An Intriguing Retrospective on Zune

Over on Slate, Farhad Manjoo has a piece about the Zune that puts forward two assertions. First is that the Zune “saved” Microsoft. The second is that if the Zune had been “better than the iPod”, it would have been a success. I will agree that the Zune, despite being a failure, helped Microsoft rethink some things on portable computing, I disagree completely that the Zune would have been a success had it been better than the iPod. The clickwheel iPods weren’t technically the “best” MP3 players, and the Zune HD had massive, gaping holes around it when compared to the iPod Touch.

The Zune Helped Microsoft

I do agree that building the Zune gave Microsoft a chance to rethink how it approaches mobile computing. I would also say that it, indirectly, made the Surface possible. On the PC-side of the equation, Microsoft had historically confined itself to peripherals, mainly mice and keyboards. But the Zune wasn’t Microsoft’s first foray into an end-user computing device. They have this little thing called the Xbox that predates the Zune by 5 years. As with the Zune, the Xbox entered a market dominated largely by one player (the Playstation 2), and it managed to acquit itself rather nicely. I’ll touch on why later.

Sure, the Xbox isn’t a portable device. But it was a different way of thinking about how to present a specific form of computing to people that wasn’t a PC. Had the Xbox just been a “custom PC that plays games”, it likely would have failed. Instead, Microsoft was able to look at their competition, and provide a product that would be familiar, but still different.

That isn’t to say the Zune didn’t matter, and that the act of creating the Zune didn’t help Microsoft. I believe it did. It can definitely take some credit for Microsoft taking a chance on building the Surface. But to say it “saved” Microsoft is a bit of an overstatement.

But Being Better Wouldn’t Have Mattered

But now we come to the heart of a statement made in the article that simply misses the point of the iPod’s success, and more specifically the iPod Touch. From the article:

…there’s no way in which it’s better than an iPod. And that’s why it was doomed.

Being “better”, either in usability or features wouldn’t have mattered. The Zune was doomed for one simple reason: it didn’t have the ecosystem of the iPod. That ecosystem was the reason the original iPods dominated the market by such a wide margin. And before some chime in about “Apple’s Brand” and the strength of it, consider that Apple’s brand strength back in 2001 wasn’t nearly as strong as it is now. Apple was only 4 years into Steve’s return, and was still trying to find their way. Even when the Windows version of the iPod came out in 2002, Apple’s brand was still not nearly as strong as it is today. They were still largely viewed as “that other computer company”. The iPod was a crucial element in expanding and increasing the Apple brand, and it was a gamble. There was no guarantee that Apple could pull it off.

The risk for the iPod in early days was that, except perhaps for the user interface, it wasn’t the “best” MP3 player on the market. There were others that supported more formats, provided more storage, included things like radios, had better battery life, were smaller and lighter, and virtually all were cheaper. The iPod was doing well, but it wasn’t a runaway success until a key event occurred: the iTunes Store appeared in 2003. From that point on, it was just a question of how much of the market would the iPod ultimately dominate. Having a simple, integrated store with an extensive library of inexpensive music made the iPod truly useful and compelling. The original Zune had nothing on the same level that would allow it to compete.

When the iPod Touch appeared in 2007, the landscape in portable media players shifted, in part because the Touch was more than just a music and video playback device. It was a miniature tablet, a portable computer along the same lines as a smartphone, only cheaper and without the “phone” bit. The Zune HD that came out 2 years later simply had no chance. Why? Again, it is about the ecosystem, specifically apps and content. The iPod Touch had an overwhelmingly larger library of music and video content. The iPod Touch also had apps, numbered first in the tens of thousands, and soon in the hundreds of thousands. That library included a large number of games, which helped propel the iPod Touch into the lead in mobile gaming. Even if the Zune had been “better”, it wouldn’t have mattered.

Microsoft Had Lessons They Could Draw From, And Didn’t

The sad part is that Microsoft knew just how important the ecosystem was, and they fumbled the ball. The PC was a success because of applications, and more applications gave rise to more applications. The Xbox was an even better example. Here was a device that, like the Zune and Zune HD, entered a market dominated by one large player. In the case of game consoles, it was the era of the Playstation 2, by far the most common game console available at the time. To succeed, the Xbox needed more than just good-or-better hardware and specs, it needed games. Specifically it needed both lots of games, and good games. And it got them. It took time, but the Xbox has built itself up such that the current Xbox 360 is now a heavyweight in the game console market. It was able to succeed and grow, not because of the hardware, but because of the ecosystem. Yes, the hardware needed to be “good enough”, but power alone isn’t sufficient. For an example of that, look at the Nintendo Wii. It has the largest installed base, and it isn’t much more powerful than the older Playstation 2. What it has is an ecosystem: accessories and games that make it entertaining for the long haul.

Microsoft could have also looked at the Macintosh, and seen a counter example. By some measures, the PowerPC-based Macintoshes were “better” machines. They had better performance, had a operating system that required fewer resources, and still provided a somewhat superior user interface. All that didn’t matter for one reason: the PC had more and better software to choose from. With the Zune, Microsoft tried too hard to focus on device features, and largely overlooked the more crucial element of making the device useful. What makes a media player useful? Media.

No Realistic Chance For Success

Had the Zune had the same deep library of music that the iPod had, it might have had a chance. Had the Zune HD been able to access a library of tens or hundreds of thousands of apps, it might have given the iPod Touch a run for its money (and potentially provided a base of apps for the Windows Phone that followed in 2010). The Zune could have been the most amazing piece of hardware, with the easiest and most advanced of user interfaces, and it still wouldn’t have had a chance.

It comes down to the ecosystem. The iPod simply had a better one.