Editorial: Saving The Zune By Killing It

The following is an excellent editorial written by Raul Burriel.  “Saving The Zune By Killing It” can be found The-Trades.com

Microsoft’s Zune was already a laughing stock. Perhaps the best and brightest competition against Apple’s iPod juggernaut, people largely saw it as an “also ran”. Its best feature was its social networking functionality. It led a pack crowded with Sony, Archos, iRiver and Creative, but combined, the whole lot of them were still second best to the trend setting iPod. Even when this lot came out with avant-garde features that trumped the iPod (Archos has been integrating video into its players for years), all they did was fuel the Apple idea machine, giving the boys at Cupertino a chance to take something mediocre and make it better. After all, Apple didn’t invent the MP3 player. Diamond Multimedia and its Rio player was on the market years ahead of Apple, and they’re the ones who fought the MP3 wars with the RIAA (For those of you too young to remember, a judge once ordered Diamond to halt all MP3 player production because it had the potential of infringing on music copyrights). Apple was John-come-lately, taking a handy device and making it prettier (and maybe a little bit handier). Microsoft is notorious for playing the “me too!” game, but their products are rarely up to snuff. So they frequently go out and buy a little company with great potential and use them to leverage their way into new markets (see DOS). Redmond’s alternative is to try to go at it alone, and throw truckloads of money at the product until it finally succeeds (see Xbox). With the Zune, Microsoft chose the latter. With this second strategy, Microsoft invariably comes out as not good enough, implementing features we’ve seen for years in other products, and new features no one really cares about. Owners of Microsoft’s Zune love the sociability aspect of the device, but those owners are few and far between. The Zune has become such a mockery that when President-elect Barack Obama was spotted using one, efforts were quickly made to dismiss this abhorrent behavior. How could it be? The cool new President was using one of those? The perception is that the Zune should be held at arm’s length while pinching your nose with the other hand, something akin to a stinky diaper. And then… New Year’s Eve came around.

It’s not that every Zune on earth stopped working on New Year’s Eve. The understanding is that only first generation Zunes suffered from a calendar bug which caused the devices to stop working on a leap day. The general perception, though, is that the Zune is broken. All of them? Some of them? Only a few? It doesn’t matter. The Zune is broken. December 31, 2008 became “The Day the Music Died”. The Zune, already a PR problem for Microsoft, has become an albatross. So how is Microsoft going to recover from this?

Microsoft can spend millions of dollars fixing the bad PR that comes from this latest disaster, or they can follow another course entirely. I am proposing the latter.

Redmond has already suffered one epically expensive PR problem in 2008. To solve persistent Xbox 360 failures, Microsoft set aside a billion dollars and extended warranties on all the gaming devices. Do they want to do the same, and become notorious as the company that’s always having to pick up the pieces after their hardware fails? Or is it time to strike out in a new direction? Microsoft has to move quickly. With every passing day, they appear to be a rudderless ship as they continue to throw good money after bad. This is what Microsoft must do:

Cancel the Zune

The Zune brand is tainted. Tainted beyond repair. Too much money is necessary to put it in good standing again. Years from now, the Zune will still be remembered as the device that failed because it couldn’t count to 366. Kill it. Kill it now.

Canceling hardware is nothing new for Microsoft. I still lament the loss of their top notch and popular Sidewinder series of gaming devices (a brand only recently resurrected). See, now there’s a brand that should never have been killed off. Microsoft even branched out into wifi hardware for about 5 minutes, and then quickly pulled the plug. What was that all about, anyway?

Don’t Really Cancel the Zune

A lot of work has been put into the development of the Zune. To cancel it now would make the next step (more on that in a second) all the more difficult and expensive. Continue development. Improve it. Add features (rumors persist of an imminent “Zune phone”, for instance).

Release the New Zune (under a different name) in Time For the Christmas 2009 Shopping Season

The new Zune cannot be called a Zune. It cannot look like a Zune. And the interface must be markedly different from that of the old Zune. For starters, it has to be a touchscreen device. No point avoiding this fact anymore. All the trendy new products are touchscreen. Unless Microsoft can invent a wrist-mounted holo-projecting device in time for Christmas 2009, touchscreen is the only way to go. And it has to be trim and slick. If the screen isn’t at least as big as the iPhone, and the thickness isn’t at least as thin as the iPhone, then don’t even bother. Get rid of that stupid big fat button, and don’t give it a bezel any bigger than a human hair. You don’t want a device that’s “almost as good” as the current iPhone (12 months from now, no less!) You want a product that competes with whatever Apple will be putting out in December ‘09. Make sure it has a phone, and a camera (and no dinky camera, either – it better friggin’ do video and have a flash!) And get started on an app store right now. I still remember how I had to add applications to my old Dell Axim and that’s not going to fly in this modern age of app stores.

One big problem Microsoft has to contend with this new device will be, of course, that they already have a phone. Dozens of phones, in fact. Microsoft may have been late to the game when it came to a phone OS a few years back, but by throwing enough money at the problem, they eventually became a major player (heck, even Palm puts out a phone running Windows Mobile these days). So, does this new Zune run the old Zune OS or does it run Windows Mobile? The smart choice would be to adapt Windows Mobile for the new device. Many of the Windows Mobile hardware makers these days are adding their own layer on top of the phones these days to make the OS look slicker and more contemporary (i.e. more “iPhone-ish”). It’s time for Microsoft to get a clue and catch up. And they’re already juggling too many disparate operating systems. Besides the Windows family of operating systems, Microsoft also develops the Xbox OS, and the Zune OS. They’re fragmenting their own market. Apple, on the other hand, developed an OS so dynamic that it can run on a desktop, a settop box (AppleTV), or a handheld device (iPod/iPhone). If Microsoft really intends to stick with the Windows kernel for their desktop platform, then it needs to be made more dynamic. It’s still considered somewhat clunky and sluggish when it comes to its Windows Mobile iteration, but if we’ve learned anything from the early betas of Windows 7, it’s that Microsoft can take something old and make it blazing fast. And it doesn’t look half bad, either. So put a trimmed down version of Windows 7 on this new Zune.

Which leaves us with our last question mark: If we can’t call it a Zune, then what will we call it?

Introducing the XboxGo

It won’t look like a Zune either in terms of hardware or software. It won’t even be running the Zune software. It will be a successor to the Zune in spirit, only. What it really is is the mythical and long rumored portable Xbox. When this comes out in late 2009, people will say “Hey, it’s that portable Xbox everyone’s been talking about since 2006!” Never mind that it was actually developed practically overnight after the catastrophic collapse of the Zune.

Apple did what I’ve advocated for years. They started with a simple handheld device – the iPod – and slowly added features (thus eliminating the need for other handheld devices). PDA, camera, phone, gaming all came gradually to the iPod, like it was natural, evolutionary. This was revolutionary only to those who couldn’t see the big picture. Do you really want to carry around an iPod, a Razr, an iPaq, a Coolpix and a DS when you can just carry one device? The only question was who was going to do it first, and most affordably. For Microsoft, there will never be a portable Xbox. Whatever their portable gaming device is, it will be integrated into something else. Either their Windows Mobile platform or their Zune platform. After all, market analysts don’t salivate over divergence. Convergence is the buzz word they like to throw around.

By slapping the Xbox brand on their new portable device, Microsoft will open the device to a whole new market of users who would never have considered getting a Zune. If even all you can do is download your avatar from the Xbox to your portable device and make him dance to the music you’re listening to, that will still be enough to make an Xbox user stand up and take notice.

Microsoft already has a substantial footprint in the mobile phone market. They’ve also make quite a name for themselves in the gaming industry. That’s two big check marks in the plus column for them. Despite Steve Jobs’ assertion that the iPod Touch is the “Funnest iPod Ever” (fair enough, when it comes to iPod, I’m sure it is), Apple still doesn’t dominate the gaming market. That title belongs to Nintendo, by a staggering margin. Second is Sony with its PSP, but in numbers so small that they’re practically insignificant. Gaming is where the future of handhelds is at. It’s the next killer app that will put your handheld device in the hands of consumers that so far have resisted buying your phone/gps/web browser/camera/toaster hybrid. Nintendo and Sony are not sitting still here. They see the future as well as Apple did. Sony’s working on its PSP2 while Nintendo has already released its DSi in Japan. Portable music and video, phone, GSP, camera, PDA, and much more are coming to your handheld gaming device (and in some cases, already has).

Humiliating Sony has become a favorite past-time for Microsoft’s gaming division. Making Sony’s imminent PSP2 an also-ran would put some grins on the faces of executives in Redmond. And eating into Nintendo’s market share would be sweet revenge for Microsoft and the beatdown they got from Nintendo’s Wii.

To accomplish this, Microsoft must act quickly and spend freely. Spending freely is not a problem. Even in this economy, Microsoft has the means. But can they right the ship quickly enough to recover and turn this into a viable proposition? Granted, this may not be a profitable endeavor for a long time. Surely, to grab a substantial market share, Microsoft will have to sell this new device at a greatly reduced price. But this is nothing new for Redmond, either. They’ve been selling Xboxes for below cost since the first generation device came out. Make a product that’s at least as good as the competition’s, and sell yours for less, and you’ll come out the winner every time… even if you end up broke. Microsoft’s already got the hardware and the software necessary to make this happen. Microsoft has experience in portable operating systems (including a phone OS), and whether it was ever intended as an actual product or not, you know that work has been done on a portable Xbox and a Zune phone in the past. All the pieces to the puzzle are there, they just need to put them together. A few design tweaks here and there, and they can start producing this killer device in a few months. The start up costs necessary to get the factories up and running will probably be the biggest expense. Building buzz by leaking a few bits of information here and there – catering to the rabid and hype-sensitive gaming community, of course – will help build demand. Show off some working prototypes this summer at E3. And by Christmas, Microsoft will have the “must have” device of the season.

It’s a formula with massive potential. But Microsoft must first realize that the Zune is a sinking ship and cut its losses, and that’s not going to be an easy decision to make. Even with all the Zune resources re-allocated to this new “super secret” project, there’s going to be resistance internally (even if externally, analysts have been seeing the “Death of Zune” coming for months). But the time has come for Microsoft to stop playing “also ran” and take the lead. The Zune crash of ‘08 is an opportunity Microsoft cannot afford to pass up.