Uploaded on Flickr by jesstherese

On 21 February the Cuba St Carnival will mark its 10th year of celebrating the distinctive culture of Wellington’s much loved street. Each year the Carnival continues to grow and this year will be no different, with crowds of 150,000 people expected. The iconic and quirky shopping street will be filled with music and dancing as it celebrates its renaissance from what was formally a shopping back water in Wellington.

“The Cuba Street Carnival is an event that gets the whole city buzzing. Although it’s just 10 years old, the Carnival has already become an iconic Wellington event – celebrating the capital’s truly vibrant culture.” according to Meridan Sponsor Mel SeyFort

Other highlights to look out for at the Cuba Street Carnival include a display of street art as you have never seen before, to Latin American performances, as well as music from a wide variety of acts including the Wellington International Ukelele Orchestra, and The Tutts.

Uploaded on Flickr by Velvet Android

Above it is photo of the love it or hate it buckets in Cuba St Wellington

There are over 80 bands and DJ’s booked to play on 8 stages and four entertainment zones throughout the streets of Wellington. Everything from big main stage acts, to Caribbean style steel drums, and a whole stage devoted to highly excitable Latin performers.

The International Street Performers  include Rubber Band Boy (world record holder for “The Most Rubber bands on a single Face”), plus Canada’s Magic Brian, Pinky’s Street Circus from Australia, The Brothers from Nowhere (USA/NZ) and Piper McKenzie (Canada).

Related Posts:

• Driving from Christchurch to Queenstown — Heart of NZ South Island
• Marlborough Region — South Island New Zealand
• NZ Stars sign up to prevent animal cruelty (Video)
• Hippy Gourmet Goes to Abel Tasman Region (Video)
• Milford Sound — Wonder of the Natural World (Video)

Uploaded on Flickr by Enol

Over Christmas there was some intense negotiations between the various record companies and Apple over the removal of Digital Rights Management and Variable Pricing for music. The primary issue was that Apple wanted to get music distribution onto the iPhone because they felt that impulse buying on the iPhone was an important component to growth. They had offered variable pricing in return for these terms but over Christmas Sony was the only hold out, which resulted in Steve Jobs intervening.

In interviews, several high-level music executives, who spoke on the condition that they not be named to avoid angering Apple, said they operated in fear of Apple’s removing a label’s products from the iTunes store over a disagreement, even though that has never happened. The labels do not have much leverage in negotiating with Apple.

Overall the music industry fears the growing power of iTunes and Apple particularly the front page:

One chit the company holds is the power of the iTunes home page, where it promotes music………“Whether the industry likes it or not, the iTunes chart showing the most popular songs in America is a major influencer of how kids today discover and communicate with their friends what kind of music they like,” said Charlie Walk, the former president of Epic Records, a unit of Sony Music. “It’s a very powerful thing right now in American pop culture and immediately validates a hit song.”

What music industry executives are worried about is the growing power of the front page (and recommendation engine) of iTunes and the ability of iTunes to influence consumers. Couple that with a retailer that has enormous market power in the only growing sector of their market and you have a potential perfect storm for the executives of the music industry.

In the past the system worked on the concept of finite shelf space and fragmented music retailers. The music distribution companies were the distribution choke point and they decided what ends up on the front shelf at your music store and they got to kick around the music retailers. They were the ones that controlled what consumers got to hear on the radio, and they were the ones that decided how to price and promote an artist. (We all remember where we transitioned from Albums and Tapes to CDs). We could not understand why it was more expensive when the cost of manufacturing was lower. The transition of technology had traditionally always been good for the music executives, but this time the rules changed because they knocked straight into the network effect, the effect that creates natural monopolies because of their accumulate effects that benefit customers.

But today market power is shifting back to one large online retailer who continues to grow in substance and power each day. However what the music executives lose sleep over and could threaten their Gulfstream G650s is the ability for Apple to get into the music distribution game and sign artists directly.

Those with market power already, for example Madonna, already control all of the rights to their music. It would not be fantasy to suggest that the next album that Madonna releases will be an iTunes only album. What this means to the artist is a far greater share of the revenue stream as well as more control over how it is marketed. This is not that far away. After all the objective is to get their share of iPod hard disk space.

However the one thing that really kills them(music execs)  is the potential that Apple will have the ability (soon) to market new artists. Currently how the system works is much like American Idol. Hundreds of talentless and semi talented people get in front of a small group of “experts” who decide who gets to make an album and who gets shown the door. Even before the walk through the door for the first time, they have to submit to an oneous contract and are stripped of all rights to their own talent. (That is not to stay this is how it happens in the normal course of recording companies because there is usually lawyers on both sides involved, but that controlling a really talented person like Kelly Clarkson is indeed mining gold). However the market power of the record companies is controlling the distribution and access to that distribution. Currently if you are seriously talented you must deal with these people in order to participate in the channel. It is important for them to make sure that the artists know you cannot participate in this market without them. What they don’t need is the front page (and recommendation engine) of iTunes to create an alternative outlet where a talented artist can work the process and create exposure independently of the labels.

With the front page (and recommendation engine) of iTunes you potentially have the potential to create the next Pop Idol through simple exposure.

This is not to say that music industry system as we know it today will disappear anytime soon. This is because  there is a hugh system in place already to vet and process artists employing millions of people as we speak. The hard work behind the scenes still has to be done. Writing songs, the studio work, production and marketing as well as road time. A potential deal on iTunes does not preclude the hard work building the infrastructure behind your career as many people that you have never heard of already have done. What it means is that it is feasible for an artist to be a major success without having to deal with the major labels and that is what keeps music execs quaking in their G650s. Those cliche scenes where the young band working out of a garage gets the call from a record producer from Atlantic or Sony, will be replaced with the call from Apple one day.

Related Posts:

• Worlds Largest Piano Built By A Kiwi Teenager (Video)
• Annie Lenox Leaves Sony Starts New Life (Video)
• Steve Jobs Prepares Wall St for No Steve Jobs
• Top Posts of the Week
• Boh Runga Has a Day Job — Fixing Muscle Cars

Uploaded on November 11, 2006 by penmachine

Victor Godinez of the Dallas Morning News comments today about the fate of the Zune and indeed why iPod users should care.

But anyone who plans to buy an iPod should hope that Microsoft is able to turn the Zune into at least a modest success.

His basic argument is that having healthy competition will force Apple to improve it’s product. He has cited the lack of an FM radio in the iPod as an advantage in a competitive landscape. However there are his arguments are based on Apple having competition, where as the speculation as to the demise of the Zune i totally based on the question as to why Microsoft should be in the portable music player business.

There are numerous competitiors to the Apple iPod including Sony, Philips, Archos, iRiver, SanDisk, Creative, Cowon, iBiza, Blue Raven, Coby, RCA, Toshiba, Music Gremlin, DigiArmor, Cowon, Yukyung among many others. If we narrow it to effective competition, ie those that have distribution ability, we still have Sony, Philips, Creative and Toshiba. (I would also argue SanDisk).

The problem with Microsoft being in the portable music business is that it is highly unlikely that Microsoft will ever be a significant player in the music market. Microsoft needs to have products with a $1Billion + runrate in order to satisfy it’s shareholders and customers. Couple that with the failure of Vista, customers and shareholders are unhappy that Microsoft are playing around the edges and not working on their core product offerings.

The failure of Microsoft Zune to even dent the iPod marketshare is exactly the same problem as Sony has delivering sales on it’s Walkman products: the portable music industry has a high network effect and that network effect is iTunes. ITunes through it’s critical mass now has tremendous market power in the delivery of digital content and all major content owners must deal with them. ITunes are the price maker in this market, everyone else is a price taker.

Just like Windows OS has a very strong network effect, so too does iTunes. And for this reason people have a valid reasoning to suggest that Microsoft should not be in the Zune business, especially since it’s revenues are going in the complete opposite direction from upward.

Related Posts:

• Zune Opens Nerd Club
• Zune Team Splits Up Prepares for Hardware Divorce
• Is Microsoft’s Portable Strategy in Tatters?
• Zune Sales Plummet 54%
• Bill Gates On Energy (Video)

Uploaded flickr by gholzer

Windows Mobile was originally launched as Pocket PC in April 2000. It was born in an age when Microsoft was busy trying to tie everything to the Windows Desktop and cast a long shadow over every part of the IT industry. It was not long after that that the Windows wheels fell off when the US DOJ and the EU put paid to that. However Windows Mobile is a product of that past where the motive was to tie customers (mostly enterprise) to the Windows platform and windows groupware products. It is this motive that will be the destruction of Windows mobile.

Microsoft has up till recently insisted that the Windows folder experience is what is necessary and that Windows desktop users would be comfortable with using it on a mobile device. This was however a circular argument because the number one mandate was to proliferate the Windows brand, so that justification was made, however RIM had made that argument dead in the water. What RIM did find was that push email/calendar and contacts the number one issue.

Microsoft also made the mistake that they made in the portable music market, the Plays for Sure approach was an unmitigated disaster. They believe that OS distribution model (eg Windows) would win over an OS integrated approach (iPod). This idea was firmly beaten into the ground with the introduction of Zune player which is an integrated music player. What they forgot and continue to ignore is that with mobile devices, the number one issue is the experience on the devices, and the iPod ushered that era in bringing about a renassiance of the Mac Operating System.

It is ironic that RIM and Blackberry ended up doing a much better job of delivering functionality to the mobile enterprise and now dominates the push email market for corporate. It is the one device that held held back the Windows Mobile from dominating.

With the spectacular success of the iPhone, having in the last quarter moved past RIM in smartphone revenues, RIM is now having to respond, and have a raft of new devices coming out in the next few months. Google and their launch partner T-Mobile have released the new Andriod platform and App Store. They have effectively rationalized the linux mobile market and set Linux on the path to significant market share. Motorola is putting their “Good” people behind Andriod and you will see a raft of new capabilities including their messaging platform move to Andriod.

All this will mean Microsoft will have to respond with their own hybrid experience. They will need to develop an App Store to compete with the others. But this too has challenges because apps will need to be tested over a wide number of devices, whereas Apple only has to test on a single platform. Google intends to have one App Store that will allow distribution to all Andriod phones. The problem with all this activity is that for Microsoft, they have to follow what others are upto. And all this activity is without the benefit of the Windows monopoly. Microsoft has never succeeded where they have not been able to force users to adopt through the Windows operating system, and Windows Mobile is no different.

According to Bob Cringely, Windows Mobile is doomed because of simple market dynamics, that is there will be no room for a Windows mobile device. He states that it will be dominated by iPhone, Android, RIM and everyone else. He believes that handset manufacturers will abandon Windows mobile because they need to go where the action is (read critical mass). They can’t go to iPhone or RIM, which means they will migrate to Android with it’s open architecture, App store and enormous Google presence. What this means for Windows Mobile is over the next year it will continue to be marginized and more handset manufacturers will quietly drop the OS over the much cheaper (read free) Andriod OS and features.

Only time will tell, but it is hard to see how Microsoft can compete with the iPhone freight train and the Android sexyness. They could release a Zune phone but as everyone knows that ship has sailed….

Related Posts:

• Why Nokia Will Buy PocketGear.com
• The Future of Wireless is Fixed
• More Head Wind For Windows Mobile
• Facebook’s Future Is Not Mobile It Is Me
• iPhone Mania Hits Kiwiland

The upgrades to 2.0 for the iPhone and iPod Touch has arrived. If any one has tried to install upgrades and new applications in other smartphones then they will appreciate just how good iTunes + iPhone/iPod integration is.

I upgraded my iPod touch to 2.0 and added in Ebay app, AOL Radio (with NPR goodness on it), trip adviser, iTunes Remote.

I had one problem and it had to do with the DRM system. What happened is that the applications loaded but would not run. A blank screen would briefly appear then it would return to the main menu. To fix this problem you need to read this. Basically, delete apps (hold finger down on app until it wiggles), reauthorize your mac then resync your ipod/iphone. This fixes an out of sync DRM thingee.

Related Posts:

• Facebook’s Future Is Not Mobile It Is Me
• Why Nokia Will Buy PocketGear.com
• The Future of Wireless is Fixed
• More Head Wind For Windows Mobile
• Bright New Mobile Future

[Uploaded on August 31, 2007 by nobihaya]

The Adobe CEO Shantanu Narayen spilled the beans over progress made on getting Flash working on the iphone yesterday:

MACMILLAN: And then just to follow-up was on the Apple iPhone 3G — any update on Flash support within that device? Thanks.

NARAYEN: With respect to the iPhone, we are working on it. We have a version that’s working on the emulation. This is still on the computer and you know, we have to continue to move it from a test environment onto the device and continue to make it work. So we are pleased with the internal progress that we’ve made to date.

The exchange was made during an earnings release conference call on Tuesday. It is no surprise that progress has been made given the fact that mobile safari is built on exactly the same framework as the full blown Safari.

Whether or not we get Flash on the iPhone is and has been a function of marketing and politics between Adobe and Apple. Indeed the Flash on iPhone discussion is just one part of a much larger battle for web development tools currently going on between Microsoft and their Silverlight Project, Google with it’s support for open standards, Adobe’s Flash specification and Apple.

Macromedia Flash’s early success was because of Microsoft. In 1997 Macromedia and Microsoft came to a bundling agreement with Internet Explorer 5 which allowed it to be quickly distributed. Couple this with a growing developer base that found it easy to use and flash quickly became the prevalent. Interestingly enough, Microsoft inked the deal to fend off the threat from Netscape and Java.

Up until it purchased Macromedia in 2005, Adobe attempted to destroy Flash through a number of failed initiatives including VML and PGML. Once Adobe acquired Macromedia and Flash, it set about extending Flash’s dominance in the market. Flash was given a big boost by the explosion of video content on the net lead by the popularity of You Tube, the first large scale video distribution side.

Today Flash is not supported on the iPhone and Apple have made it clear that it’s preference is open standards using XML, Javascript and HTML rather than any one particular proprietary runtime such as Java or Flash or Silverlight. However this desire may yeild to more practical considerations on making the iPhone platform a mobile game changer and take control of the consumer smartphone market (as opposed to the corporate smart phone market dominated by RIM).

This will ultimately mean that flash is supported but Apple will extract a price from Adobe over that support and that is much better support for Non Windows platforms. Apple will not allow Adobe to provide anything less than a top notch Flash Player 9 for the Mac and iPhone.

And with the 3G iPhone, Apple just may have the big stick to bring Adobe into line.

Related Posts:

• Facebook’s Future Is Not Mobile It Is Me
• Why Nokia Will Buy PocketGear.com
• The Future of Wireless is Fixed
• More Head Wind For Windows Mobile
• Bright New Mobile Future

The big numbers story this January is that General Motors has held on to it’s spot as number one car manufacturer in the US over Toyota who has beaten Ford for the first time:

Toyota sold 48,226 more cars and trucks than Ford, according to sales figures released today. Toyota’s sales were up 3 percent for the year, buoyed by new products like the Toyota Tundra pickup, which saw sales jump 57 percent.

On a global basis it is expected that Toyota will overtake General Motors as the world’s largest auto maker with approximately 9.51M vehicles sold. The bigger story is the continuing decline in relevance of the US auto market to the rest of the world. The biggest stories are in Asia especially China and India where the growth of new vehicles are stunning. Toyota and it’s Asian counterparts are investing heavily in production in new markets and the results are starting to show.

Toyota also has a major cost and profit advantage to the (formerly) big 3 and is able to invest more heavily in new initiatives while the older automakers struggle to reduce capacity in the North American markets.

Ultimately however these numbers are meaningless and only really of interest for interest sake, much like personal computer market share. I have always been critical of personal computer market share numbers because they really don’t mean anything other than for interest sake. Lumping contact center personal computer workstation with a home user with a notebook user doesn’t mean much to anyone. The monolithic market for personal computers does not mean anything. What is far more interest is between relative uses such as notebooks for professionals, education market, multimedia uses, and home use.

My criticism for this number is also in how this is used. For example, a common misapprehension goes like this: Window has 90% plus share of the market therefore Microsoft must win with mobile phones and it is only a matter of time”. We all know that the true is that the market is very fragmented with Nokia/Symbian having the largest share (although 90% of the users don’t use 90% of the function).

Experience like Toyota tells us that the future is based not on directly challenging the large lumbering monopolies or (oligopolies) but to look for growth in niches that can turn into large markets. Toyota dominates the small car and now hybrid markets. They made the decision in the mid 90s that oil prices long term trend is upwards (peak oil etc etc) and they had to dominate the market when that occurs.

Dell is looking decidedly like Ford with it’s over reliance on the corporate market. It’s poor R&D spend is coming back to hurt them. HP is not a personal computer company but a full service computing organization with a personal computer division. It’s R&D and services business make it attractive to corporations as an alternative to IBM. Acer is looking more like Toyota as a fast growing Asian.

The long-term trend is not generic corporate workstations who will always be heavily discounted, but trends in computing, largely mobile in nature. Take for example the iPOD, it is a mobile computing device for music delivery. It is a personal computer but designed to do one thing well.

Predictions

• Generic Windows Computing will continue its inevitable decline. Microsoft will be the only one making money in this sector and because Dell is heavily dependent on this market, it will continue to decline as HP, Acer and others continue to take market share.
• There will be a host of new sub notebook designs this year from Apple and others that will be flash memory based or based on the new super small hard disks.
• Look for the rise of the personal assistant devices (PDA) again lead by Apple. The Apple touch technology will be used in both PDA and subnotebook formats. Both will have the ability to use the Bluetooth keyboard and mighty mouse and sync with core Mac hardware wirelessly.
• Tablet computing has always suffered because it was designed as a general purpose computing device that is mobile. Tablet computing needs to be application centric with tools that allow it meet specific functions. Hats off to Panasonic with their toughbook range. They found a niche and build the product to meet it. Look for GPS enabled functionality built in this year and application centric tablet devices.

As you can see I am bullish on mobile computing as making the most head way this year. However I also see home computing, read multimedia capabilities moving forward quickly this year. The iLife suite from Apple has been a deciding factor for many people to move to the Apple Mac at home. Look for some major movement in wireless home entertainment including media extension devices such as the Apple TV.

As for my out their prediction, Apple will make a big acquisition this year on it’s quest to be the home computing king. Apple will purchase Bose or Harmon International, both high end entertainment hardware manufacturers. They will commit to integrate their products with both blue tooth and Wifi N networking to build a complete experience in the living room.

Other than that, have a great new year….

Related Posts:

• No Related Posts

I don’t know if anyone noticed but this week Hewlett Packard announced 5 new PDAs based on the Windows PDA OS:

The new iPAQ 210 Enterprise Handheld, iPAQ 110 Classic Handheld, iPAQ 910 Business Messenger, iPAQ 610 Business Navigator, and the iPAQ 310 Travel Companion are HP’s ammunition in what appears to be a serious go at resurrecting foundering (and neglected) once very successful mobile-device business.

I am sure this is very useful for the corporate road warrior or a very conscientious auditor/accountant type. (but I would question the wisdom of launching on top of any Apple presentation). There is a smart phone (Business Navigator), some traditional Palm type PDAs and a Tom Tom type portable device (Travel Companion).

Corporate warrior tools don’t exactly strike the imagination. They are purely functional and their bland exteriors belay their utilitarian purpose of tying oneself to the corporate machine, a constant reminder of the staid existence of cubicle world. Frankly like most launches of Windows based products it is as exciting as the release of a GAP statement. Contrast with the almost manic coverage of the new iPod Touch, the question is why the difference?

The difference is in the fundamental view of what personal devices are. While I paint a dull (zune like) brown staid existence of the cubicle world that the Windows PDA exemplifies, the new Apple iPod Touch characteristics the youthful optimism of sharing and social.

As humans we are social animals and we are characterized by participation and sharing. Where as the HP iPAQ is about personal productivity, the iPod Touch is about content and sharing. It more closely aligns with the social self. This of course leads us down the path of not only You tube, but My Space, Facebook, twitter etc etc. Tools that are explicitly designed for sharing and building. It is not going to take very long for the iPod Touch and iPhone to be enabled to support the hot social networking tools and turn into a pivot point for the myspace and facebook generations. If you can integrate the music and video content of the iPod part of the iPhone/iPod Touch, maybe sharing partial or free content such as music videos around the iPod experience.

Another thought is that now iTunes Wireless is available, can we share the playlists in the same way we do on Macs now ? can we share the latest episode of Desperate Housewives or blog about the latest Lindsay Lohan incident (not me but I can imagine someone wanting to do that).

[gratuitous Linday Lohan shot]

To answer my own question, the iPod Touch may have ushered in an entirely new market for consumer based PDAs or Social Digital Assistants (SDA).

technorati tags: hp ipaq ipod touch apple social pda music networking
del.icio.us tags: hp ipaq ipod touch apple social pda music networking
icerocket tags: hp ipaq ipod touch apple social pda music networking
keotag tags: hp ipaq ipod touch apple social pda music networking

Related Posts:

• No Related Posts

Whilst Apple’s iPod and iPhone products continue to create new sales records, Microsoft’s Zune player pricing continues to slide with discounts ranging from 17 to 20% off retail according to Amazon.

Whereas the iPod at the retail level is sold at list price, online it attracts only a 5% discount at most.

The dramatic discounting for the Zune reflects the poor demand or it could be a consequence of large stocks in the channel.

Related Posts:

• No Related Posts

The folks at hideapod.com have released the ultimate anti theft device for your ipod, an iPod cover that is shaped like a brown Zune player.

It’s really very simple. Just tell us what iPod model you want to protect and we provide a gutted and hinged Zune with our custom molded iPod casing adapter. We also include a custom cable from the Zune’s controls (see FAQ) and audio output jack that you simply plug into your iPod. No iPod modifications are necessary.

The cover can protect any ipod as well as the new iPhone theft by would be iPod-jackers. By hiding your iPod in a Zune cover you can guarantee that it won’t be stolen. You can even leave it in plain view at your local starbucks knowing it will be safely there when you get back.

Related Posts:

• No Related Posts

Microsoft Employees at the Zune Headquarters in Redmond Washington are refusing to give up their iPods. In an attempt to force staff to give up their ipods without retribution, the Zune staff have installed an “iPod Amnesty” bin.

iPod Amnesty Bin

Originally uploaded by fimoculous.
“After been out for a week, the effort has been pretty much a bust” says insiders, “much like the Zune itself” they added.

“The iPod amnesty was to give us a chance to make some money out of the Zune Player” says sources inside Microsoft. “We have our Ebay store ready to go with the surrendered iPods. We tried selling Zunes on ebay but they turned out even less popular than our ‘tickle me BillG’ soft toy “.

“We will continue to look for innovative ways to make money on the Zune as obviously the general market continues to be oblivious to our marketing efforts.” says Microsoft PR.

technorati tags: zune ipod amnesty microsoft apple
del.icio.us tags: zune ipod amnesty microsoft apple
icerocket tags: zune ipod amnesty microsoft apple
keotag tags: zune ipod amnesty microsoft apple

Related Posts:

• No Related Posts

Just as soon as I proposed that Microsoft adopt a DRM Free platform in order to compete with Apple, Apple announces DRM free music from EMI on Itunes….

Reacting to Apple’s announcement Monday that it will soon begin selling music tracks from EMI without copy protection, PiperJaffray analyst Gene Munster advised investors to look out for an increase iTunes music sales, explaining that the removal of DRM abolishes one more barrier to entry into the iTunes+iPod ecosystem.

It is difficult to underestimate the important seismic change that the music industry is going through. I suspect that Jobs picked off EMI in typical fashion (ie. divide and conquer) in order to prove that DRM free is ultimately the way to go and EMI cracked.

This is not good news for Microsoft and at this time be hiding the chairs from Ballmer…..

Technorati Tags: apple ipod microsoft msft zune xbox itunes argo pyxis
Check out Indie Music Mix Podcast here

Related Posts:

• No Related Posts

My post on the weekend about the impending doom for Zune created a lot of feedback. Most of it was positive but some was negative and their were the usual supporters from the “Microsoft can do no wrong” cult. Here is some responses to the feedback:

IPod was successful because it was cool

Those of you who support the iPod, the iPod was not successful because it was cool, it was successful because it created an integrated music experience that released us from the tyranny of the Compact Disk (CD). Although there we very good players before the iPod, such as the Rio Player and the Sony MiniDisk Walkman, it was Apple that first made it so simple that anyone could purchase, burn and listen to music. Itunes is by far the easiest CD ripper and music organizer on the market. You dont need a degree in computers to load and play music. Yes the iPod is cool but the compelling feature is the simple to use interface (both iTunes and iPod).

Also the click wheel allowed you to use it when commuting. Using one hand while holding onto the railing on the subway train is very important. It is no coincidence that New York is a huge market for Apple.

The iPod has better sound than the Zune and vice versa

This is not the point. Better sound is a subjective criteria (ie matter of taste) and beside most Joe and Joeline Sixpack’s can’t tell the difference anyway. What did happen is that they could rip and listen to their music in a couple of mouse clicks.

The XBox is a Success therefore the Zune will be successful argument

This is bogus. Firstly I don’t believe the XBox is a success as defined by Microsoft. Microsoft lives by the curse of the Windows/Office monopoly. This means that people measure Microsoft success by the success of Windows, that is anything less than total domination of a market is a failure. In Microsoft terms, Xbox, 3rd place in a market with two strong competitors is not good. After 5 years on the market it is

However I want to be fair to Microsoft, it is extraordinarily rare that a product can capture the kind of market share that Windows/Office has. I can think of only two other products that have that level of success, the iPod and Google. We cannot realistically expect any company to meet the ridiculously high standard of Windows/Office market share and nor should we measure Zune based on this high standard.

To answer the question, Xbox and the gaming market has nothing to do with the Portable Music Player market other than they have some overlap of users. The Zune is not a product extension of the Xbox no matter how much you can allude to Zune mixing with the Xbox environment. They are decisions that can and are being made separately.

iPod is not compelling

Bollocks !!!!, in the last quarter (1Q 2007) was 21 million units including me buying 2 new iPods (Nano as a gift and a blue shuffle for the gym, I have the 60GB Video as well).

My point was that the Zune has no compelling features over and above the iPod, and in fact it has less features, the wireless thing is a gimic and it has been crippled by it’s DRM system and the concessions made to the music industry.

Summary

The point is that the Zune has been a miserable failure (29 – 40K units see here) by any consumer product which is why the VP for Zune was fired. It offers no compelling features over and above the iPod and hence no reason to purchase the product over the industry standard. To get the product to market, Microsoft had to make major concessions to the music industry which left the product crippled. The only way to create a compelling product beyond what Apple has is to completely support MP3 and make it into an open platform which isn’t going to happen.

So unless something radical happens, the Zune is doomed…..

Technorati Tags: apple ipod microsoft msft zune xbox itunes argo pyxis
Check out Indie Music Mix Podcast here

Related Posts:

• No Related Posts

TheZune player continues to struggle against strong competition from it’s own “Playsforsure” partners Creative and SansDisk, both soundly beating the Zune player in sales.

“Apple has dominated sales of MP3 players almost since it entered the market five years ago. In contrast, there are already questions about how sustainable Microsoft’s Zune sales will be. NPD’s own weekly data had Microsoft falling from the No. 2 vendor of MP3 players in its first week to No. 5 in its second week.”

Technology News: iPod: Zune Makes No Dent in iPod Market Share

For the week ending December 31st, the Zune player was knocked down to position 81 in the consumer electronic sales behind:

• 1 – Apple 30GB Video IPod (Black)
• 7 – Apple 80GB Video IPod (Black)
• 36 – Creative Zen 30GB Player
• 51 – Apple 30GB Video IPod (White)

Bear in mind that Microsoft deliberately released the Zune to be incompatible to Playsforsure to drive their partners out of the market, they still have a long way to go in order to remove this competition from the market.

technorati tags: zune market share ipod sandisk creative
del.icio.us tags: zune market share ipod sandisk creative
icerocket tags: zune market share ipod sandisk creative

Check out Northvoice Independent Music Podcast here

Related Posts:

• No Related Posts

The release of the Zune Player has been, despite the concerted PR effort, as exciting as a new flavour of Heinz beans. Unlike the chaos and excitement of the launching of the Wee Wii and the Playstation 3, the Zune was met with a chorus of negative reviews.

My favorite is Andy Ihnatko of Sun Time whose experience with the Zune player was as “enjoyable as having an airbag deployed in your face”.

The setup process stands among the very worst experiences I’ve ever had with digital music players. The installer app failed, and an hour into the ordeal, I found myself asking my office goldfish, “Has it really come to this? Am I really about to manually create and install a .dll file?”

Avoid the loony Zune – Sun Times

Stan Beer from ITWire was equally vocal about the installation of the Zune software:

The first time I tried to download the Zune software, it wouldn’t let me even though my system met the Zune software standards – Win XP SP2, a processor that runs at least at 1.5GHz, memory of at least….hang on what is this nonsense anyway!? I got none of this minimum hardware requirements rubbish when I installed iTunes 7, which installed without hitch in exactly five minutes.

Why consumers are angry with Microsoft over Zune

Stan makes two good points, firstly what is it with the hardware requirements for a simple piece of software such as the Zune Application and secondly the Zune software has not been immune to vaguaries of Windows software installation. It has been said on numerous occassions that the key to the Itunes success has been the seamless experience for users regardless of their level of skill.

[Zune Amazon Watch - # 74; Number of Music Players above Zune: Apple (12) including 1st, 2nd and 3rd place, SanDisk (4), Creative Zen (1)]

No Points for Points

The new points program for Zune is giving most reviewers heartache.

The iPod and now Zune have greatly transformed the way people buy music. People no longer visit a brick-&-mortar store to check out CDs of their choice and then make a purchase. A significant percentage of music sales nowadays happens online. Apple’s online music library iTunes has made it a lot simpler, allowing visitors to download songs of their choice for 99c a song or for a subscription fee as with Rhapsody.com which charges a monthly fee of $9.99 for unlimited access to music.

On the other hand, Zune’s equivalent of iTunes, the Zune Marketplace (uses a currency of points), compels the user to shell out at least $5 which will buy a bulk of 400 points (@ 99 cents for ever 79 points). When your total purchase reaches $80 worth, you get one extra song free. The Zune Marketplace offers a choice of about 2 million tracks but no videos or podcasts.

This system would work except for the fact that Apple already successfully uses credit cards and a system known as dollars and cents. Because Apple has kept it simple, it has created a competitive disadvantage for Microsoft’s system. They may be subsidizing the player through keeping the interest on the float, or some other motive. While people are busy theorizing this motive, they are not buying music from Zune marketplace which makes for a very long uphill battle.

Technorati Tags: apple ipod microsoft msft zune xbox itunes argo pyxis
Check out Northvoice Independent Music Podcast here

Related Posts:

• No Related Posts

The delivery of the Zune player to the market came and went on Tuesday. There were no long lines of bleary eyed gamesters, no mad rush, crushing crowds or excited Japanese teenagers unlike the cult like delivery of the Playstation yesterday. This probably does not mean terribly much in the longer run but as someone who has watched Microsoft for a long time (and even went to a Windows 95 launch, remember Start Me Up) this was a disappointment. The real secret of Microsoft is that it is run like a Political Party. It’s Public Relations are extremely sophisticated and it is well run messaging machine.

Microsoft VP Bryan Lee [CNN Video Link] did a reasonably good job of pitching the Zune Player as they spread out for the morning shows. These placements are very important because for MOST consumers they will get their information from these shows and the mainstream media. They will NOT be reading tech crunch. The reason I make this point is because Microsoft has to reach into certain audience beyond the already blasé tech heads who already have invested in 3 different IPods. The key differentiator that Microsoft is going after is the sharing capability and that was they kept driving home. However this is a feature that if push came to shove Apple could very easily add to the IPod and probably in more compelling ways. One of the sops to the Music Industry that Microsoft made was even if the audio (could be podcast) you want to share is your own, it will still be wrapped in DRM so that it will only play 3 times. This is a potential problem for users, a trap I don’t think that Apple would had walked into.

What they didn’t need was Soledad O’Brien schlepping a IPod Shuffle onto her immaculate cream Gucci [CNN Video Link] suit while Miles O’Brien says “why don’t they [Microsoft] get some decent design people”. Without the support of people like Miles and Soledad you are going to have problems getting the carefully crafted story out.

[spot the old G4 IPod...]

On ABC and NBC’s Today they stuck to the story and did not editorialize. What the talking points that clearly stood out was that wireless sharing is the way to go, so the social sharing thing, and that Microsoft has the ability (read money) to wait it out to beat Apple, just look at the Xbox 360. This begs the question what about Sony, that also has the ability to build a successful music player business but has not even made a dent in the Apple IPod’s market share.

There are many imponderables to whether this is a successful product however they will cause enormous headaches for their (former) partners in the Playsforsure segment.

However what Microsoft does know is that they needed to get to 10% market share and that was not going to come from Apple. They needed to take that market share from their Playsforsure partners in order to launch their assault on Apple.

Time will tell.

Technorati Tags: apple ipod microsoft msft zune xbox itunes argo pyxis
Check out Northvoice Independent Music Podcast here

Related Posts:

• No Related Posts

Continuing on the topic that intrigues me is how much vertical integration is needed in consumer products to make them a great consumer product. Just like the Palm Pilot before it, the IPod is the quintessential 21st Century consumer hit, however it is characterized by a highly integrated experience from design all the way through to the in-store experience and the brand experience. Corporation by in large have been notoriously bad at creating experiences when they have been successful at the corporate level.

Compare and contrast products like Burberry, Hermes, BMW, Apple, Ikea, Sony and others. Although they are great consumer products, they are not corporate products and don’t seek to create a corporate experience. For example BMW has successfully created a brand around success and drive-ability. (This does not translate into the Ford Mondeo or Chevy Impala, both fleet vehicles. ) The brand experience permeates from the advertising through to the buying experience. Those who have been fortunate enough to purchase through a BMW dealer, you will understand that it is very different than buying from a Chevy Dealer. Both BMW and Lexus understand this and make it a requisite to selling a BMW vehicle. And yes they do provide free lattes and muffins and some of them do look like Starbucks stores. (The BMW dealers prefer the white and stainless steel look like Shelley BMW in Wellington and BMW Sydney in Potts Points as well as BMW Toronto, where as LandRover/Jaguar likes the Wood Paneling.)

Back to the Sony Walkman, as I stated previously, the Walkman need to have the music prepackaged and available. Because of the Phillips Compact Cassette this was possible at the time in large numbers. In fact it would be reasonable to state that without both Sony and the Music Industry benefited enormously with the Walkman and created a new level of economics with the Music Industry. It is now a fact that this level of integration, the cassette and the portable player was a necessary precondition for the market to exist. This is because although it was indeed possible to copy music onto the tape desk and a lot of us did, we also purchased prerecorded music in large numbers to quickly and easily.

Sony also spent a lot of time on the brand experience. The name Walkman was both clever and multilingual. They were able to clearly create the brand around the Walkman that expressed youth and freedom. The ability to listen to your music when and where you need it became the rigor of the day and is a fact we take for granted today.

Walkman as a Verb or Generic Noun

As much as Google dislikes the term “google” as a verb “to search”, it is not up to them but the consumer to decide what brands are verbs. They should be flattered because it is an esteemed position in the market that signifies a market position that is unequalled. Walkman along with the iPod, the Hoover and the Xerox are all brands that achieved this position. Walkman became the defacto name for a portable music player right up until Apple replaced it with the iPod. Although it is still difficult for older people to replace Walkman, for younger people the Walkman is just another music player.

However Sony was able to create the “Walkman” brand as a class of device which made it almost impossible for anyone else to compete for consumer mindshare. I challenge anyone to come up with an alternative portable CD or cassette player. I would argue that Apple has achieved this so far and we look to see if the term “Zune” makes any in roads or is just another wanabee brand.

Vertical Integration Must Include the Brand Experience

So the second element is that the brand experience is a vital part of the Vertical Integration strategy which leads us closer to the argument that a platform won’t work in the consumer space and that is because they value the experience beyond the device and maybe they buy the device to subscribe to all the values that the brand provides.

What if Microsoft called it the MSN Player instead of Zune?

Our natural reaction is that this would not work buy why?. I would hazard a guess that it is because there is already preconceived brand experience that consumers would apply to the Music Player and you do not want to move those brand values across because they are not the experience you want convey. The MSN network is what we refer to as the ghetto portal. Unlike Google and Yahoo, who have great search and great media partners, MSN is a hodge podge of content with some apps around it. If it disappeared tomorrow no one would care too much because it is a duplication of Yahoo who does it 10 time better. That is not to say that Windows Live will not improve on that experience (the fact that they have to do Windows Live shows that MSN is going to be taken out back and clubbed to death) but Windows Live is trying to brand extend into the Portal space.

Does the OS Vertical Integration Argument Extend to Music Players?

Again the ability to experience digital music in a consistent fashion from the purchase through to the listening was an important part of the Itunes/iPod success. The key failing of the Sony Digital Walkman is that it did not integrate cleanly with music downloads. The Sonic Stage Software is unwieldy and difficult to use. It requires a level of skill in moving music across to the player that was beyond most consumers and it’s restrictions on playback were frankly counter productive. This is because of the limitations that Sony placed on itself when rolling out the Digital Product, it was in fact it’s own worst enemy.

Because Microsoft has dropped the Playsforsure partners, they too have admitted that the the iTunes/iPod combination is a necessary condition to compete. They did not say that a few years ago when they were courting partners for this system, they thought that a platform approach where they would license the software and DRM to manufacturers would work.

So to paraphrase, what was the strength of the Sony Walkman, prerecorded and prepackaged music and a strong brand experience was indeed their downfall. Because Sony did not make it as simple and convenient as possible to use their product, they failed to pick up on the iPod tread and gave the market to Apple and the iTunes/iPod combination. Sony because of it’s success in the CD/Cassette Player market believed they could control the experience of the consumer and how they could use their music. They also had the limitation of owning a large record company (Sony Columbia) that lobbied hard at the corporate level to cripple the Digital Walkman and ultimately left the way open for Apple to take the lead.

Before we get to the question of whether Windows will make a difference to the Zune ecosystem, we need to understand why the Playsforsure ecosystem failed and has Microsoft learnt any lessons from this.

Other Posts

Apple Prepares for Battle

Zune not IPod Killer, a Microsoft Partner Killer

Sony Walkman, a march in Time

Technorati Tags: apple ipod microsoft msft zune xbox itunes
Check out Northvoice Independent Music Podcast here

Related Posts:

• No Related Posts

As you have seen from previous posts I have been pondering why Sony failed to match the success of the iPod with it’s Walkman line of products when all of the good money was on Sony doing just that. This failure of Sony to capture this market could hold some good lessons for Microsoft as it starts to take on the iPod with it’s Zune player product.

Microsoft has a large job on it’s hands taking on what is arguably the most successful consumer product in history and they have a long way to go. On the fifth anniversary of the iPod, this is probably a good time to look back at the Walkman and explain why it’s original success was the seed to losing what could be the most important consumer battle of the 21st Century, the battle to reinterpret and reinvent the home entertainment experience, a title that Sony would love to have.

Over the next week we will look at the history of the Walkman products right upto the current NW-A1200 hard disk Walkman (there is a clue there).

The history of the Walkman dates back to September 1963, when at the opening of the Berlin IFA Exhibition, Fredrich Lachner of the German company Grundig proposed to Ohga that the two companies cooperate in developing a DC International Standard for cassette tapes, a standard conceived by three German manufacturers. While Norio Ohga (Head of Tape Recorder Division) considered this possibility, another proposal came from Wisse Dekker, manager of the Philips Electronics Far East Division and later president, and L.F. Ottens, a technical expert also from Philips. They came to Japan and proposed the co-development of the compact cassette to Ohga. Philips had already developed a compact cassette in 1963. The advantages of both the Grundig and Philips formats were weighed and considered. To Ohga’s credit Sony held out for the compact cassette to be royalty free and after some discussion, Sony adopted the format and entered into a non exclusive agreement with Philips. At the time they did not know that this was to play a large role in the eventual universal acceptance of the compact cassette format (It is ironic that Sony is now part of a battle to control high definition DVD and the royalties for Blue Ray).

From 1963 to 1981 the market for Magnetic Tape grew from 3.5B to 130B Yen with the advent of personal recording. Where as Reel to Reel tapes held onto the high end music mastering and audiophile markets, the compact cassette ushered in a whole new era of field recording which Sony has dominated to this day. However the real success of the compact cassette format lay in the distribution of pre recorded music which also was started by Philips through their subsidiary Philips and Mercury Records. Although the dominate format was Vinyl, cassettes proved popular for dubbing and for environments like car stereos. This combination of pre recorded music and cassettes lead to the first Walkman.

In 1978, Sony had a good business in home and vehicle audio however portable playback devices were only mono aural (mono). Sony added that year a small TC-D5 stereo model to its well-known Densuke series of portable tape recorders. Although popular among audiophiles, the TC-D5 was too heavy to be truly portable and the cost was prohibitive at 100,000 yen. The TC-D5 was part of the Sony Pressman range of recorders. This is where the name Walkman came from being a variation of the term Pressman. The Chairman of Sony at the time, Ibuka used to take the TC-D5 overseas to listen to music. He asked Ohga one day if they could come up with a small playback only player he could take with him. Ohga immediately called Kozo Ohsone, general manager of the Tape Recorder Business Division and made the request. The team came up with a modified Pressman with a smaller form factor and stereo headphones.

Qhen Ibuka returned from the U.S. he was obviously pleased with the unit, even if it had large headphones and lacked a record function. Ibuka went to Morita (then Chairman) and said, Try this. Don’t you think a stereo cassette player that you can listen to while walking around is a good idea? Morita took it home to try over the weekend, and he was also impressed. He agreed with Ibuka that the sound was quite different compared to conventional speakers, and he was excited by the fact that the device could be carried around easily, creating a personal listening experience.

There were two problems to solve, one was the weight and the second was the price. Sony had in development a set of headphones called Air Phones. They felt that the large 400g headphones would not sit well with the small form factor and make it difficult to carry around. The Air Phones at 50g was the right choice for a portable player (a senario that was to play out years later with the Apple ear buds).

On June 22 1979, when the journalists arrived at the Sony Building located in the Ginza area of Tokyo, they were escorted onto a bus and each handed a Walkman. They were taken to Yoyogi (a major park in Tokyo) and, after disembarking and receiving a brief greeting, they were instructed to put on the headphones and push the play button. The journalists listened to an explanation of the Walkman in stereo, while Sony staff members and students hired for the launch carried out various demonstrations of the product. The tape the journalists were listening to asked them to look at certain demonstrations, including a young man and woman listening to a Walkman while riding on a tandem bicycle. All staff members and students who were involved in the product demonstrations wore Walkman T-shirts to add to the overall effect of the launch.

The TPS-L was released to the public on July 1st 1979 to initial slow sales (3000 units). There was doubt that the product would be a success and many complained that the recording function was missing.

Because Sony had all the technology it needed to build this product, most of the work was done around the consumer experience. Although we think a lot about these concepts these days, in 1979 this was new thinking. In order for this experience to work, they had to work on headphone comfort, battery life and weight to target specifically at the portable music market. This product also needed prerecorded music on cassettes, a market created by home and vehicle audio. In fact the early Walkmans came with a sample cassette of music in order to demonstrate the product.In the next post I will look at why the Sony Player became successful (hint Tipping Point).

Computerworld light on facts heavy on speculation

Apple Prepares for Battle

Zune not IPod Killer, a Microsoft Partner Killer

Technorati Tags: apple ipod microsoft msft zune xbox itunes
Check out Northvoice Independent Music Podcast here

Related Posts:

• No Related Posts

Steven Levy (Insanely Great) has a new book out called “The Perfect Thing”. A gushing rendition on the whys and wherefores of the most successful consumer device ever.

On October 23, 2001, Apple Computer, a company known for its chic, cutting-edge technology — if not necessarily for its dominant market share — launched a product with an enticing promise: You can carry an entire music collection in your pocket. It was called the iPod. What happened next exceeded the company’s wildest dreams. Over 50 million people have inserted the device’s distinctive white buds into their ears, and the iPod has become a global obsession. The Perfect Thing is the definitive account, from design and marketing to startling impact, of Apple’s iPod, the signature device of our young century.

Besides being one of the most successful consumer products in decades, the iPod has changed our behavior and even our society. It has transformed Apple from a computer company into a consumer electronics giant. It has remolded the music business, altering not only the means of distribution but even the ways in which people enjoy and think about music. Its ubiquity and its universally acknowledged coolness have made it a symbol for the digital age itself, with commentators remarking on “the iPod generation.” Now the iPod is beginning to transform the broadcast industry, too, as podcasting becomes a way to access radio and television programming. Meanwhile millions of Podheads obsess about their gizmo, reveling in the personal soundtrack it offers them, basking in the social cachet it lends them, even wondering whether the device itself has its own musical preferences.

Steven Levy, the chief technology correspondent for Newsweek magazine and a longtime Apple watcher, is the ideal writer to tell the iPod’s tale. He has had access to all the key players in the iPod story, including Steve Jobs, Apple’s charismatic cofounder and CEO, whom Levy has known for over twenty years. Detailing for the first time the complete story of the creation of the iPod, Levy explains why Apple succeeded brilliantly with its version of the MP3 player when other companies didn’t get it right, and how Jobs was able to convince the bosses at the big record labels to license their music for Apple’s groundbreaking iTunes Store. (We even learn why the iPod is white.) Besides his inside view of Apple, Levy draws on his experiences covering Napster and attending Supreme Court arguments on copyright (as well as his own travels on the iPod’s click wheel) to address all of the fascinating issues — technical, legal, social, and musical — that the iPod raises.

Borrowing one of the definitive qualities of the iPod itself, The Perfect Thing shuffles the book format. Each chapter of this book was written to stand on its own, a deeply researched, wittily observed take on a different aspect of the iPod. The sequence of the chapters in the book has been shuffled in different copies, with only the opening and concluding sections excepted. “Shuffle” is a hallmark of the digital age — and The Perfect Thing, via sharp, insightful reporting, is the perfect guide to the deceptively diminutive gadget embodying our era.

You can find it on Amazon here.

Check out Northvoice Independent Music Podcast here

technorati tags: apple ipod steven levy
del.icio.us tags: apple ipod steven levy
icerocket tags: apple ipod steven levy

Related Posts:

• No Related Posts

Mike Elgan, who is the author of last weeks Computer world article “Opinion: Why Microsoft’s Zune scares Apple to the core” has kindly responded to my posting last week. I have taken the time to response in more detail this week.

The State of Play

It is now common knowledge that first part of the iPod execution has been near flawless. Indeed Jobs has got everything he wanted from the Music Companies, especially the pricing model he wanted. Recently the license to sell music was renewed and Apple was able, despite the Music Industry, to again get what he wanted. This is an important part of the battle because Apple is currently setting the “tune” for the digital industry as a whole, and Microsoft is going to have to respond to Apple being the Market Maker, traditionally a Microsoft role. The content providers are going to play a big role going forward and we need to understand them.

What is the content providers agenda?

The biggest fear that the Music Industry, and to a lesser extent the Movie Industry (I will get to that), has is that this new distribution channel has the opportunity to completely change the dynamic of the industry to the worst for them. They have for years controlled what enters the channel, what the retailers could sell, and what the Radio Stations could play. The Music Industry works from the center out, they control what enters the channel. The dirty secret of the music industry is that they willfully stopped retailers from gaining too much control over what the consumer was able to consume. This of course is changing with the internet and specifically with iTunes. They are dismayed that there is one dominant player and a number of also-rans (Amazon, Yahoo, Rhapsody etc). The concentration of retail power in one player is not in their interest, so they basically have welcomed Microsoft with open arms.

CDs and multi song formats are revenue maximizes. The format of 12 tracks per CD was to justify the $14+ cost of the CD, not to offer consumers choice. That is why they killed off the single because it was costing album sales. This approach is now explicitly threatened.

Microsoft of course is busy offering everything that the Music Industry wants in regards to Digital Rights Management (DRM) and will continue to yield to RIAA pressure to ratchet up the limitation of consumer rights. You will see this in subtle changes in the End User License Agreement (EULA) over a period of time and an increase in the limitations of what you can and cant do with downloaded music. What you will see from the Zune Shop is a whole host of “exclusive” content from them. The Industry will give Microsoft preference over Apple for a number of chart busters to coopt consumers onto their platform. Microsoft will in turn yield to the industries demands as I mentioned above.

What about Windows Distribution Strength?

The Windows Distribution strategy is another key area they can increase their traction. However I would caution that they currently have the Department of Justice (DOJ) camped on their doorstep until 2011 so they can’t get up to the nasty tricks they used to do. Also the European Union is also getting feistier in their attempts to reign in Microsoft, which also limits their options (re the Windows Media Player).

So lets take the coercion tactics off the table and concentrate on what Microsoft can do legally in the channel. Firstly the obvious step is to bundle Zune player into the Windows Media Player environment (except the EU). By tying the Zune player closer you immediately force users into the Zune environment whether they like it or not, and consumers always follow the line of least resistance. This is a benefit that Apple does not have. Although they have an excellent competitive suite of products of which Microsoft has to match, they don’t have the benefit of being preinstalled on desktops and laptops, nor being baked into the corporate desktop images.

However this may provoke a new round of legal battles, because Real Networks, Apple and others could argue that this is a monopoly tie in which as we know is illegal under the Sherman Act, and there already is a court convened to handle this currently. I am sure the Microsoft lawyers have been up late at night thinking about this. At the very lest, the PC companies will be able to replace or remove this option, without incurring the wraith of Microsoft (those students of PC history will remember the infamous Compaq memo where Microsoft threatened to cancel their Windows license if they did not stop shipping Netscape).

I do think that however this is a channel that will generally open up to Microsoft, especially if some incentives were attached to this, including allowing them to resell the Zune Player. However how much this will drive sales of the player is unknown. The key to this question is how consumers purchase music players and whether PC software drives the Music Player, or the Music Player drives the PC software and service.

There are some things that we do know and can extract from the Apple success:

• The appetite for music players is there. Apple more than anyone else has exposed the market to the hows and wherefores of digital music and it is affecting sales of CDs materially. This will only continue to gain steam.
• Vertical integration is the answer to this problem. Microsoft by controlling the hardware, software and content has basically stated that their platform model failed and they need a vertically integrated solution. However this does beg the question as to what level of integration is necessary, does this mean to the store itself?
• There are plenty more consumers out their to convert. Although the sales of the iPod have been impressive, there are still far more people buying CDs than digital music but the trend is clear.
• Brand equity is a vital component of the sale. The consumer needs to invest in what and how they consume the product. The iPod displays enormous product affinity that leads to an emotional investment. Once you get the user emotionally invested you have them for life and they become your salesforce. Apple has been extraordinary at this.
• 3rd Party eco system is vital to increase the consumer investment in the product. The investment companies like Griffith and others have made reinforces product and brand affinity.

Offering the Same but in Brown is not enough

I believe the key ingredient in the success of the iPod was the pursuit of ease-of-use. The first experience that a customer has with digital music is the player itself. They usually hear through advertising or through friends that they need to check out the iPod. The iPod sets you free, opens the inner you etc. They then proceed to the Apple Store to try out the iPod. It is no coincidence that you can touch, feel and use the iPod in the store. This tactile experience is vital to the purchase. How it feels in you hand, how you can use it with just one hand (very important for commuters), the smooth back, the glossy front all contribute to the sale. It is an industrial designers and anthropologists dream.

Another component is the aspiration sale. That is where a person will initially purchase the Nano in anticipation of purchasing the Video iPod. There is a powerful social incentive to move up (just like cars). This also means that the investment in iTunes is safe. (A close friend of mine just moved from the Shuffle to the Video iPod. She was going to go to the Nano, but moved to the Video iPod instead). Microsoft needs to respond with flash based players and compete in the mid player market. (However I have said that Apple has the flash memory production controlled tightly).

The next step is the affinity step. Apple Stores are always full of people of all sorts, discussing the products, dragging friends around. Why do I make it a habit of going to Apple Stores in different cities?. I do it to be part of a larger community of like-minded folks. This of course reinforces the purchasing decision.

So how can Microsoft replicate this when it doesn’t have (or intends to) have this level of vertical integration?. Obviously they are good at online communities and building online buzz, but most of their customers need to be less tech savvy. You need to be able to reach the guy who has a Bose Lifestyle Stereo System and listens to Stravinsky. Obviously the iPod does that for them (they are also more likely to own a Powerbook). You need to reach the university student, the rapper, the soccer mum and the nascar dad.

The answer actually is counter-intuitive, and it lies in the work of Malcom Gladwell. You need to find the influencers and convert them. You need to forget everyone else and concentrate on the few individuals that tell everyone else what to buy. Now this maybe what is behind the brown case, but there is going to need to be more, a lot more than brown and wireless sharing. There needs to be the wow factor that appeals to the narrow interest rather than trying to build wide support. This can be University Students for example. They are definable and reachable.

The Holiday Socks Test

I have a simple test to see if a product has a coolness coefficient that takes the product into the transcendental plane. That is the holiday socks test. Ask yourself the simple test. How do I react if a get two presents for Christmas, firstly a pair of socks, and secondly a Video iPod?. Each of these are the extremes of gifts. Obvious a socks quotient is at the lower end of the scale, and the Video iPod is at the higher end of the scale. The brilliance of the iPod is that the Wow factor cuts across demographics, where as a Nintendo Console does not.

The Wow Quotient is the measure of surprise and delight at the purchase, a happy scale if you will. Microsoft not only has to figure out how to have a wow quotient more than the Video iPod, they have to have response should be measured off the scale. This is a measure of perceived value or utility of the gift.

How Microsoft can improve its wow factor and it’s Christmas present status?. This is a more challenging issue and over time and probably through a number of false starts, but they probably know this.

There is not a lot of argument that Microsoft will acquire market share with it’s Zune Player(s). As I stated earlier, Microsoft will pick up the Playsforsure market which is about 5%. They will pick up additional growth in the market which will logically reduce Apple’s growth delta and eventually reduce Apple’s market share as a result. My question still remains, will those who have already decided to buy Apple iPod change, and will little Johnny or Susie be upset that there is a Zune player in there Christmas Stocking this year.

Computerworld light on facts heavy on speculation

Apple Prepares for Battle

Zune not IPod Killer, a Microsoft Partner Killer

Technorati Tags: apple ipod microsoft msft zune xbox itunes
Check out Northvoice Independent Music Podcast here

Related Posts:

• No Related Posts