 "Photo: Courtesy of Microsoft")
STORRS, Conn. - The iPod changed the way we listen to music. With relative ease at controlling the digital player industry, Apple - thanks to its iPod - outpaced its life-long competitor Microsoft.
But buyer beware - a new mobile media era will soon begin and, this time, Microsoft is in charge. Just in time for the holiday shopping season, Zune - Microsoft's new digital media player - will not only be on many wish lists, but will also serve as a catalyst for renewed technological competition, hopefully leading to happier consumers spending less money for their favorite digital player.
Just as the dot.com bubble burst and its effects were still being felt, Apple unveiled "a breakthrough digital device" in 2001 called the iPod. Nearly five years later, the iPod has grown, transforming into the most popular mobile entertainment device among a wide reaching demographic from school-aged youngsters to senior citizens. The media blitz of the latest iPods never seem to cool down as Apple continuously surprises their loyal iPod consumers. Apple found itself a market niche that took everyone by storm - including Microsoft.
One way to beat a giant is to begin attacking when it is sleeping and that is exactly what Apple did. Microsoft is now wide awake and flexing its muscle by unveiling Zune. Microsoft hopes consumers will gravitate toward Zune because of the ability to share files wirelessly between devices and its three-inch LCD video screen. The degree to which these features can transform a prospective iPod buyer to a Zune buyer is unknown, but the bigger attraction will be the media attention Zune will receive.
The popularity of the iPod has made it very difficult for other competitors to gain a solid footing. Brands such as Toshiba, Zen Vision and iRiver offer products similar to iPod, but these do not make a dent in market share compared to Apple's 70 percent share of all MP3 players.
Yet Microsoft does have a good start when it comes to Zune. An important and intangible asset for a business is its brand power. Such power can persuade a consumer to buy one product over another simply because consumers have heard and recognize the name, thus feeling it will be more reliable and even perform better.
According to BusinessWeek's Top Global Brands for 2005, Microsoft came in second behind Coca-Cola. With Zune on the market, Microsoft will receive sales just because it is Microsoft - and they will need all the help they can get going against the established iPod product line.
Another trend the digital media player brought to the forefront was the method to legally download songs, movies and television shows. More than 350 million songs have been downloaded from Apple's iTunes music store, representing a more than 70 percent market share in the digital music download market. Microsoft is eager to cut into Apple's revenue and attack them in this market as well by announcing the Zune Marketplace, which will offer a flat subscription rate for music downloads.
It will be difficult for Zune to overpower Apple and the iPod, but Microsoft's entrance into the ever-growing mobile media industry makes Zune a very important device for Microsoft's competitive future. If Apple is left alone in the industry for too much longer, it will be increasingly difficult for Microsoft to gain a foothold.
Many anti-iPod individuals are looking forward to Zune because of the lack of variety and choice among the mobile media players. Most accessories are designed for iPods, plus other media players lack the support and infrastructure to download songs. With Zune, Microsoft has the financial power to create a network of accessories comparable to the iPod.
The only thing that Microsoft has purposely not revealed about Zune is its price. Such a marketing tactic may be to pull in interested buyers enough so they would be willing to pay a premium. However, for Microsoft to compete with the iPod, the cost of Zune must be very close, if not lower, and such a feat will cost Microsoft a loss for each Zune sold.
As technology costs decrease and iPod prices begin to fall, a formidable competitor will help to decrease prices even further. Situating the Zune against the iPod in a price war will help increase the quality of their players, while aiming for the lowest price to gain popularity.
In the end, the consumer must decide if Zune will ever make inroads in the mobile media industry.
Currently the iPod brand is the "in" thing with connotations including cool, hip and fun. As long as Zune clearly sets itself apart from the iPod and fulfills consumer's ever-changing needs and wants quicker than the iPod, Microsoft will do well in the long fight against its enemy.
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