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Dogma (Special Edition)
By Betty Aberlin, Ben Affleck, Nancy Bach, Lesley Braden, George Carlin, Bud Cort, Matt Damon, Dan Etheridge, Linda Fiorentino, Walter Flanagan, Janeane Garofalo, Barret Hackney, Bryan Johnson, Jason Lee, Derek Milosavljevic, Marie Elena O'Brien, Brian O'Halloran, Jared Pfennigwerth, Kitao Sakurai
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Microsoft released last week its new Zune media player in a bid to challenge the dominance of the Apple iPod. (Disclosure: I own and use an Apple computer, use the iTunes software, but do not own an iPod. My sister on the other hand does own an iPod Nano. Furthermore, I have taken advantage of the new Intel-chipset in my Macintosh and have loaded Windows XP. I also own a Playstation 2.) The new Zune is pricematched with the iPod as far as storage capacity is concerned, is slightly larger, and has a larger screen, but with the same number of pixels as a fifth generation iPod. The Zune Marketplace will sell content exclusively for the Zune player at 79 cents each; iTunes songs cost 99 cents a piece. The Zune also carries a Wi-Fi transceiver (specially built to connect with other Zune users) and an FM receiver, as well as connectivity for the Xbox 360 (via USB port). Compared this way, the Zune may be considered a superior product.
But come on, you just know that with Microsoft there's more to this than meets the eye.
The Zune player is actually a modified Toshiba Gigabeat, manufactured by Toshiba. The software does not have full compatability with either Windows XP or the upcoming Windows Vista; you have to download a patch. Music and video files obtained from only the Zune Marketplace or from a CD ripped through Marketplace on your computer will function; zero support for files legally purchased from iTunes. This means you will have to rebuild from scratch your entire music library in order to use it on the Zune. The Wi-Fi can only be used to conect to other Zune users, not to your own computer, not to the Zune Marketplace through a Wi-Fi hotspot. Music and videos obtained from other users can only be listened to three times each, up to three days, after which you must buy the file from Zune Marketplace. And no, you may not just keep sharing the same files; once a file is shared, it can neither be shared with that user again nor be traded on to another third user. Likewise, files purchased for another Zune cannot be traded, the Zune software will not play the file. And perhaps most irritating of all no podcasts are available; free podcasts must be individually transfered, one at a time, no automatic updates.
But enough about th Zune. Microsoft's challenge to the iPod will go over less than successfully. In fact, I predict it to be a total failure. Oh, sure, some people will buy it, but the product has no compellong reason behind it. Indeed, the connectivity and social-networking features are mearly lame attempts to make up for the Soviet style DRM.
From the start, Microsoft has found success because people just HAD to buy their products, not from any claim to be innovative or "better". Be it willingly or grudgingly, the Mrcosoft coustomer is confronted with what they believe to be the only logical choice: a Microsoft product. In 1981, the IBM Personal Computer was the only small computer that cracked the psycological barrier to the corporate office market (while the Apple II had made some inroads, the market was still dominated by the large mainframe computers). IBM, rushing the product to market, chose the small six year-old Seattle firm "MicroSoft" to assist with finding suitable software for such a simple device. MicroSoft Disk Operating System--or MS-DOS--was the software shipped with millions of these computers. While DOS was wildly popular, it was only when Compaq released its first IBM-compatable clone in 1983 that Microsoft understood the potential of its operating system as a major product. The IBM PC was the market standard largely by accident (IBM executives hated the open-ended nature of the device that later lead to IBM being forced out of the micro-computer market). But while IBM was sidelined by other manufacturers, all the clones were built to use only MS-DOS. Bling-bling.
The success of the PC gave Microsoft a monopoly, a potentially unending source of money that would go on and on and on, forever.
Unless people stopped buying Microsoft.
The dirty secret of DOS is that you only needed to use it because everyone else you interact with used it. Is was only a matter of time before some other operating system came about that was cheaper, better, and less buggy. Say you work in an office. A big part of your job is simply typing reports, reading reports, and editing reports other people wrote. Text files are not system specific, they are based on an old set of standards called ASCii (American Standard Code Two). Word processors mearly take these text files, and automatically format them for your printer to look how you want (yes children, that's how it works; in the old days you got a big manual with your printer explaining how to uses these "print-codes" without a word processor). A word processor can be written to run on any operating system you lie and still understand the same files. All it takes is one curious person in an office to realize that you could buy a non-Microsoft operating system and still be able to read, print, and share all your important files. The only barrier is the cost and hassle of purchasing and installing a new suite of software. And if your computer keeps crashing, you may just do it.
So Microsoft entered a deal with the computer manufacturers that it continues to this day: preloaded software. Manufacturers got to put a Microsoft compliant logo on their machines, thus ensuring that the public would continue to associate the new machines with their old ones. Retailers were able to convince the public to buy a new, less problem-plaugued machine. Microsoft got to keep selling copies of its software. In 1990, IBM was left in the dust and Windows had hit the shelves, mostly already inside your computer when purchased. Soon, new PCs were popping up not just with Windows but Word, Excel, and the entire Office suite preloaded.
In 1995, the Netscape Corporation released its hypertext program, Netscape Navigator, allowing people to access the Internet via the World Wide Web. It fueled an explosion in internet content and sparked the great Internet boom of 1995-2001. When Microsoft first saw the Web, they saw a threat: more and more computer users would be on the internet every day, every minute, all using a non-Microsoft piece of software to get things done. Microsoft took aim, but this time just decided to give it away: Internet Explorer would be free. The avalanch of free software buried Netscape (it was eventually absorbed by AOL) and even promted an anti-trust investigation by the US Government for abuse of monopoly power. The once popular Navigator was only reborn when the source code was publicly released as Mozilla, also free for anyone to download.
Here the tale of Microsoft's great crushing victories ends (I'll get to the Xbox soon enough). The next Attack was against AOL and was less than successful. The Microsoft Network, or MSN, failed to catch on, despite the way it was preloaded with Windows. You still had to pay extra to se MSN. Becoming an Internet Service Provider pitted Microsoft not just against AOL, but the telecom companies too. Despite its success, AOL was loosing market share because more and more people were choosing to connect to the internet directly, usually through dial-up, modems. AOL compeated by offering exclusive content to its members, something Microsoft found difficult. The MSN business model was locked into a market that did not need Microsoft: it was to big to emulate. Because MSN had to be bought separately no matter what, it had to compeate product-a-product, without any of the advantages Windows offered. And the competition sidelined MSN as an ISP.
Portals like Yahoo also posed a threat: you go through them, not Microsoft. So MSN was expanded to become a portal, not just an ISP. But again the advantages offered by preloading were useless. Removing Windows or migrating to a new suite of software ment hours of tedium wasted on a long and complex process that no one really understood. A website can easily be left by a minimum of typing in the address bar. Google likewise cashed in on this and compeated head-to-head as a superior free service with a minimum of non-invasive ads.
Remember kids: Microsoft's strategy to stay on top is not based on having the best products and services available, but by making it so difficult to not use Microsoft that it is easier to put up with it. That is what has scarred people away from the Machintosh. Every step of the way, the Mac has been a betterr product save for two key areas: price and compatibility. The Mac is better designed and engineered, thus it costs more to produce, so less peple have them and less software is written for them. Only people believing that owning a Macintosh will prevent its user from getting any work done due to compatability issues keeps a great many from buying even the cheap ones. But as a recent convert to the cult of Mac, I can tell you that these problems have been overcome. The Intel-chipset allows me to run Windows natively if I want, unlocking all the old software I still have. Besides, Microsoft Office runs quite nicely on the Mac, and the internet is not platform specific (OK, not true, but only a small handfull of sites need Internet Explorer).
When Sony launched the Playstation 2, it was planned to be the begining of a full advance into the PC market. Not only did th PS2 have USB and Firewire ports, it also had an optional hard-drive and network adapter. In Japan a Linux-based full computer version of the device was test marketed. Sony was planning to invade the Personal Computer market with a Japanese Computer, becoming a third option: PC, MAC and PSX (the planned name). It was to be a market entrance that would revitalize the micro-computer market and challene the dominance of the Windows-Intel PC. But the strategy was to enter through the growing home entertainment gizmo market. Digital Video Recorders like TiVo were making the television more like a computer. The growing graphics acceleration of the personal computer and the internet made the PC a bigger contender in the video game market. Sony decided to be on the cutting edge of the convergence and marry the two with a new product.
Microsoft lived and breathed on sales of new PCs. Apple was not a serious threat because of price. But an open source Linux device? If Sony turned the home entertainment market into a computer market before the PC got there, then Windows would be threatened with real competition and a loss of its twenty-year monopoly over operating systems. So Microsoft got together its best and brightest and had them do what IBM did a generation ago: beat Sony to the punch and develop a home-entertainment device first. The team came out with two such products: the Microsoft Windows Media Center Personal Computer and the Microsoft Xbox Video Game Console. They are the same product, a generation or two removed. The original Xbox (and its successors) are special Intel PCs, preloaded to only use Xbox software and games. Only by hacking open the system does one realize it's only a computer and may be reprogramed to do exactly what that thing on your desk does. The Media Center PC was the next step, combine the TiVo style DVR, the DVD player and the content of the Internet and hook it up to your cable/sattelite dish and the big screen TV. Within a decade, the Media Center PC will sprout little plugs for Xbox controllers.
But wait, the Media Center PC is ahead of its time and the Xbox was a success without having anything to do with Windows. But that is because of the nature of the video game business. It was Halo and Halo 2 that made the Xbox so wildly popular. Before this game came out, the Xbox was a boring toy. Better than a PS2, yes, but with few of the smash hit titles, it only provoked yawns. Only when people HAD to get Halo did the Xbox take off in sales. But it was far from the crushing victory of the nineties. The PS2 sold plenty of units and games and the Nintendo Game Cube managed to claim a profitable third in the market. Far from simply being a format war over video games, the struggle that opened this week--PS3 vs. Xbox 360--is the continuation of the struggle for dominance that Sony and Microsoft see themselves in. If personal computers and home entertainment electronics are merging, then Sony (maker of entertainment electronics) and Microsoft (maker of personal computer software) are in a fight to the death for the future of the computer.
Enter Apple. The funky California company always had that hippy vibe around it, damaging its credibility as a serious machine. But when Steve Jobs returned from his exile, he set about reshaping the company into an American Sony. He and Bill Gates go way back and there were both good times and bad. But what drives Jobs is not greed or revenge but vision. He never lost his hippy visions about how the computer can make life more groovy. His sixties revolutionary lives on in a constant need to innovate and change the world. At every step of the way he has successfully identified huge trends ten years before they happened and has always tried to put himself at the front of the pack. While it's not always the market dominator, Apple has always been a trendsetter. Which is why few gave the iPod much notice when it debuted in 2001. The tech market had crashed and Apple was always popping out this or that too early. The iPod accidentally happened at exaclty the right moment. The CD player market was depressed into a glut of cheap devices. The mp3 players available were junk due to the cost of flash memory, the size of hard-drives and the poor design of the things. Online music was a wild west of pirate downloaders and overpriced music services. Jobs hit upon the prefect combination of design, functionability, ease of use, and price at exactly the right moment, before everyone else. And he won big for it.
Sony saw the personal music player as its core product going back to the Walkman. It integrated a music player into some mobile phones and its Playstation Portable. But the PSP was primarily a gaming device to the public, and while sales have been brisk, the public has not embraced convergence here yet.
Ever since Apple started in 1976, it has been trying to be at the right place at the right time with the right product. Now after thirty years they have doe it in a way that their dominance is unassailable. The Zune will not supplant the iPod because there is no reason for it to. The cutsie features are not enough to alone build the critical mass of buyers needed to make these features really usable in the first place. "Buy a Zune, just like all your friends," is difficult enough to pull off even when all your friends do all have Zunes.
But the real Achillies Heel of the Zune is the DRM, the Digital Rights Management. The iPod has skirtted that narrow line between usability and copyright protection only by making those limitations easy enough to get around that anyone who wants to can, and just strong enough that it unlocks the magic word to make it practicle.
Content.
Were the iPod to use a system that did not fit with what major media companies felt was secure enough, then not enough content would be available on the iTunes Music Store and iPod users would automatically drift into the pirated music sphere. But to lock the iPod into an extension of iTunes would also limit sales of the device. And so, if you are so inclined, there are many ways to still use an iPod and not pay for music. The Zune fails here. In order to justify the lower price per song, Microsoft tightend up the DRM. But by locking into only what the Zune Marketplace allows, it handcuffs ithe Zune and makes it too troublesome to use.
My prediction, unless Microsoft relaxes on DRM, the Zune will be a disaster. After all, what does it have to offer? | | | Posted 11/20/2006 6:13 AM - 112 Views - 6 eProps - 3 comments
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