Does the Lack of Apps Doom the Zune HD?

By  |  Tuesday, September 15, 2009 at 5:10 pm

T-PollOver at Wired News, Brian X. Chen has posted what’s probably not the only article we’ll see in the next few days that juxtaposes the words “Zune” and “failure.” Brian talked to a bunch of Microsoft-watchers, and the gist of their consensus is that the fact that the Zune isn’t a true software platform sets it up to bomb.

I don’t agree that it’s destined to tank–I’m guessing that Microsoft would be thrilled if it sold half as many Zune HDs as Apple sells iPod Nanos, and the Nano is even less of a software platform than the Zune. But yes, the iPod Touch is core to Apple’s future, and there’s no way that the Zune in its current form is core to Microsoft’s fate. Even in a best-case scenario, it’ll just be a neat media player that sells well.

(Speaking of the Nano, MKM Partners’ Tero Kuittinen has an interesting suggestion for Microsoft in Brian’s story: Lower the price of the Zune HD so it’s a cooler, more powerful alternative to the Nano rather than a more limited iPod Touch rival.)

Anyhow, I bring this up mostly because I’m interested in what you think…

 
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13 Comments For This Post

  1. Mike Cerm Says:

    I think the comparison to the Nano, Apple’s most popular player, is key. Apple had no trouble selling the music-centric 16GB Nano. The Zune HD is a superior music and video device, with superior desktop software (iTunes is garbage), and a few bonus features (browser and games), for a little bit more money.

    The logical question is, of course, “Wouldn’t that same person just get the 8GB Touch instead of the Zune HD?” Well, not necessarily, for all the same reasons those same people might choose a Nano. Like the Nano, the Zune HD is a media-centric device; easier to navigate. Like the Nano, the Zune is much smaller and lighter than the Touch. Hey, maybe 8GB just isn’t enough, the 32GB Touch is too expensive, and 16GB is just right.

    There’s a place for the Zune HD in the market, but not as a direct iPod Touch competitor. It’s a perfect device for someone who wants something right between the Nano and the Touch, and would prefer to steer clear of iTunes.

  2. William Says:

    This post on Kotaku says that xna was updated today to allow for full Zune HD development: http://m.kotaku.com/site?t=DD.wKZUdb-G3NajL0YiuQA&sid=kotaku

    I think we need to remember the app store didn’t go live until the iPhone 2g was released a year after the original iPhone was released. For those unfamiliar with xna studios, it’s used to develop indie games for the Xbox 360, and also the Zune HD now, I would imagine it could also be used for any number of applications.

  3. Daniel Says:

    The issue at heart is what market are they going after? Not the iPod touch, so that leaves them to compete against the nano. Price wise it the nano is $40.00 less and provides video. So what does that leave, nothing. MS will not recover it’s R&D cost again from the hardware due to the slim margins Apple is squeezing from them. This is MS second foray into the complex hardware and if they have anywhere near the hardware fauilure the Xbox 360 had then their demise will be faster.

  4. IcyFog Says:

    The fact the Zune HD is a Microsoft product dooms it.

  5. tom b Says:

    “if they have anywhere near the hardware fauilure the Xbox 360 had then their demise will be faster.”

    They’ve eked out a small profit on the Xbox division the past year or so– after sinking 20 billion into consoles over the life of the division. They’ll need to upgrade the console soon to stay competitive. They are trying to move into movie downloads and online games. I can’t imagine people will be eager watch movies served by noisy Xboxes, and there’s so many free online games, there can’t be any money in that. I don’t know why they keep throwing money down this rat hole. Because they are MSFT, I guess. Had they stuck to PC games, they would CLEARLY have been better off.

  6. Chip Says:

    I don’t understand Wall Street and the markets, so I’m wondering:

    Does today’s stock movement for Apple (up a lot) and Microsoft (down) reflect reaction to yesterday’s Zune debut.

    Not trying to pick a fight. I’m curious to hear from anyone who might know.

  7. tom b Says:

    Apple has been allowed by the Gov’t to change its accounting so it can “show” more iPhone in the current quarter. The change may be purely mathematical. As for the Zune, it’s not likely to generate any profit, so I wouldn’t expect it to influence MSFT’s price.

  8. Paul Judd Says:

    Tom, thats not quite true. Apple has lobbied for the ability to do what you mentioned, but there has not been any approval to do that. They still have to file the same type of accounting forms that they have in the past.

  9. tom b Says:

    I guess you are right. I thought the change was a “done deal”.

    http://blogs.barrons.com/techtraderdaily/2009/09/14/apple-could-benefit-from-possible-accounting-rule-change/

  10. Obiwan Says:

    I guess you guys have a short memory, because Apple didn’t have an app store when the iPhone first came out either.

    Microsoft just release the Zune HD extensions to the XNA Game Studio, so we will most likely see some 3D gaming in the future, plus other apps! Just give it time, it’s a new ecosystem that has a lot of potential.

  11. Tom B Says:

    Obiwan: you are correct. The iPhone came before the app store. But, I think the bar has now been raised. MSFT is the biggest software vendor in the world– shipping hardware NOW without apps seems lame. Also, MSFT has historically done a mediocre to poor job designing develpment tools– they have nothing like Apple’s XCode– so they may have a hard time pulling developers over to a platform that is not doing well and could change at any time at the whim of MSFT. Remember “plays for sure”? They dropped that.

  12. Daniel Says:

    @Obiwan,

    the bar was set two years ago by Apple on what to expect from your pmp, so MS has had that much time to come with something better than this train wreck. XNA has not set the Xbox world on fire, but it would have been nice if MS had this at least. Again, MS swings and misses. Too late, to slow seems to be MS motto.

  13. Rick Bellefond Says:

    So year has passed since your post and it does not seem to me as though the Zune has gained much in the way of market share. It seems like competing and winning against the iPod and iTunes is going to be a really tough thing for Microsoft to do.

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