How Zune Stacks Up To The iPod - InformationWeek

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How Zune Stacks Up To The iPod

Microsoft is offering a device that has an equal number of weaknesses and strengths. But the company's greatest weapon may be the hundreds of millions of dollars it's expected to spend on marketing.

Microsoft on Tuesday launches what it hopes to be an iPod-killing Zune, marking the beginning of a colossal battle with Apple in which analysts say the software giant initially has as many weaknesses as strengths.

In general, Microsoft has done a good job in building anticipation for the launch that could eventually reshape the market dominated by the iPod, which is in the hands of three out of four owners of portable music players.

"There's certainly a lot of buzz," says Joe Wilcox, analyst for JupiterResearch. "Partly because it's Microsoft, and because people love to watch giants fight."

When the Zune lands on store shelves, it will have plusses and minuses that are on the lists of many analysts. On the positive side is its ability to share tracks wirelessly between devices and to play music downloaded from Microsoft's subscription service, which will launch the same time as the device, along with the Zune online store. In addition, the device has the brainpower of the Xbox team behind it. The tenacious developers and marketers of Microsoft's video game console have managed over a few years to rise from zero to No. 2 behind Sony's PlayStation.

On the negative side, Zune is larger and heavier than the iPod, and there's no comparable mini-version, i.e. the iPod Nano, that customers can clip to their pocket while listening to their favorite bands.

Beyond this general consensus, however, analysts differ on Zune's Achilles' heel, and its best weaponry.

Richard Doherty, analyst for the Envisioneering Group, believes it's a mistake that music downloaded from other services, even those supporting Microsoft's own Windows Media Player, can't be heard on the Zune. And while the video screen is bigger, Doherty says he's had reliable reports that the pictures are grainier. "A bigger picture without detail may not be a plus," he said.

On the positive side, Doherty gives the wireless capabilities high marks for its viral marketing potential. If a person turns on a friend to a new tune, there's a good chance that person may buy it later. Songs shared between devices can only be played for a limited time. "If the viral marketing takes off, than Apple could have a real problem," he said.

The weakness in the feature, however, is Microsoft's decision to only allow copyright-protected material to be shared, Doherty said. That means user-generated audio, such as the sounds of a couple's newborn, can't be shared.

Wilcox, on the other hand, believes Microsoft's Windows Media Audio Codec is better than similar technology in the iPod, which means the Zune may have better sound quality. Average users are unlikely to notice the difference, but it may attract audiophiles. In addition, Microsoft can leverage the Xbox customer base to sell more Zunes through promotions or integration.

On the downside, Microsoft enters the battle facing an Apple that has a far larger catalog of music and videos, a huge retail distribution channel that's firing on all cylinders, and lots of peripherals that add value to the iPod, Wilcox said.

Ross Rubin, analyst for the NPD Group, believes the Zune navigation system, while "very good and fluid," doesn't match Apple's scroll wheel; and he says the battery life on the Zune is less than on the iPod. Rubin also takes an opposing view on Microsoft's subscription service. "Most services that offered both [music to own and subscriptions] have been identified strongly with the subscription service, which consumers have not embraced," Rubin said.

The analyst, however, gives Microsoft points for having a larger video screen, which means a longer list of songs to navigate through, and better personalization features, such as the ability to use any photo as the background of the video screen.

So, Microsoft goes to war carrying a device with about an equal number of weaknesses and strengths. But the company's greatest weapon may prove to be its refusal to say "uncle" when entering a new market, and the hundreds of millions of dollars it's expected to spend over the next few years marketing the Zune.

"In typical Microsoft fashion, they will learn from the marketplace and continue to move on," Rubin said. "They are one of the most tenacious competitors."

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