Microsoft considers 'cell-phone-style Zune subsidies'

[Blue Velvet]

SAN FRANCISCO (MarketWatch) -- Microsoft Corp. is considering new distribution models for its Zune media player -- including offering the device at next to no cost for consumers who sign on for subscription plans.

Microsoft's Zune marketing director, Jason Reindorp, in an interview with PC World magazine first publicly aired the idea of modeling the Zune's marketing after that of subsidized cellular phones.

A Microsoft spokesman confirmed that "Microsoft is exploring lots of ideas, and this is just one of them."

The Zune, which hit the market last year, has been a high-profile and highly scrutinized endeavor for Microsoft, since it's aimed squarely at stealing market share from Apple Inc.'s immensely popular iPod.

The Microsoft spokesman said the company first considered a cell-phone-style distribution plan after noting the level of interest in its Zune Pass subscription service, under which users pay a monthly fee for access to songs on the Zune Marketplace, a competitor to Apple's iTunes store.

Though he declined to say how many subscribers currently use Zune Pass, the spokesman said subscriptions were up 65% during January.

http://www.marketwatch.com/news/sto...4266-ADB4-DDD1A093FDBD}&siteid=yhoo&dist=yhoo


So, in other words, Plan A isn't working...

 

[JNB]

With this guy calling the shots, is it any wonder?

http://video.google.com/videoplay?docid=1274983729713522403

"I have four words. I. Don't. Use. Antiperspirant."

 

[Blue Velvet]

I don't think Apple are sweating that much, although Microsloth are preparing a 'second wave' of marketing. Hold onto your hats, all you Zune fans out there.

The software giant is readying a new marketing and advertising blitz and plans to launch the device in new colors to maintain sales before it makes a hopefully bigger splash with new features — and possibly a flash-based player like Apple's rival iPod before the end of the year.

http://www.thestreet.com/_yahoo/new...47869.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

 

[JNB]

The software giant is readying a new marketing and advertising blitz and plans to launch the device in new colors to maintain sales

COLORS??? Oh, my sweet Jesus, it's the end of the iPod!

I guess I'll just go to that dingy endcap at Sears, dust off the Chocolate Zune (just in time for Easter!), and submit to the assimilation peacefully...

 

[Lixivial]

COLORS??? Oh, my sweet Jesus, it's the end of the iPod!

You're sarcastic, but it's actually a valid move on Microsoft's part. As I'm sure you'll recall, Apple had only offered one line of colored MP3 players, and killed it with its replacement, effectively eliminating multiple colors from the iPod. Since then, Apple has converted 2 of their 3 existing iPod lines over to having multiple color options.

It seems to me, since the line you quote states, "maintain sales," that their current customer base demands Microsoft offer something Apple's similar offering doesn't: broader color choices. It's easy to forget, but these things act as a fashion accessory in a similar way that cell phones do.

I'm just trying to figure out why Microsoft didn't introduce flash-based players or different hard drive options in their Zune from the outset. They say they took the entire project seriously, but the strange artificial limitations seemed to have sandbox its growth. I think offering these options will grow the Zune market far more than any "Cell phone style subsidies" will. We'll see if Microsoft lives up to its v5.0 tradition; just give 'em 10 years...

 

[JNB]

I'm just trying to figure out why Microsoft didn't introduce flash-based players or different hard drive options in their Zune from the outset. They say they took the entire project seriously, but the strange artificial limitations seemed to have sandbox its growth. I think offering these options will grow the Zune market far more than any "Cell phone style subsidies" will. We'll see if Microsoft lives up to its v5.0 tradition; just give 'em 10 years...

I was sarcastic for the reason that MS just doesn't get it. Adding colors at this point is lipstick on a pig. My company had a Product Development VP talking about our developing our "iPod" category-killer in the same vein. What he - and MS - didn't understand that it's not just packaging, it's not just features, and it sure as hell ain't colors.

Where's the value-add to this? What does it do better? Consumers - in a group behavior way - are stupid, but they do catch on. If a product and its execution are crap, changing colors won't make it more attractive.

MS is turning - or has already turned - into Sony/GM. Huge, bloated, mindful more of process and organization and rigid adherence to "roadmap" then just making the best products that fill a need it can. They quit even trying to be a thought leader, and more's the pity.

Even the fastest spinning top will fall over if you don't rewind the string and give a good yank occasionally.

 

[Lixivial]

EDIT: By the way, I know your sarcasm had meaning behind it. I hope I didn't convey an attempt at belittling your point in my previous response.

Where's the value-add to this? What does it do better? Consumers - in a group behavior way - are stupid, but they do catch on. If a product and its execution are crap, changing colors won't make it more attractive.

I don't want to derail the thread, and I agree with almost all of your points. Especially the points on it not being about packaging and Microsoft's sloth-like attitude attitude. I can't speak on the points of its execution, as I've never used a Zune, but it looks to me that their offering mimics the iPod in nearly every regard. In terms of the current state of their MP3 player (ignoring this article), I believe the only thing that Microsoft doesn't get about the market is that people don't want to use a proprietary format such as WMA.

However, it'd seem that this move -- the subsidies and additional colors -- is a move by Microsoft to distinguish its product from the competition. What value does it add? It's hard to say without further details, but it's an option that, to my knowledge, no other device maker is currently offering. The lure of diverting payment into monthly service installments can be rather tempting, as the up front cost is hidden. This is especially true if the people purchase a lot of music a month, and aren't fully cognizant of the fact that they won't "own" the music.

It does seem interesting that Microsoft would leverage its player in such a way as it seems more apt to primarily benefit the labels, but it seems like classic Microsoft strategy. Get it in the hands of everyone so they become familiar, integrate, and then jack up the price. I'm not too familiar with the profit margins of subsidizing phones in exchange for contracted service/subsidized hardware, so I don't know how profit breaks down between cell manufacturer and cell service provider, but it does seem viable.

 

[JNB]

No, no offense taken! That's what I hate about text, and emoticons do little to improve it.

In any case, subscription models are loved by companies providing them (and Wall Street), as they typically have higher buy-in rates, provide a steadier and more predictable revenue stream, and far outpace any hardware subsidies. Why else would you be able to get cell phones for free? Or an XBox at an actual loss to MS?

It remains to be seen if this works; I believe my original description can be expanded, not only is this lipstick on a pig, but you have to go on a date with it every month...

If Microsoft embeds Vista on a Zune, will the new geek pick-up line be, "Wow! Can I squirt you?"