Sometimes you just have to act your age.
If you're middle-age and out of shape, don't make a fool of yourself by donning rollerblades, a skimpy top and skin-tight shorts. And if you're
, maybe you shouldn't play in the youth-oriented world of digital entertainment until you're sure you really get it.
Microsoft's Zune, the company's purported answer to
wildly popular iPod, is looking like the so-what product of the holiday season. With its formal launch just days away, the digital music player is getting lukewarm reviews at best.
Michael Gartenberg, research director of Jupiter Research, damned the product with faint praise, saying in an interview, "In a world without the iPod, it might be one of the best." But the iPod does exist, of course, and with it Apple owns roughly 75% of the market for digital music players.
What's wrong with the Zune? David Pogue, the influential technology columnist for
The New York Times
, puts it this way: "What exactly is the point of the Zune? It seems like an awful lot of duplication -- in a bigger, heavier form with fewer features -- just to indulge Microsoft's 'we want some o' that' envy."
Although the device itself is reasonably well engineered -- the sound quality and the built-in software are reportedly quite good -- Microsoft has apparently forgotten to think through what the company itself called the product's differentiating feature -- the ability to be part of a social network. In conversations with Microsofties over the last few months, I had the strong impression that the company would use the Zune's wireless capabilities to give young people a reason to switch.
But it hasn't. The Zune allows users to share songs -- something young people (and even some of us older folks) love to do -- but not very well. Sure, the Zune speaks Wi-Fi. But it can't communicate with any of the millions of Wi-Fi-enabled PCs, or iPods, or anything else at all -- except another Zune. But, wait -- there's not many Zunes out there. Reminds me of the line from
-- Who ya gonna call?
Even worse is the lunatic feature, undoubtedly added at the behest of the record companies, that limits a shared song from being played more than three times. And after three days, the song disappears anyway. Thanks a lot.
Microsoft, says Gartenberg, could have made up for that deficiency with some creative marketing; selling the device in two- or four-pack boxes to encourage networking, for example. But it didn't.
Having said all that, it's not smart to discount Microsoft's effect on the market. The company has said from the beginning that it expects to lose money on the Zune for some time, just like the Xbox was (and is) a money loser. And Microsoft is perfectly willing to pour money into an effort it deems strategic.
Consider the deal it struck with
this week. Microsoft will not only give Universal a royalty payment for music downloaded from its online store, it will give the entertainment company a royalty payment (reportedly $1 or more) for every single Zune it sells.
The deal is unprecedented. "Did you ever hear of a cassette company that paid a royalty because someone might record a song on their tape?" asked Gartenberg. Microsoft said it will offer similar deals to other record companies.
It won't take long for Universal and friends to lean on Apple for royalty payments. Chances are, Apple will hang tough because its share of the market gives it lots of negotiating muscle. But should the Zune become successful in the future, Apple may be forced to play ball.
And given the iPod's immense importance to Apple, investors should pay close attention as the battle unfolds.
isn't the only storage giant that can play the M&A game. Earlier this week,
agreed to purchase Topio, a privately held data replication vendor, for $160 million. The move is getting good reviews as it appears to counter EMC's May $153 million acquisition of Kashya.
Topio's strength, says Baird analyst Daniel J. Renouard, is technology that makes it easier to replicate data between storage and backup devices made by different vendors. And since many enterprises run so-called mixed environments, Renourard says Topio will allow NetApp to compete for many more deals. His company is seeking investment banking business with NetApp.
The deal is slated to close in December.