Week in Revue: Zune Is Just Resting

Zune Social: solar257 | By: Neville Williams | 10/07/2011 |

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This past week Microsoft introduced a tweaked version of Zune Pass at a lower price. In addition, they announced that they would not make any more Zune HDs – or maybe they did not, I am not 100% sure. Let us take a look at news that happened and had some affect on Zune Nation over the past week, shall we?

10/3 Monday: Windows Phone announced the progress in updating all users to Windows Phone 7.5 “Mango” was running ahead of schedule. Rhapsody announced its intent to buy Napster, in a bid to fight Spotify.

Microsoft ushered in changes to its Zune Pass music subscription service. The price lowered to $9.99. Zune Pass was renamed Zune Music Pass. Lastly, the service is available now, in Canada. In essence the new Zune Music Pass is very similar to options from new service upstarts like MOG, Spotify, Rdio, and veterans like Rhapsody+Napster (Rhapster?). Missing from the new Zune Music Pass service are Zune’s former marquee feature of Keep 10 and any addition of a cost effective music subscription option for families.

As a result of the introduction of Zune music Pass, changes to the Zune website were made to reflect Microsoft’s current Zune offering. One thing was missing. The Zune HD. A Zune support page revealed the Zune HD was d-e-a-d, dead.

“We recently announced that, going forward, Windows Phone will be the focus of our mobile music and video strategy, and that we will no longer be producing Zune players. So what does this mean for our current Zune users? Absolutely nothing. Your device will continue to work with Zune services just as it does today. And we will continue to honor the warranties of all devices for both current owners and those who buy our very last devices. Customer service has been, and will remain a top priority for us.”

10/4 Tuesday: Or was Zune dead? Late Monday afternoon Michael Yaeger, in charge of Zune PR, tweeted the Zune HD product page was removed in error when the Zune Team updated Zune.net. On Twitter, Zune Support also said something similar. The Zune Support page, stating in in essence that Zunes would no longer be produced and containing the quote above, disappeared. The Zune HD is not dead? Still, how does one ‘CTRL’ + 'Z’ that mistake?

These shenanigans were overshadowed by Apple’s. Tuesday saw introduction of the new iPhone 4s, along with new iPod Nanos and iPod touches. When talking about music, in particular, a few quotes from Tim Cook and Phil Schiller struck me as interesting, my thoughts accompany the attributed quotes,

“Music for us is iTunes and iPod.” TC – What is music for Microsoft? Zune Software and ____ ? Xbox is gaming and more recently entertainment. Windows Phone puts people first. Even if Music is Zune software and Windows Phone what about those who cannot afford smartphones? Tough cookies? Most smartphones are roughly $2,000 investments when service and a two year contract are figured in. Without a Zune HD, all is left for sale are $2,000 Zunes. Even when purchased secondhand, there are not many around.

“[iPod] not only revolutionized the way we all listened to music but it revolutionized the whole music industry… it reminded all of us how much we loved music, and made it so simple to enjoy again.” TC – Now Marques has a different take on this, but again I think Schiller was referring to the mp3 player landscape at the time in 2001. Remember Rio? Remember Creative? Remember Dell? Remember Plays for Sure?

“Almost half of [the 45 million iPods sold from June 2010-11] are going to people who are buying their first iPod. And many are going to people who are just being introduced to Apple through the iPod.” TC – Though the mp3 player marketplace may be mature, it sounds like there is still room to make some sales. The auto industry is a mature market and upstart electric car maker Tesla seems to be doing well.

“We started the iPod simply because we love music and that hasn’t stopped we still love music and we’re still making great iPods.” PS – Out of context, I thought this sounded like a jab at Monday’s Zune news. Now I am not so sure.

What do I take from these quotes? At Apple, I see Music is important as it managed to find around 20 million new customers last year to buy its iPods. When compared to the actions at Microsoft this week, I see Music must not be too important as the company cannot make up its mind whether it wants to keep making mp3 players or bet all the money on Windows Phone.

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10/5 Wednesday: Video did kill the radio star. Perhaps Music is not as big as TV and Cable. Xbox announced a wide ranging partnership with a number of cable and content providers to bring live TV or on-demand content to Xbox. These providers include Comcast, Verizon FiOS, SyFy, Bravo, and a number of others depending on your region. The update that provides the content from these cable and content providers should happen sometime this holiday season. As Marques noted, Zune is a content provider in this new entertainment wonderland.

One more thing happened on Wednesday. Early in the evening came news that Steve Jobs lost his battle with pancreatic cancer. Arguably the iPod is the single reason for Zune’s existence. I wonder what Steve would have to say about cancelling an mp3 player one day, saying “oops” the next, and then announcing a worldwide content partnership with cable providers in the same day. It certainly is not the most direct or simple way to do business.

10/6 Thursday: ComScore released its findings on smartphone market share for the past three months. In the report ComScore noted that Microsoft dropped from 5.8% to 5.7% in terms of overall smartphone users. In addition, it was reported that listening to music was the activity that saw the third largest percentage gain as an activity among all smartphone users. In August of this year 20.7% of all smartphone users played music on their devices, up from 18.6% in May of this year. Even though more people are listening to music on their smartphone, fewer people are doing it with Windows Phone.

Also, Rdio, a streaming service that does offer a discount for families who stream music through their service, announced a new free tier to their music offerings. This offering allows the user to stream 12 million tracks on demand via the Rdio website or using desktop application for Windows or OS X. Some saw this as an effort to compete with MOG and Spotify.

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10/7 Friday: I received an email telling me that Zune and Xbox would be combining their email marketing efforts with Xbox taking the lead, the relevant text is below. I suppose this is the end of Zune emails. I should have seen it coming, considering a 10/3 email I received announcing Zune Music Pass which featured Xbox regalia.

“We are writing to inform you of a change to your Zune and Xbox accounts. We have combined account preferences for Zune and Xbox, including your preference for receiving marketing communications. Since you are both a Zune and Xbox customer with a Zune opt-in setting of YES, as of October 3rd, 2011 you will continue to receive communications from us. These communications will be from Xbox instead of Zune, but will contain relevant information for you based on your engagement with Zune and other services and games on Xbox LIVE.”

Now: And now for something completely different. The Zune HD is not dead. It’s pining (beautiful plumage). So, even if Zune is not dead, it looks like email communications from Zune exclusively are no more. Even if the Zune HD is a zombie it appears that Windows Phone is now the music + video focus… well it did as of Monday afternoon. Now? Not so sure.

Good bye value, hello $2,000 Zunes. How do $2,000 Zunes help families? Not everyone can afford smartphone and its required data plan on most US carriers. Of the 22 million new iPod owners I would wager a good number are iPod Nano and Shuffle owners. What I cannot understand is why discontinue an mp3 player, (effectively) its brand, and hope people will purchase a more expensive smartphone with declining market share? For Zune Nation this has been a crazy week, we will weather it. On the bright side, the week is over. On the not-so-bright there are probably fewer of us coming out on the other side. Happy weekend, get on with it.

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