In case more evidence was needed that Microsoft (NASDAQ: MSFT)'s Zune is a bust, GameStop (NASDAQ: GME) has decided to stop selling the MP3 player, citing the fact the product "didn't have the appeal" that it had hoped it would. GameStop has pulled the inventory from its stores and will offer the Zunes on its website until it has cleared out the entire inventory.
In response, Microsoft told the Wall Street Journal that the Zune sales "have seen good momentum" of late and that the company had seen "great response to our spring release." Translation: "Believe us not your lying eyes."
The failure of the Zune and similar iPod wannabes indicates that Apple (NASDAQ: AAPL) may have a bigger moat than many had expected. So far no one has been able to dethrone the iPod and as stores like GameStop stop carrying competitors, Apple's competitive advantage will strengthen.
Microsoft (NASDAQ: MSFT) can't sell any Zunes, so it has come up with a plan so that it will continue to do badly in the business. According toThe Wall Street Journal, Redmond"is introducing a new technology that will let users of its Zune portable devices legally share portions of their song libraries with other Zune users." To take full advantage of the new product users will have to buy a $14.99 a month service called Microsoft's Zune Pass.
None of that is going to help get share from the Apple (NASDAQ: AAPL) iPod. Not only is it the largest music download service in the US, the iPod has almost 80% of the market. Zune owners can't share music with other Zune owners because there are so few of them. Perhaps Microsoft could start a "Zune-user location service" and charge money to help people find the two or three other Zune customers in their town.
There have been hopes that the Zune would do for Microsoft in the portable music device business what the Xbox did for it in gaming. But, Apple's footprint is too large and it is adding services, like video downloads and rentals, too quickly.
Microsoft should stick to trying to buy Yahoo! (NASDAQ: YHOO).
It may be hard to fathom. The Zune portable multimedia player, introduced over a year ago, is selling out. Microsoft (NASDAQ: MSFT) could not give the first version away. Its attempt to take market share from the first place Apple (NASDAQ: AAPL) iPod was a very public failure.
But, the world's largest software company came out with a new and improved version for this holiday, and it appears to be a hit. According to the Associated Press "the 80-gigabyte Zune media player Microsoft launched Tuesday has sold out across the Web, to the dismay of online shoppers and delight of the world's largest software maker." There is talk of 10-day delays for Zunes ordered on Amazon.com (NASDAQ: AMZN).
The lack of availability of the device may seem like good news for Redmond, but it isn't. It may get the company some PR about the popularity of the new device, but the software company can't gain market share against the iPod if it does not have inventory to sell.
Microsoft may lack skills in terms of manufacturing hardware devices and managing its supply chain. Apple has been at the hardware business for well over two decades.
On reflection, there is nothing to celebrate about a Zune shortage, except at Apple.
Douglas A. McIntyre is an editor at 247wallst.com.
Looks like Microsoft Corporation (NASDAQ: MSFT) is interested in acquiring mobile content company Musiwave to up its stance on mobile entertainment. Musiwave gives wireless carriers the capability to offer branded ringtones, callback tones, and even full music track downloads from the web directly to a handset. With mobile ringtones being a billion-dollar industry, it seems appropriate for Microsoft to have interest. Has the revenue ship already sailed for the most part, though?
Not exactly. Musiwave's customers sound like the 'who's who' of European mobile media wireless content providers: O2, Vodafone, T-Mobile, Orange, Telus, Telefónica, and Virgin Mobile. Will Microsoft use this acquisition to push its Zune and Windows Live brands into the hands of millions of mobile phone users? Of course -- that's the whole reason behind the interest in acquiring Musiwave. Trying to find an edge to gain footage on Apple, Inc. (NASDAQ: AAPL)'s iTunes universe is no easy feat.
Sliding cellphone users into the world of the Zune-i-verse makes for a challenging but doable prospect for Microsoft. Apple iPod Touch and iPhone users can use the WiFi capability of those devices to access and download music content off the air wirelessly, and Microsoft needs the same capability. However, the difference here is that any mobile provider can be used -- not just a generic WiFi wireless internet hotspot.
Microsoft (NASDAQ: MSFT) will begin selling newer versions of its Zune digital media player as of today at national retailers like Best Buy (NYSE: BBY) and Wal-Mart (NYSE: WMT). The world's largest software company will, again, try to compete head-to-head with Apple (NASDAQ: AAPL)'s iPods, current the planet's most popular line of digital media players.
In addition to replacing the original Zune player with a newer, sleeker unit, Microsoft's releasing the slimmer Zune player in 4GB and 8GB capacities to compete more directly with Apple's most popular iPod product, the iPod nano. After five years, is the world tiring of the iPod and seeking another, equally capable device with more features and an online media store to boot? Many would answer "yes" to that question, and that's the market Microsoft wants to recruit to this new line of Zune devices.
As reported on Engadget yesterday, Microsoft Corp. (NASDAQ: MSFT) is set to launch a newer, slimmer Zune digital media player in November. It's adding two new products to the Zune ecosystem as well, both of which are based on flash memory instead of using hard drives. In essence, Microsoft is trying to catch up, once again, to Apple, Inc.'s (NASDAQ: AAPL) iPod lineup, the most recent of which was announced and subsequently launched about a month ago.
Microsoft's more fascinating products out of the new lineup are the slim, flash memory-based devices. These new Zunes will come in several colors and memory capacities, with a 4-gigabyte version selling for $150 and an 8-gigabyte version running at $200. These are the exact same price point Apple has on its new iPod nano products.
Microsoft is touting the term "Zune" as more than just about the player devices themselves, but is trying to market the brand in a way similar to the iTunes atmosphere most iPod owners use to download music, movies, TV shows, podcasts and other content. Microsoft is doing one thing different, though -- it's adding a "social network" concept to the Zune atmosphere and pushing that concept with built-in wireless internet capability on all new players. Also, the Redmond giant is relaxing some of the song-sharing restrictions that have hampered wireless networking capabilities in the first generation of Zune players released last year. The large question is this: will the Zune ever be able to compete with the iPod, on any level and at any price? Round two is about to begin.
Free music downloads, sweet! Digital music newcomer SpiralFrog went live yesterday, giving away tunes to all us Thifty McLintpockets, sticking it to iTunes, asking only that we show a little love to its sponsors. Are we back in the Napster shopping-spree days of 2000, ready to grind our employers' networks to a standstill?
Not quite. The tragically titled SpiralFrog -- run by the private Mohen Inc., whose interests appear to be solely this venture -- bills itself as "the market-driven solution to illicit pirate file-sharing sites." It claims to be gunning not so much for Apple (NASDAQ: AAPL)'s iTunes or Amazon (NASDAQ: AMZN)'s forthcoming MP3 site, but instead challenging amorphous peer-to-peer MP3 networks like LimeWire and Soulseek, priding itself on being free of viruses, spyware and other nasties.
Not that this is a bad idea -- it's actually a very good, very natural idea. No need to point out that well before websites gave away content for a smattering of mortgage lenders' ads, radio, network television, magazines and newspapers were all available freely or at least affordably as advertisers footed the bills. So why couldn't music downloads work as well?
This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.
The technology stories of the 1980s have a lot to do with the dawn of the PC era. IBM was about to license its personal computer technology to the open market (leading to the rising popularity of Microsoft) and Apple's computers were a hit-or-miss proposition with consumers as el-cheapo PCs made their entrance and became the dominant force in many homes and offices. Remember 1,200-bps modems and bulletin boards, folks?
Microsoft's arguably illegal tactics made it flourish in the 1990s under CEO and company cofounder William H. Gates, and the debate continues to this day whether the Windows 3.0 and Windows 95 operating systems were in part copies of Apple's MacIntosh operating system. Suggested viewing: Pirates of Silicon Valley.
Apple seemed dead in the water in the mid '90s, and Microsoft was growing by leaps and bounds. Bill Gates became the richest person in the world on paper (which would last more than a decade), and Steve Jobs came back in 1997 to try and resurrect a floundering Apple that had not done much in terms of innovation or growth under then-CEO Gil Amelio. Gates seemed on top of the world; Jobs, not so much.
This article over at PC World churned up some food for thought over the weekend for me. The author makes many decent points about how computer industry stalwarts Microsoft Corp. (NASDAQ: MSFT) and Apple, Inc. (NASDAQ: AAPL) have pretty much changed places in terms of being monopolists in their chosen industries. Now, the term "monopolist" may be the only beef I have with the argument. There have always been loads of choices for consumers in the PC and music player industry. Loads.
But the legal trouble Microsoft ran into globally about a decade ago related to its "monopolistic" practice of bundling a web browser (Internet Explorer) into its Windows operating system is not happening to Apple when it "forces" customers to use its iTunes software to make that new iPod work. It's true that alternatives existed for Internet Explorer a decade ago (for informed consumers, anyway), and the same exists for iPods, new and old. You don't "need" iTunes to make it work, but the workarounds are far beyond the patience and technical level of most iPod customers. Therefore, can anyone argue that either company has a monopoly?
It's interesting to see the author point out that Apple is doing things with its digital audio player ecosystem (iPod/iTunes) that would have landed Ole' Softie in court years ago -- something I agree with. Apple makes products that are easy to use and feed the customer need for "just make it work" simplicity, and which are elegantly-designed to boot. Hence, these products sell incredibly well. What's monopolistic about that?
Conversely, Microsoft was not the only PC operating system years ago, although it was hard to buy a new PC without having a version of Windows already installed on it (forcing you to indirectly buy the software). As I said, there were always workarounds, but most customers do not want that -- they just want these products to work, and work well. Has Apple displaced Microsoft as the new monopolist of the high-tech industry? Or, should we even use the term "monopolist" at all?
So, have you gotten tired yet of hearing about Apple Inc. (NASDAQ: AAPL)'s new iPhone that is going "change the world"? With so much attention being paid to the new iPhone, you may have missed the rumors lately that Microsoft Corp. (NASDAQ: MSFT) is planning to release its next generation of the Zune later this year.
According to our friends over at Engadget, it looks like all you Zune lovers could be in store for its next generation digital music product in time for Christmas! The new flash Zune, going under the code name of Draco, is expected to be available in both 4 and 8GB editions.
Engadget got its information from the people at Whiz Byte, who claim to have heard from a Microsoft representative that the new Zune will be out definitely in time for this year's holiday season. While there are no specifics regarding what we can expect to see when the new Zune comes out, the Microsoft source did point to three areas where we can expect to see changes:
Updates to the Zune family itself. These new updates will include new sizes, styles and price points
Features that will help the Zune "move towards parity with iPod"
The devil made him do it. Or maybe it was Bill Gates.
No matter. The internets are having a jolly mock-fest over a man who took brand marketing to an alarming plateau. Our sister site Engadget is a-twitter over the happy Microsoft Zune fan who got not one, but two Zune logos tattooed on his beefy arms.
With the amount of chatter going on about this chap, you might think he'd be in for his 15 minutes of fame as a sort of underground Zune spokesman. But there are a few problems:
Microsoft Corporation (NASDAQ: MSFT)'s MP3 player Zune is widely seen as a decided also-ran next to the ubiquitous Apple Inc. (NASDAQ: AAPL) iPod. And even though Microsoft hired college students to help flack Zune during its launch late last year, there are certain tacit rules when it comes to using people to help promote a brand: One of them is that they gotta seem cool and attractive to other people.
In other words, not big-'n-geeky and living in your parents' basement. That sort of endorsement doesn't exactly help Zune's cause.
The fan in question is flying out to Microsoft's Seattle headquarters in July. Maybe the company should pay him not to do it any more favors.
According to Engadget, Microsoft's (NASDAQ: MSFT) Zune is being sold for about 20% off its normal retail price. The figure is at least that low at Staples, and Circuit City also has the product for sale at a deep discount.
Whether the discount is by design or the retailers are simply trying to clear out inventory is still unknown.
The Zune has now sold over a million copies since it was introduced, but that is a rain drop in the ocean compared to sales of Apple's (NASDAQ: AAPL) iPod at the 100 million plus. Estimates for iPod sales in the current quarter run at about 10 million, depending on which Wall Street analyst is polled.
Micorosoft now has a problem it can only solve with price. Apple's lead in the MP3 player market is still much too wide for the world's largest software company to gain market share on an equal-price footing.
Microsoft was willing to lose large sums on the Xbox in an effort to gain on Sony's (NYSE: SNE) PlayStation. The company is losing money on its internet properties now. So, there is evidence that making a large investment is not outside the firm's culture, if it appears there may be some reward down the road.
The odds of Microsoft's Zune doing well are still long, but they would shorten a bit if the product sells for $175.
When Microsoft Corp. (NASDAQ: MSFT) released the Zune digital music player last November, there were inklings that the company who could challenge Apple Inc. (NASDAQ: AAPL)'s iPod dominance had finally arrived. The splintered digital music universe of a zillion companies making MP3 music players was a dizzying array of incompatibilities and cheaply-made junk that gave Apple no challenge in creating an complete "music ecosystem" that has made it the undisputed champion in the digital music player arena.
So, when Microsoft's Zune was launched, the company was attempting to compete with Apple head-on with nicely-designed products and a complete set of online music download tools that would attempt to re-create and complete Apple iPod experience -- but from Microsoft. Its Zune music and media player had a few features the iPod lacked -- like WiFi wireless networking -- but limited the usability of some of those advanced features as to make them useless to experienced digital music player fans.
Well, in the six months since the Zune was released, Microsoft has reportedly sold one million of the players, which is a pretty decent start on competing with the formidable iPod -- but it has a long, long way to go. Just as with the gaming division (xbox 360), Microsoft (most likely) is in this game for the long haul and probably intends on competing with Apple for several years in the digital music player space before even making a small dent in the iPod's marketshare. Redmond has plenty of patience and money to do this, so the Zune -- contrary to beliefs that it will die a quick death -- will be here for a while. One million units is decently impressive at this point, but there are more millions to go most likely.
Microsoft's (NASDAQ: MSFT) Halo 2 video game racked up sales of $125 million the day it hit the market. The world's largest software company believes that sales of the new Halo 3 game will be even larger. Aside from a version of the game for the Xbox 360, there will also be a Halo 3 for the Microsoft Zune.
According to one video game review publication, the newest version of the game is meant to fend off competition for the Sony (NYSE: SNE) PS3 and Nintendo Wii.
Video game industry experts say that Halo 3 has four million pre-orders from retailers, compared with 1.5 million for the launch of Halo 2. If that is true, it may add to the troubles for the already shaky start of the new PS3. Most surveys show the new Sony platform's sales lagging the unexpectedly popular Wii and the Xbox.
Wall Street and the gaming industry did not expect that Xbox, which was launched in late 2001, had much of a chance of catching Sony. The Japanese company simply had too large a lead. But, it is now Sony that is struggling to move back into first place. PS3 problems have even been blamed for the departure from Sony of PlayStation creator Ken Kutaragi.
The Microsoft way is to enter a business, out-develop and out-spend competition, and then finish them off. It seems to be working against Sony.
Apple has sold 100 million iPods without a wireless feature, but adding WiFi interactivity would seem to be a way to cement its huge lead by offering a feature that the competition is pitching as an advantage.
The features of the new Yahoo! player expand a great deal on what an iPod can do. That may be another reason for Apple to add WiFi. Word is that the Yahoo!/Sandisk model will allow for instant message use, internet radio, and the ability to browse photos at Flickr.
There have also been reports that Microsoft may offer the Zune player for next to nothing, and try to make its money on the sale of songs for the device. This is not unlike the cell service provider model where phones cost very little as long as consumers sign up for a minimum service plan. It is a gamble, but Microsoft can afford to take it in an attempt to get market share from Apple.
A WiFi iPod may not help sales, but it could protect them.
In case more evidence was needed that Microsoft (NASDAQ: MSFT)'s Zune is a bust, GameStop (NASDAQ: GME) has decided to stop selling the MP3 player, citing the fact the product "didn't have the appeal" that it had hoped it would. GameStop has pulled the inventory from its stores and will offer the Zunes on its website until it has cleared out the entire inventory.
As reported on 
Free music downloads, sweet! Digital music newcomer 
The technology stories of the 1980s have a lot to do with the dawn of the PC era. IBM was about to license its personal computer technology to the open market (leading to the rising popularity of Microsoft) and Apple's computers were a hit-or-miss proposition with consumers as el-cheapo PCs made their entrance and became the dominant force in many homes and offices. Remember 1,200-bps modems and bulletin boards, folks?
So, have you gotten tired yet of hearing about 
When 
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