Too little, too late for Zune in '07

The technology and music pundits wrote off Microsoft's Zune player immediately after it launched, and one reviewer predicted that it would be such a failure that Microsoft would quietly forget about it by the middle of 2007. I was willing to give Microsoft a little more credit, only because I don't think that the iPod and iTunes are perfect, and because I've seen how Microsoft comes from behind: it refines, improves, outspends and waits until the competition stumbles.

This evening, Microsoft unveiled version 2.0 of its Zune family, and this time, it's got a credible music player--for 2006. Unfortunately for Microsoft, it's 2007.

The new Zunes have a scroll pad (sort of like the ones on notebook computers), which is a reasonable competitor to the click wheel of the old iPods and certainly better than the four-way clickable ring of the first Zunes (which everybody assumes is a click wheel when they try it). But that's last year's battle.

The iPhone and iPod Touch have touch screens, which make all other music players--including the new Zunes--look dated. You'd think that a company with the resources and technical depth of Microsoft could come up with a portable music device with a touch screen. Apparently not (yet).

The Zune's had Wi-Fi built in from the start, but there's still no online connectivity--no Wi-Fi Zune store, no anytime-anywhere access to music using the subscription Zune Pass, and certainly no Web browsing. No comparison to the wireless capabilities of the iPhone and iPod Touch.

To be fair, the new Zunes do have wireless sync with the PC-based software, which saves you the trouble of walking into the room where your PC is and docking it. I'm not sure how much of a hassle that was in the first place. And they got rid of the "three days" and "no passing it on" restrictions of Zune-to-Zune wireless sharing, which makes it marginally more interesting, but shared songs still expire after three plays.

These two shortcomings are related. Connecting to a public wireless network can be clunky--it usually displays the local network's sign-in screen, which might require a username and password. For that experience to be as smooth as possible, you need to connect through a Web browser. And to use a Web browser on a small device without adding a tiny keyboard--a nonstarter for a consumer product--you need a touch screen. Microsoft told me that it'd prefer to lose out on a couple of features than deliver a poor or confusing user experience. Hence, no wireless Internet or music store for Zune.

Even with the new flash-based Zunes, Apple still has better segmentation. At the low end, it has the $79 iPod Shuffle, which almost anybody can afford.

For the serious music and video collector, Apple has the 160GB iPod Classic at $349. And for the gadget freak, there's always the iPod Touch (starts at $299) and iPhone (starts at $399, not including the AT&T contract). In other words, regardless of your budget or interest, Apple has a product for you.

And Microsoft isn't offering any discount versus the comparable iPod models. The 4GB and 8GB flash-based Zunes cost $149.99 and $199.99, respectively, and the player with the 80GB hard drive costs $249.99--all 99 cents more than their iPod competitors. If you're competing against the industry standard (nearly everybody who sees my Zune asks, "is that the Microsoft iPod?"), and you're not offering any major advantages in terms of features or functionality, then you darn well better offer a discount.

So what's Microsoft doing right with Zune? It did add video to its flash-based players, which could have trumped Apple...if Apple hadn't announced the Nano with video first. It finally fixed most of the glaring holes in the first Zune, like lack of podcast support and the inability to play TV shows recorded on a Media Center PC.

It's trying to build a community with Zune Social, though it could be accused of getting late to this game, given that companies like iLike already offer applets that let you view what other users are listening to--on their iPods, no less.

Even so, Zune Social might eventually encompass enough music recommendation and social-networking features to make it interesting--imagine iLike meets Pandora meets MySpace, back when it was mostly for musicians and their fans, all with an integrated music store.

(Side note: one of iLike's top executives is Hadi Partovi, who used to run the division encompassing MSN Music--remember that download store? It was quietly forgotten when the Zune launched.)

Microsoft says it's not trying to compete with Apple in this generation. Instead, the company hopes to vault into the clear No. 2 position, then mount its attack on the market leader (sort of like it did with the Xbox and Xbox 360 versus Sony's PlayStation 2 and PS3). A reasonable goal, though I don't think that Sandisk is going to give in as easily as Microsoft hopes.

The problem is, Apple's not standing still. At some point, Microsoft is going to have to come up with two years' worth of innovation in a single year. And based on what I've seen so far, Microsoft's commitment to the product isn't deep enough to do that.