Music, culture, and the inside scoop from Cesar Menendez,
a Microsoft employee working on Zune - Microsoft's new music project.

November 30, 2006

Motley Fool: MP3 Category is Still Growing

Interesting note in this article by Motley Fool (via MSNBC) about yesterday's widely reported Reuter's survey. You know, the one that surveyed 450 potential buyers of music players. The survey found that 35% of folks expressing interest in Zune see it as an upgrade to an existing player - as opposed to 18% for the iPod. And, 80% of respondents chose iPod as their first player (70% without being prompted). That's not that surprising to anybody around here - iPod is a great product with very strong awareness.

But here's the interesting part that Motley Fool notes today:

Yet it's not even close to the most important finding from Reuters' survey. What's that, you ask? Turns out only 20% of respondents had previously purchased a music player. Think about that for a minute. Apple has sold more than 70 million iPods since 2001. How is it, then, that the vast majority of portable music player buyers are dipping into their wallets for the first time?

Interesting. Looks like the category is still growing. So that brings up a question for readers of this blog: if you bought Zune already, is it your first MP3 player? I'll answer first: it's not my first.

. . . And to head off early the claims that the Motley Fool guy is pro-Apple or pro-MS, here's the disclosure statement:

Fool contributor Tim Beyers no longer owns Apple shares, nor shares of Microsoft or any other company mentioned in this article. That said, he digs his MacBook Pro, which he occasionally uses to run Windows. Get the skinny on all the stocks in his portfolio by checking Tim's Fool profile. The Motley Fool's disclosure policy rocks.

 |  Friday, December 01, 2006 3:10 AM  |  40 Comments

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Rhett

I fall in the first time buyer catagory. Until now the devices didn't have the capacity to be apealing to me. I also come from the demographic that remembers and loves the vinyl product and I still have a passion for owning CD's. I have never purchased a digi music download and have no current plans to do so.

I was solely looking for a better way to manage and listen to my CD collection.

Baby boomers and their kids are a HUGE group of consumers. Todays teens may buy a download here and there but I think it is the Boomers and their kids who are buying the music. Thats why it is so strange to me that for 15 bucks a month there is no monthly CD included in the Zune subscription. That is almost 3 times as much as I pay for my CD club subscription and you offer NOTHING except limited rights to listen to radio. Its a weird business model. I don't get it.

I'm diggin my Zune though. My only wish right now is that the Zune team is staying up late on the weekends working on fixing the gapless problem.

Glenn

Only 20% had previously purchased an MP3 player? Wow...somebody actually got a good sample.

An explanation is simple. Apple has sold 70 million iPods. I assume that's worldwide. And I know many people who have purchased more than one iPod. So there are not 70 million unique iPod owners out there, and there are certainly far fewer than 70 million iPod owners in the U.S.

Let's say there are 40 million iPod owners in the U.S. That's a generous number. That's less than one out of seven Americans, just over 13%.

Note to journalists: Get outside your small sphere and try to understand the spending habits of the average American.

jasonspix

I've had several mp3 players before.  At least 4 iPods and 1 Creative.  I too remember vinyl, but have to say that I hate CDs.  If I buy a CD I rip it and chuck the CD.  I picked up a Zune the day it came out and love it.  I have a few gripes, nothing major (can't use it as a hard drive etc.)  I like the Zune much more than any of the iPods easily.

raaga

I did put quiet an effort in deciding my first mp3 player .

Initially i wanted to buy an iRiver Clix.i put iPod as the second option , though many of my friends have an iPod.

Then i've heard Zune is getting released. i waited for a month for its release and played with it in different stores. loved it , though its little thicker ..and bought my Black Zune.

250+ USD is not an EZ throw away money .I wanted the best for what i spend.Zune won me.

I also , Knew , Zune's wireless features , initially will not be useful. but ,6 months down the lane , there will be many Zuners around to have fun. and also got some confidence that soooner or later , MS might come up with PC wifi sync options  through software updates .

I am enjoying my every moment with Zune . esp. the background theme customizations , radio , and my music and home videos.

james

The Zune is my first mp3 player. I love my Zune. For students at NYU, I started a facebook group: NYU Zune Community. Join the group, we're hoping to have get-together events!

Shawn Oster

Nope, my first MP3 was *the* first MP3 ever released here US stateside, waaaay before the iPod hit.  Can't even remember it's name it was so weird.  It was before the Diamond Rio as well.

Since then I've had a Creative Muvo that I got for free from Audible and after that picked up a Zen Micro.  It should be noted that the reason I bought the Micro is that I wanted something to store both music and data files on... hint, hint.

Then, I bought a Zune.

dstrack

Not my first... went original iPod -> Archos AV700 -> Zune.  Sorta used my Treo as a player for a bit as well, but the headphone dongle b.s. drove me nuts.  iPod is very nice and I anxiously await their next version, but right now I'm really digging Zune and my early impression is that I like the direction they're going with it.

Zune MAX

Zune is my first mp3 player and I'm lovingit. It's inspired me to listen to more music and the Zune pass has me downloading new tunes each evening. I love my Zune! His name is MAX.

MusicAddict

I guess I would fall into the first time buyer range of a high capacity mp3 player.  There really was no marketing scheme that attracted me to the Zune since I did not even hear about it until last week while in Circuit City.  It attracted my attention not so much for the features included but the potential it holds with wireless capabilities and the magnificent screen.  

I'm not an Ipod hater but it's just a player that would not work for me because...well it's too sleek and I'd be worried about scratching it all the time.  

I fell in love with my Zune while riding my bike around campus today and it fell out of my jacket pocket.  I slowly stopped my bike not wanting to turn around to see the mangled guts of my Zune, but to my surprise it was still intact with very few scratches.  Needless to say if I did that with an Ipod I would have to dig a hole and bury myself.  

Zune is a wonderful device and I'm satisfied with my purchase.  I think that your marketing in the future needs to focus on the durability of the Zune and its wonderful screen.

Jim Scardelis

My Zune will be (my 6 year old is aware that I "asked Santa" for it, so I won't be getting it until Xmas) my fourth or fifth music player. I've had several small flash-based straight WMV/MP3 players, a Rio Nitrus, a couple of free ones that I got from Napster (one of which my daughter is using), and the last, an iRiver H10 6GB unit (which she'll inherit when Santa brings me my Zune :) )

I'll be moving from a Napster to Go subscription to a Zune Pass as well -- in reality, I don't really care who makes the player -- as long as I don't have to re-rip my CD's (which are in WMV format) and there's a subscription model. I'm at the point in life where I'll only get new music if doing so has no incremental cost -- hence, the Napster subscription, and now Zune Pass. Since iPod is a purchase-only model, I never had any interest in it at all -- and I wonder how many people really do. After all, a Zune Pass is a lot like a satellite radio subscription -- only you get to control what music is actually on.

My iRiver works like that (only it doesn't have 30GB or video) -- I'd just put it on "shuffle" and if I didn't want the song that came up, I just punched the next song button. I expect to do the same with the Zune.

Woody56292

I had one previous mp3 player.

Jerboa

I'm in the never-before-owned category. Haven't bought a Zune yet either, though. I'm still on the fence with which player I want.

Right now, the Zune looks great. But I'm not thrilled with the Marketplace. For someone who's primary genres are Jazz, and Christian Contemporary, the Marketplace is difficult to browse. It needs to have more genres defined at the top level. That said...I can find music, just not as easily as the latest Beyonce tunes.

That, plus netcasts, audiobooks, and video would make the Zune choice a slam dunk.

But the lack of above puts me squarely on the fence.

sportsunit

This is like my 7th mp3 player or something like that...

Havoc

Audio books are a definate need for me. Any word on that yet?

Zuneless

You know me by now...

First, this article from 2003 is hilarious in light of the past three years:

http://daringfireball.net/2003/10/closed_is_open

Second, I've had three portable digital audio players. All iPods. My first iPod was the original 5GB model released in October of 2001. I bought mine the first weekend they were out. Great device. I took it to the gym every day. I also used it extensively in my work; I kept a bootable Mac OS partition on it with diagnostic tools. Having the firewire port on the device was fantastic. I eventually sold it because I wanted one with larger capacity.

My second iPod was the first one with the dock connector; also referred to as the third generation. I bought a 40GB model in April of 2003. Another great device, although the placement of the buttons was a tad awkward. I moved my bootable diagnostics to a tiny bus-powered firewire HD.

I sold my second iPod in August and bought a new 30GB iPod Video (5.5 generation) in September of this year. Love it, love it, love it.

In my opinion, the Zune has but one thing compelling going for it... a decent screen. The extra half-inch does make a big difference. Of course, the iPod isn't a stationary target. I'm sure the next revision will one-up the Zune screen.

The only thing that would be good for consumers, though, is interoperability. Here are some typical consumer questions: Why can't I play my Zune Marketplace songs on my iPod? Why can't I play my iTunes Music Store songs on my Zune? Why won't the Zune work on my Mac?

Interoperability is crucial for the DAP market to survive.

Jason

No MP3 player, I still buy CDs.  But the Zune has me thinking about finally stepping up.  What am I waiting for?  Higher video resolution playback support on Zune device so it looks great when a TV is connected.  Tighter integration with Media Center so I can take recorded TV shows with me. And a camera accessory so I can transfer images directly to Zune.  Thats all I want it to do outside of great audio output.

sportsunit

Jason...all good points.  I hope they're working on all those things you mentioned, especially the media center support.  I've always wondered why the Zune is based on the gigabeat, yet they took away two of the gigabeat's greatest features (dvr-ms file support, and picture syncing directly from cameras).  If this thing is based on portable media center, then they actually had to take tthese features out of the software because they were already built into it.  But, honestly...right now, I just want mine to stop skipping...soon.  I feel like I'm back in the turntable days with my records jumping and such....bummer.

Matt

Zuneless - why can't iPod play zune marketplace?  Surely that's a question for Apple?  Pretty sure they don't play standard wmv either do they?

I had a microPhoto which I just sent back as it failed on me, got refund.  Also had a Nano that I won which was cool and everything but not really what i wanted in a player, great for free though!

Zune is my next player, January 14th - pittsburgh - the day after I land.  now if you'll excuse me I have an ebay bid on a 360 goin cheap .......I'm so weak!

John from S.Florida

Sportsunit..I hope they get your skipping problem fixed soon!

As far as Zune and previous Portable Media Center devices.  If I am correct, Microsoft PMC devices are based on Windows Mobile.  I've seen a few and if you notice they all have identical menu layouts.  I'm guessing that Zune's Marketing Department wanted a custom look & other customization features that it required them to start development from a stripped down Windows Mobile OS.  Can someone from Microsoft confirm this and/or give us a little history?

Another question for Microsoft/Zune:  Before releasing Zune in the wild did you have product roadmap for Zune?  And would you say that your initial roadmap is on target with what users wants/desires or are you find yourselves having to do some drastic roadmap redrawing?

Sean

I had a camera all in 1 type mp3 player but i don't think that would count.

Franco

Microsoft needs to stop fooling around and just get the Zune to work with MP11 right quick...

Franco

By the way who's that in the background. I hope it's not a certian WWII German leader.....

sportsunit

I really, really hope the Zune and WMP 11 stay far away from each other.  I can't stand WMP, and the Zune marketplace already has some annoying similarities to windows media player.  I have absolutely no clue why people want wmp 11 and zune to be compatible.  But, I just have to get my vote in that things need to stay the way they are.  Zune and WMP 11 need to go their separate ways.

miniplayer

Zune is my 3rd player following iRiver T-10 and Meizu Mini Player.  While I love Mini Player I really prefer having a subscription based music service.  I have no desire to actually own my music. I'd rather let in come into my life whenever I want it.  Seems silly to drag around a huge collection of files everywhere I go.  Ideally I would prefer music on demand and download as I want to hear it.   I'm a very happy Vista user waiting impatiently for Zune Vista compatibility!

ray

off topic i know but i just have to ask cesar if todays presentation of the zune at a microsoft conference in spain mean that the zune will be officially launched in europe soon? look at this link:

http://www.zune-online.com/news/zune/photos-and-video-from-zune-in-europe.html

i know you dont like people asking about international launches etc but this one seems official so i just had to and i cant wait to buy one:)

Kreets

The Zune is my first MP3 Player and I am loving it.

nikostheater

Proud owner of ipod here.

No zune in Europe yet,so....

i dont want to spend money to a device that gives a portion of my money to a label that i does not like.

Shame on you drm infested M$

John from S.Florida

nikostheater..glad you are happy with what you've got.  But come on, you think Microsoft wanted to pay that out?  I think the record labels are guilty as sin for these kind of tactics.  They have raised the stakes and unfortunately you have to pay to play in this business segment. IPod user should be upset because this will likely affect Apple's upcoming contract renegotiations.  I wish Apple luck on that front.

TomT

Free advice of the day (grin):

"Analysts said Microsoft should use the Consumer Electronics Show, in early January, to announce new wireless capabilities for the Zune, and launch a whole new version of the player by the spring."

http://www.ft.com/cms/s/2a9fff40-8165-11db-864e-0000779e2340.html

Todd

Good article from FT.com.  They are spot on with their assessment that MS/Zune needs to make some waves at CES.  Not so much new content, but with new wireless functionality.

But I'm not sure I'd agree that its necessary to replace the existing player with a new one.  Its likely they are only suggesting Microsoft/Zune diversify abit with different Zune form factors (.ie large capacity, flash only nano, etc).

Kenny Sullivan

Redmond will release Zune in time for Christmas and sell nearly 50, not counting the ones Microsoft will send to Steve Jobs as a lousy joke. MS CEO Steve Ballmer will be arrested for biting a mother on her face in a department store while her son and daughter inspect the offerings at the iPod display. Ballmer will claim the report of the attack was a "gross exaggeration, spread by Microsoft's infinite enemies; I just brushed by her, looking for the Zune display" before settling out of court. Defects will plague the players (all 42 that will finally be sold) and Microsoft will end up in a law suit with all its media vendors who will charge that Microsoft was refusing to pay royalties after placing a 1/800th of a second of silence at the end of the songs they were selling through Zune and claiming they were all "new, original and innovative works copyrighted Microsoft. Duh." After 8 months of litigation, the suit will be settled out of court after CEO Ballmer bites through one of the tires on the Sony attorney's Lexus in the court parking lot and is shot with a tranquilizer round by the Washington State Department of Animal Control. Zune will be pulled off the shelves in June 2007 after MS issues a press release describing "its brilliant *pilot* of a massive, galaxy-stretching, mind-expanding portable media program yet to come" as a "total and unquestioned success." Analysts will point out, however, that after the law suits, media companies were so shocked to find nastier lawyers working for MS than they ever employed, MS was unable to contract any content for the Zune service at all. MS will be forced to start its own recording label and will only be able to sign William Shatner scatting and singing obscene lyrics to television theme songs and, in a desperate play, offer downloadable monster movies of CEO Ballmer stalking and eating his neighbors' pets. Analysts, newspaper columnists, national security consultants and religious leaders will accurately predict the devastating Vistapocalypse that will attend the release of Vista on Thanksgiving Day, 2007. Microsoft, sure of its success, will make an unprecedented media move buying all of the available commercial air time on the SuperBowl broadcast to demonstrate Vista's "advanced features" during commercial breaks starring William Shatner and CEO Ballmer as 'Spock' aboard the new "Starship Vista." Breaking with tradition, the spots will air live and will have to be improvised largely by Shatner when Ballmer's bright red Federation officer's jersey becomes hopelessly tangled around his head. "The new Aero screen saver is guaranteed to neutralize erectile dysfunction, hair loss and flatuence, right Science Officer Ballmer?" Shatner will announce, beaming from his familiar captain's chair, while muffled shrieks emanate from the crimson-shrouded head of the shirtless Ballmer, thrashing senselessly, struggling to pull the jersey down over his head. By the third quarter, newscasters will announce during breaks in the action that Vista had been cracked by Eastern European and Central Asian terrorist groups, had already taken over all the Vista desktops in the western world and were using them to drain corporate bank accounts and send wire transfers to Al Qaeda. Ballmer, interviewed by sportcasters on the scene, will be by then hopelessly entangled in the red jersey with his hands caught in the sleeves and his arms suspended over his shoulders. Unable to answer their questions with anything more than a strangled scream, Ballmer runs from the TV cameras and head-butts the Astrodome until he is unconscious. The next day, President Bush will declare, "Now I know what the 'blue screens of death' thing-things were all about. These people are fellow travelleres to Al Qaeda and their collaborators in the Democratic Party," and orders the Justice Department to bring racketeering and terrorism charges against the company. MS attemtps to deflect the charges by changing its address to a vacant lot in Spokane and ordering its employees to hide their eyes behind their hands while at work on the Redmond campus. CEO Ballmer flees justice and is caught in a dragnet some months later by British Columbia animal control officers, answering a call about an insane pet-eating bear running amock Fort Nelson in northern British Columbia. There, CEO Ballmer will be shot dead after fatally chewing through the neck of one officer and nearly severing his head from his shoulders. MS finally will collapse as thousands of employees leave, disgusted by the ethics of company convicted of abusive business practices and accused of shoddy engineering, racketeering, terrorism and finally, in the last straw, cannibalism. The company loses most of its board and finally a court appoints a board of receivers to maintain the company until the Windows operating system can be sold to investors. Microsoft XBOX survives as Shatner buys the division, keeping the tradename 'Microsoft' as the receivers could find no one else to buy the name of a company associated with crime, terrorism, insanity and cannibalism. Shatner will market a successful range of pornographic outer-space adventure games under the brand for the XBOX.

JC

Was that therapeutic Kenny?  Get some help dude!

Martin Törnsten

I have one old flash MP3/WMA player (RCA/Thomson Lyra), but it has the same basic flaws as Zune (see below).

I have been in the market for a new DAP this year, and have also watched the development of the Zune device with a lot of interest (and as I'm very happy with a lot of other Microsoft products).

Nice try, but it's way too big for me (just like the large iPod, but even worse). You have to sell something like the iPod nano to be in the game.

I thought it would be good software in the Zune device, and it looks like a fine UI, but it fails big on basic software functions:

1. No gapless playback (kills both house/techno mixes as well as my opera collections). I used to hate iPod for this, but Apple has finally seen the light.

2. No lossless playback (kills audio quality for all my music). Idiotic as Apples has had it for years, and the Toshiba Gigabeat (who is close to Zune) has it. Pure stupidity.

I have never bought any Apple products in my whole life, but my next DAP will probably be a red 8GB iPod Nano. Small/sexy, and supports both gapless and lossless playback -- my two main criteria for any DAP.

The iPod Nano won't support WMP10/11 which is a shame (I don't like to be forced to install additional applications on all  my computers, and at many work places I'm not allowed to), but neither will Zune (so no loss in that regard). '

That you have screwed up the market with two different DRM is just incredible. I hate to see different DRM from different vendors, but two different DRM schemes from the same vendor is even more idiotic. Reminds me why I still buy CD and rip them myself and never any online music with DRM -- who just locks you in as a consumer.

P4S was the best effort so far (even if I would prefer a world wide standard for DRM media), but Zune is just like iTunes -- and I will never buy any DRM crippled content from either stores. I fully respect that I should pay for all my music, but I will not buy into crippled DRM systems that will lock me in as a customer. It's a shame that Microsoft can't support even it's own standards (P4S DRM -- now Play not for sure if Microsoft products involved).

I predict Zune (at least as it is now) will fail big in the market.

It does everything bad with iPod/iTunes (lock in of the customer to only one music software and one music store) and none of it's good (small cool devices with both gapless and lossless playback of the music).

Martin Törnsten, Sweden

Swanlee

The zune is my first portable music player like this. I hate MP3's though and really wish my Zune supported lossless audio, so I refuse to call the zune an "MP3" player.

With broadband speeds and large cheap hard drives there is no reason to keep using compressed audio anymore. That was a product of the 90's and dial up access.

I can fit 40-50 full length uncompressed cd's on the Zune, I hope you guys let us one day.

TomT

The below CnetAsia article includes some good ideas:

"Top 10 ways the Zune could do better"

http://www.asia.cnet.com/reviews/musicplay/printerfriendly.htm?AT=61972140-39050075t-39000841c-39000420q-1

Alex

Swanlee, Why do you refuse to call the Zune an MP3 player simply because it doesn't support lossless?  There is no lossless MP3 - it only goes up to 320kbps - so lighten up and call it what it is.

I've had a 40GB iPod for over three years now and am happy with it.  Everything (approx. 700 CDs) is ripped using Apple Lossless - I used to use AIFF which used more hard disk space.  I've only bought about 5 very hard to find songs on the iTunes Store and downloaded about 15 free songs, so I don't have a huge investment if I needed to switch stores.  That said, the lack of lossless support on the Zune is a dealbreaker - I won't even consider any of the other features because I don't want to compromise on the quality.

I use a pair of Shure E3c in-ear headphones with a remote on the iPod and I stream music to my hifi from iTunes using Airport Express in multiple rooms.  Played through decent speakers and headphones, you notice when some music has been compressed.

I also bought a nano the day they came out but gave it away a few weeks later because there wasn't a remote for it at the time.  Constantly going into my pocket to adjust the volume or change tracks ruined my inside pockets.  Three weeks later, Apple released a remote! Oh well.

Will I switch?  Don't know.  I changed the battery about 9 months ago (took 10 minutes), so it has a new lease of life.  Whatever I buy next has to be so easy to use that I just forget it's even there, which is what happens now.

anonymous

Cesar, do you go back and read these older comments?

admin

anony - yeah, why?

anonymous

cesar, because as you add new blog entries I don't want to waste my time posting to something that not going to be read.  besides, i like thinking that someone from zune team is actually taking note of some user community ideas.  i wish there was a more straight forward way in submitting suggestions than hoping you guys are going through your personal blogs.

Shawn Oster

Todd, are you serious that you thought the FT.com article was good?  Sorry, but I personally thought it sucked.  It was damn horrible.  So bad I wrote up a review of it on my blog because it angered my blood so much.

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About admin

I'm Cesar Menendez. I left the Xbox marketing world for Microsoft's new foray into music - Zune. Community, cool videos, music, discovering new music - these are things I love. In the past I wrote music reviews for RealNetworks, and before that I volunteered at KCMU (now KEXP). Get in touch w/ me using this email: AskZune (then type the at symbol) microsoft.com (please no solicitors)
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