Zune History and Context

Historically, Microsoft has introduced hardware to market when it had a clear lock on a particular product space (keyboards, mice) or rebranded another manufacturer’s hardware to extend the capabilities of a PC on which Microsoft software runs.

That was until the XBOX, which was a departure from that strategy and has proven a success, eating up a double-digit margin in the console gaming market.  That success has inspired so-called "next-generation" hardware, the XBOX 360 which, thus far, seems to be positioned to continue eroding other manufacturer’s margins (given that nobody makes a profit on loss-leading hardware but rather on the software it runs -- in this case, games).

The Zune looks like Microsoft’s new wedge into an established market which thus far has been a stylish repackaging of an existing paradigm: move all your CDs onto a device that fits in your pocket.  Other players are looking to compete on gadget-factor (built-in recording, FM tuners, larger disks, more formats supported) but are all fighting for what amounts to the same user base.  Zune, while capable of the existing paradigm (though not compatible with iTunes FairPlay or previous Microsoft PlaysForSure DRM), introduces a new idea into personal music players: sharing.

NOTE: You are restricted to three days / three plays for shared music.

Of course, anyone can share songs now if they are willing to transfer them manually via one means or another. In those cases, the sharing is quite manual and is the equivalent of borrowing a friend’s CD.  Wireless sharing means the ability to find new music quickly and with very little barrier to entry.  iTunes and its imitators are a vehicle for established music which allow you to discover new music based on playlists and tied tightly to an online store on your Mac or PC.  While Zune has an online store with similar features, it also allows the discovery and sharing process to happen in the wild, relying on the PC for licensing and download.

With existing solutions, you need to have some idea of what you are looking for before you can discover it, which means new artists have a high barrier to entry.  Playlists and other recommendation tools help, but they are tied very tightly to a PC experience.

The popularization of "community-driven" services like myspace and YouTube, whatever their actual marketing affiliations may be, gives rise to a different kind of social networking-as-music-discovery experience which the Zune is targeting directly.

The person at Microsoft commonly credited with bringing the XBOX to its current standing is J Allard.  J Allard is also responsible for the Zune project.  Historically, Allard has built a "company within a company" to ensure the products he spearheads are not subject to the influence of other projects within Microsoft.  This may provide a clue as to the departure the Zune takes from existing Microsoft technologies such as "PlaysForSure" DRM.