are they smoking up there in Washington State? Rod McElroy Riverside Ca.

7-28-2006 @ 3:46PM

Chris Stegner said...

This same discussion has recently been started on zunetalk.org. I don't think it is nearly as impossible for zune to replace the ipod as it would be for apples OS to replace windows ;)

Sorry, staying on subject. For us the consumer I can only see this as a win/win situation. Right now apple has nearly no competetion making a dent in there sales to speak of. This could push both developers to make better products and hopefully lower prices.

Hopefully Microsoft brings better connectivity to the internet in their product release. Something that is definitley missing in this market.