Tuesday, October 03, 2006

Finishing up the Zune

Alright, been busy a bit the past couple of days.. but lets wrap up the Zune.

So what to think of it?

1. Microsoft will do well.

Lets be realistic, MS almost always comes out on top. They have capital and leverage to push whatever a new product very effectively, and they aren't going to fail to use that here. Plus, there is a pride issue at stake. Does anybody here think that MS will stand up and say that Apple beat them in something? That just isn't something that will come from them, so expect them working the Zune (and future music/video players) hard.

2. The fans will benefit.

That is a guarantee. Apple has been riding pretty high pulling a very lucrative 20-25% profit margin with iPods. Will they be able to keep that up if Microsoft is willing to actually lose money (in the short term of course) to put out a better product at the same price? I'd venture not. Apple will either have to step up and add additional value to their iPods or it will have to lower the price away from MS. As long as MS does not react passively to their efforts it should be fun for all.

3. There will be some issues.

As much as I am a fan of the Zune and the competition that it will bring to the iPod brand, I think that with the technological innovations taking place that there will be some pretty good sized issues that come about. One of the main things that comes to mind is the WiFi... it will be interesting to see how it stands up in a security sense. How MS responds to these will be one of the defining values in their product.

4. There will be fallout amongst the companies that can't keep up.

This is a no-brainer... but there are going to be some companies that will be hit pretty hard by this. I'm not actually sure if Apple is going to be the hardest hit by the entry of the Zune... there will be some damage done to the smaller producers that haven't been able to consistently bring innovation to the market place. For example, the iRiver Clix. Sounds good... but what is with a video player having only 2gb of memory? Not to mention the screen is almost an inch smaller than the Zunes. Is it a smaller device? Yes. But you can't even store a DVD or two on it to watch on the go. So expect when the two 800lb gorillas begin to throw down... smaller companies that don't produce competitive products are going to take a serious hit.

So to finish this up... I expect the industry to become a whole lot more volatile for its participants. This will allow those that constantly innovate and drive value into their product to step ahead of the pack. I really expect Apple and MS to be in that group... but as for others, only time will tell.

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