Zune to Hit Shelves in November

By Andy Patrizio

September 28, 2006

Digital rights management features will allow for music sharing, but songs will self-destruct in three days.

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 videos.

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 include:

  • 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 $19.99.
  • Zune AC Adapter. Charge the Zune without connecting it to the PC. SRP $29.99.
  • 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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