Zune to Hit Shelves in November

Microsoft has taken the wraps off the Zune
digital media player, promising to release the would-be “iPod killer” on
November 14 for a suggested price of $249.99.

The price had been rumored to be $299, but then Apple introduced a 30
gigabyte iPod for $249 earlier this month; Microsoft had previously said to
internetnews.com it would not be undercut on price.

As speculated, the first Zune player will come with a 30GB drive, three-inch LCD
screen, a new operating system built on Windows Mobile technology and custom
designed for Zune, an FM tuner, Wi-Fi sharing and preloaded music and


The three shades of Zune.

Source: Microsoft

As part of the launch, Microsoft  is setting up
an online music retailer called Zune Marketplace. Songs can be purchased
either through a monthly $14.99 pass or by using Microsoft Points, the
purchase system used in XBox Live.

Microsoft Points translate to around 1.2 cents per point, which can be a
bit confusing, said Matt Rosoff, analyst with Directions on Microsoft, but
has a greater payoff.

“It’s smart for cross-marketing and will get people who already
participate in XBox Live to be more interested in Zune,” he said. “I
understand why they did [the Points system] from their perspective for
international billing, but it’s awkward to perform that conversion.”

Zune will come with a batch of music files from artists on small, indie
labels like Sub Pop Records and V2. Band of Horses, CSS, Every Move a
Picture, and The Thermals aren’t exactly a who’s who of the Billboard top
100, but Microsoft said it wanted to start small.

“We’re not looking to go and partner with artists who are successful out
of the gate,” insisted Katy Gentes, product marketing manager for Zune.
“We’re building a new brand and an emerging experience and we’re looking to
partner with artists who are just starting out. Our approach was to expose
consumers to new, up-and-coming artists.”

Microsoft said it will have two million songs when it launches the Zune
Marketplace, with artists from major labels and indies.

In addition to obtaining music from Zune Marketplace, Zune owners can
also get music from their friends thanks to peer-to-peer Wi-Fi file sharing.

Zune’s digital rights management (DRM) software will allow people to share
music files that can be played three times, or stored for three days. After
that, the file self-destructs.

Rosoff found that rather strict but suspects Microsoft had to play ball
with the record labels.

“Hopefully over time content owners will realize a week of unlimited play is
better. You barely have time to decide if you like a song if you only get 3
listens,” he said.

The Zune will also come with music videos and three short films. Zune
will support Windows Media playback and MPEG files, but not the AVI format,
said Gentes.

Zune will come with a number of accessories, sold separately. These

  • Zune Home A/V Pack. Connect your Zune to a television or home stereo to
    play back audio and video through the TV or stereo receiver. SRP $99.99.
  • Zune Travel Pack. Includes an AC adapter, ear phones, gear bag and extra
    sync cable. SRP $99.99.
  • Zune Car Pack. Allows for playback in the car. Includes a car adapter
    and FM auto seek. SRP $79.99.
  • Zune AV Output Cable. Connects the Zune to a TV and home stereo. SRP
  • Zune AC Adapter. Charge the Zune without connecting it to the PC. SRP
  • Zune Sync Cable. Spare USB connector for PCs. SRP $19.99.
  • Zune Car Charger. SRP $24.99.
  • Zune Dock. Spare docking station. Featuring a connector port and an
    audio/video output. SRP $39.99.
  • Zune Wireless Remote for Zune Dock. Works with Zune Dock. SRP $29.99.
  • Zune Dual Connect Remote. Controls playback, has two headphone jacks.
    SRP $29.99.
  • Zune FM tuner with AutoSeek. Allows you to play back Zune music through
    your car stereo, listening on the FM tuner band. SRP $69.99.
  • Zune Gear Bag. Protective travel bag. SRP $29.99.
  • Zune Premium Earphones. SRP $39.99.

Gentes believes Zune can be competitive with the iPod as an alternative
to the popular Apple device.

“The real big thing is this wireless connection and the ability to share
music and photos with friends. We think there’s a real opportunity for that
to change the digital landscape,” she said.

Rosoff thinks in the long run, Microsoft has a good chance of at least
establishing a strong number two position, similar to what it did with the
XBox against Sony’s PlayStation.

“They won’t lose as much money as they did with XBox because the cost is
close to break even, so they can turn it into a profitable business soon,”
he said. “They’re not going to knock the iPod off any time soon, but over
the long run it can give them a run for the money.”

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