Microsoft Zune
From Invertopedia, the encyclopedia of how things fail
Microsoft Zune was a line of music players and a music store that Microsoft launched on November 14, 2006[1][2], five years after Apple introduced the iPod[3]. It sold for $249.99[1] and never came close to the iPod: by mid-2009 NPD Group numbers put its share at about 2 percent, against about 70 percent for Apple[4]. In October 2011 Microsoft said it would no longer make Zune players[2][5].
Contents
The bet
Microsoft believed it could catch Apple with a player that did something the iPod did not: share music. The first Zune had a 30 GB hard drive, a 3-inch screen, an FM radio and built-in wireless for swapping songs and pictures with other Zunes[1]. Its marketing chief, Chris Stephenson, said Microsoft was "delivering not only a device, but a shared, social experience"[1].
Behind it sat the Zune Marketplace store and a $14.99-a-month Zune Pass subscription[1]. The bet was that a social feature and a subscription would be enough to pull people off the iPod and iTunes.
What happened
| Oct 23, 2001 | Apple introduces the original iPod.[3] |
|---|---|
| Apr 28, 2003 | Apple opens the iTunes Music Store with over 200,000 songs at 99 cents each.[6] |
| Sep 28, 2006 | Microsoft sets the Zune launch for November 14 at $249.99, with the Zune Marketplace and a $14.99 monthly Zune Pass.[1] |
| Nov 14, 2006 | The Zune and the Zune Marketplace go on sale in the US.[2] |
| Late Nov 2006 | NPD retail data gives the Zune 9 percent of unit sales in its launch week, against 63 percent for the iPod.[7] |
| Jan 9, 2007 | Apple announces the iPhone, a widescreen iPod that also makes calls and browses the web.[2] |
| Holiday quarter 2008 | Zune revenue falls $100 million, or 54 percent, from a year earlier, to about $85 million.[8] |
| Jul 2009 | Recent NPD numbers put the Zune at about 2 percent of the market, against about 70 percent for the iPod.[4] |
| Feb 2010 | Microsoft announces Windows Phone, with a Zune music app built in.[2] |
| Oct 2011 | A Zune support page says: "We will no longer be producing Zune players." Windows Phone becomes "the focus of our mobile music and video strategy."[2][5] |
The kill shot
It arrived after the habit and the store had already locked in. Being about as good was not enough, and by the time it caught up, the phone had swallowed the music player.
When the Zune launched, the iPod was five years old[3] and the iTunes store more than three[6]. People's libraries, playlists and accessories were already built around Apple. A wireless sharing feature only matters when your friends have the same device, and almost none of them did: even in its launch week, when a hyped device sells best, the Zune took 9 percent of units to the iPod's 63[7].
Then the target moved. Two months after the Zune went on sale, Apple announced the iPhone[2]. Microsoft took about three years to answer with Windows Phone[2]. IDC analyst Susan Kevorkian put it plainly in 2009: "If Zune were going to make a strong move against the iPod, it already would have."[4]
Red flags ignored
- Five years late. The iPod came out in 2001[3]; the Zune in 2006.[1]
- A network feature with no network. Wireless song sharing needed another Zune nearby, in a market the iPod owned.[1][7]
- Matching, not beating. A hard-drive player with a store, at the iPod's price point, gave iPod owners no reason to switch.
- Falling while its division grew. In the 2008 holiday quarter Zune revenue fell 54 percent while Xbox 360 sales lifted the division's revenue 3 percent.[8]
The cost
Zune revenue fell from about $185 million to about $85 million in the 2008 holiday quarter, a drop of $100 million or 54 percent[8]. In the same quarter Apple shipped 22.7 million iPods[8]. By mid-2009 NPD numbers gave the Zune about 2 percent of the market[4].
Microsoft never broke out what the Zune cost it in total. It stopped making the players in 2011, about five years after launch, while promising to honor warranties for current owners and buyers of the last devices[2][5].
The inversion
If you are late, you have to be different, not just equal. Find the thing the leader cannot easily copy, or wait for the next shift and be first there.
What survived
The software. Zune's music app shipped inside Windows Phone, Zune content was available on Xbox Live, and Microsoft said existing players would keep working with Zune services[2]. Microsoft later moved those stores to Xbox branding, and on November 15, 2015 it shut down all Zune services, including Zune Music Pass and the Zune marketplace; the players kept working, but without their online features[9].
References
- ^ “Microsoft to Put Zune Experience in Consumers' Hands on Nov. 14”. Microsoft News Center, September 28, 2006. The November 14 launch date, $249.99 price, 30 GB drive, wireless sharing, FM radio, Zune Marketplace and $14.99 Zune Pass, Chris Stephenson's quote.
- ^ “Microsoft says no more Zunes, it's all about the phone now”. PCWorld (Peter Sayer), October 4, 2011. "We will no longer be producing Zune players", the Windows Phone focus, warranties, the November 14, 2006 launch, the iPhone announcement, Windows Phone with a Zune app, Zune content on Xbox Live.
- ^ “The music lives on”. Apple Newsroom, May 10, 2022. The original iPod was introduced on October 23, 2001.
- ^ “Analysts call for Microsoft to drop the Zune”. Technologizer (David Worthington), July 30, 2009. NPD's 2 percent Zune and 70 percent iPod share in mid-2009 numbers; Susan Kevorkian's quote.
- ^ “Microsoft pulls plug on Zune”. AFP via Phys.org, October 4, 2011. The end of Zune hardware posted on a support page; services and warranties continue.
- ^ “Apple Launches the iTunes Music Store”. Apple press release, April 28, 2003. The iTunes Music Store opens with over 200,000 songs at 99 cents.
- ^ “Zune takes #2 spot in retail launch week”. Engadget (Ryan Block), November 29, 2006. NPD launch-week data: Zune 9 percent unit share, iPod 63 percent.
- ^ “Microsoft: Zune revenue dropped by 54%”. Computerworld (Jeremy Kirk), January 26, 2009. Zune revenue down $100 million or 54 percent to about $85 million in the quarter to December 31, 2008, per Microsoft's 10-Q; Xbox 360 sales up; Apple's 22.7 million iPods.
- ^ “Microsoft turns off the lights on Zune services”. PCWorld (Jared Newman), November 16, 2015. All Zune services, including Music Pass and the marketplace, shut down on November 15, 2015; players keep working without online features; the move to Xbox branding.