Filed under: Analysis / Opinion, iPod Family
Could a "free" Zune compete against iPod?
Think about this. What if Microsoft gave Zunes away, the same way phone companies give away cell phones, and collected their money from the Zune Pass all-you-can-eat subscription program instead? You'd sign up for a one- or two-year contract for the service and get the hardware thrown in. That's the idea posted over at Wired where Jason Reindorp, marketing director for Zune, is basically quoted saying it's an idea that Microsoft has been kicking around.
Could a cheaper-made (perhaps flash-based) Zune swing the deal? Would it put Zune on a footing to compete with the iPod monolith? It certainly opens new possibilities.
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Reader Comments (Page 1 of 2)
Cap said 7:22PM on 4-05-2007
Wow, I'd actually consider purchasing a 1-year contract just to see what the Zune is like. Seems like a pretty decent way to check it out.
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tundraboy said 7:29PM on 4-05-2007
I've been waiting for this. Sooner or later, Microsoft will resort to it's favorite 'strategy' of flushing billions of dollars down the drain in a vain effort to buy itself some market share. It's never worked for them, and still they can't resist reaching for the elixir.
Hey Bill, how about instead of throwing the money into a black hole (again), how about just giving it out as dividends?
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Josh H. said 7:35PM on 4-05-2007
Ohhh....the lenghts Microsoft needs to go to in order to sell a product....
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Jules Stoop said 8:19PM on 4-05-2007
Haha. Like you could use the Zune to make a phonecall :p
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Steve Dale said 7:47PM on 4-05-2007
What if Apple did the same with the iPod? Imagine if they gave away the shuffle and threw in a few free songsas an enticement. After that you join a subscription service plan that allows you to just download songs, say £5 a month for 10 songs + the free song you get already, £10 amonth for 25 songs, £15 for 50 songs and so on? Maybe even an unlimited plan for £20 a month. In my mind, this would increase demand and you would still need to buy a better model if you want more capacity or video.
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Reg Muffet said 7:47PM on 4-05-2007
They could try it. But if the strategy was successful, there's nothing to stop Apple doing it too, and since iPod has the brand, Microsoft would be back to where they started.
That is, competing with a lackluster product with no street cred that only MVPs and other Apple haters force themselves to buy.
Still, anything that encourages Apple to release the damn 6G iPod, I'm all for it!
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Jon said 7:55PM on 4-05-2007
I remember someone did a survey where only 10 or 20% of the average user's iPod content came from the iTunes store, the rest coming from CDs and file sharing networks. With that in mind, I can't see Microsoft's subscription model working. But I could see people not fully reading the small print and buying one, so it may boost their market share.
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Jon said 9:18PM on 4-05-2007
Btw, Zune has the worst marketing ever, even worse than Vista's (at least you know Vista is the new version of Windows; in some ads you don't even know that the Zune is an MP3 player). Jason Reindorp should be fired.
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42 said 8:14PM on 4-05-2007
snicker... yeah, wait til someone tries to cancel the subscription or put some non-DRM'd tracks on it (you know they'll lock out the latter feature on such a product).
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Catt said 8:14PM on 4-05-2007
I'm not one for subscription service and have no interest in the Zune so that's a no for me. I checked it out in the local store just fine and decided that I didn't want one. If someone gave me one for free I would pass it on :-)
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Dann Bohn said 8:25PM on 4-05-2007
short answer, no.
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Eric Chiu said 8:19PM on 4-05-2007
tundraboy, it worked.
Otherwise you won't be seeing Internet Explorer occupying over 90% of the market share.
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CRASHLOCK said 8:20PM on 4-05-2007
No.
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Kevin said 8:33PM on 4-05-2007
"Free" as in "Rented."
And "all-you-can-eat" meaning "except the popular tracks, which you'll have to pay for."
How about Microsoft puts out a decent product rather than trying to con people into "buying" one with some sort of bogus deal?
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Macskeeball said 8:50PM on 4-05-2007
Actually, Eric, Firefox had 30 something percent of the browser marketshare the last time I heard. IE marketshare is high, but certainly not "over 90%."
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liquidmark said 9:25PM on 4-05-2007
Eric,
IE doesn't cost Microsoft much of anything to give away.
It's software. They can make a million copies and delete them in a blink of an eye if they wanted too.
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uros said 9:37PM on 4-05-2007
Although I doubt the Zune will ever truly beat the iPod, I have never thought that it was _no_ competition for the iPod.
Although i totally agree about the Zune ads.... "Welcome to the Social" Embarassing to think about it, really.
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CHNEPR said 2:13PM on 4-10-2007
Steve Dale: I like where you;re going with that.
Remember columbia house/BMG deals back in the day?
"12 CDs for 1 penny!!!*"
*requires 36 month subscription and purchase of at least 6 more albums at at an incredible mark up.
Basically, I pay a subscription fee, but get to buy and own the music.
My biggest complaint of the sub scription services is you don't get anyhting at the end.
They already have a season pass for TV shows, why not Download Plans?
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jbelkin said 1:39AM on 4-06-2007
Well, here's why it wouldn't work and the market is about 2 million users (not counting the "free" forced" university signups):
1) It's clear that offering cheaper monthly (Yahoo) does not bring them that many new users and the free SanDisk player hasn't brought in that many. Sure, MS' marleting is a little larger but how successful will it be - not by much. Why?
MAIN PROBLEM
2) You drive your brand value to ZERO - when you yourself think your product is worth "nothing," no consumer will either. You are forever stuck in that rut. Not a problem for cell phone companies because they are NOT giving away their own phones, they are giving you and telling you Moto, Nokia, samsung, LG phones are worth ZERO to about $49 dollars - what do they care. They treat them as disposable and how do you treat phones - as disosable (obviously the iphone will try and introduce a think different but that's another issue).
It should also be pointed out that MSN tried this to the tune of a $4 BILLION dollar writeoff and losing to AOL ... but hey, that's a whole 'nother division.
3) Cell phone giveaways are also different in that what you going to with a cell phone with no service? Nothing. A Zune is different. All you need is a cahrger & headphones - you don't EVER have to use "the network." Sure, that might require some hacking or illegal activity but for a free $200+ player, how many hackers will come out of the woodwork? Or simply cancel your credit card and sell the hard drive inside. What a deal. The cost of policing this will be in itself a whole department.
3) The only way for Ms to protect itself is to charge you 18 month, 2 years of "service" and rebate you $10 bucks a month or whatever but you have to pay $250 upfront (rounding down quite a bit) but you get it all back! will be the selling point - yeah, if people aren't going through the hurdle of subscribing to music, how many people want to deal with checking MS is refunding them $10 bucks a month (or of course, scary version - MS will refund you 15 MS cribbit Live points)? AND you have to program your own tracks - why not just start a band - that would be hella easier than the MS player - why not just send people the parts to? Sign up today for $300! Build a player. Spend hours making playlists! We'll send you $10 dollars a month - in two years, you own a Zune! What a deal!
4) You know there is no way MS will let you use a "free" player without streaming you ads every 15 minutes.
Will MS do this? of course, what do they care about selling you office for $999 and turning around and plowing it into giving away $200-$300 to make literally pennies on the dollar!
The only good that will come of this will be watching MS fanboys suck MS clean and whether this program can be shut down in 6 hours and how big the writeoff will be. Right now, MS will take a good 15 years to wither away but this should hasten MS's cash flow and demise by a good 2-3 years so let's literally pave our driveways with Zunes!
Based on NPD data that they are selling about about 1 Zune per store - anything will be an improvement in clearing the shelves ... though it will contribute nothing to their bottom line.
Shareholders - you have to ask yourself the Ballmer WTF?
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Tod said 2:04AM on 4-06-2007
#19: I like your analysis. Thanks for taking the time to write up your comments.
I have one question and that's regarding the 2nd to last para where you mention NPD data and one Zune per store...where did you ever dig up that piece of news?
Incidentally the MS fanbois are going wild with news, predictng the imminent demise of the iPod. Trouble is, each of the 250 MS fanbois already has a Zune so what good is it to them for it to be given away now?
Oh, and what's the "free forced university users" comment about? I'd like to read more about that as well!
Thanks again for some good food for thought.
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