Apple and Microsoft prepare for another war; MS biding time waiting for Jobs to go

Apple Store“Apple Computer Inc., with its easy-to-use iPod handheld and iTunes Internet store, has staked out an impressive market lead using the former,” John Shinal reports for MarketWatch.

“Now Microsoft Corp., with its upcoming Zune player and broad online media push, is about to turn up the stakes using the latter,” Shinal reports. “It could take years before we know whether this contest will turn out differently than the first one between the companies, which ended with Microsoft’s Windows running nearly all of the world’s personal computers and PC pioneer Apple relegated to a niche player.”

“But it’s clear that things are about to get more interesting,” Shinal reports. “While Microsoft hasn’t come out and announced exactly when Zune is coming or exactly what it will do, it’s given enough clues that it’s strategy can be easily deduced. Think ‘Xbox Live,’ but with music and videos.”

Shinal reports, “Jobs is busy shepherding the next version of the iPod to market. Ever secretive, the company is saying nothing about what features it may have or how many songs it will hold — even though the absence of a new iPod release at the company’s confab in early August has the industry buzzing with speculation. Microsoft, on the other hand, seems to be biding its time, even though it’s decision to build its own player rather than license its media software to handheld makers is a dramatic strategic reversal.”

“It’s as if the company’s victory in its first war with Jobs, which came even though Apple’s operating system repeatedly beat Windows to market with key capabilities like a graphical user interface, taught the Redmond, Wash.-based giant that there are more important things than feature sets,” Shinal reports.

Shinal reports, “Consider this comment from Dan’l Lewin, the Microsoft vice president in charge of its software developer tools efforts and the company’s point man in Silicon Valley: ‘We tend to take the long view. There’s a flash of brilliance in the iPod, but what will they do after Steve is gone, when it will be about massive scale?’ Lewin asked me as we sat on Microsoft’s Mountain View, Calif. campus. It’s an interesting question, one that suggests the software giant is betting that sooner or later, Apple will stumble, if and when Jobs’ vision and determination are no longer driving it.”

“Now, with Zune, [Microsoft] has decided to compete against the makers of MP3 players that have been using its software. In truth, Zune will be evolutionary rather than revolutionary, since it will actually be built by Toshiba, which now makes a Microsoft-based player,” Shinal reports. “The Zune product will have a wireless Internet link to enable users to download music anywhere, rather than be tethered to a PC. That’s a good thing for Microsoft, because a venture capitalist at a prominent Silicon Valley firm told me this week that Apple has sent reference designs for a new wireless iPod to some potential component suppliers.”

Shinal reports, “RealNetworks Chief Executive and former Microsoft executive Rob Glaser had a different opinion. He called it ‘an over-reaction’ to the iPod’s success and said it will mean that any market share gains Microsoft makes in the digital music market will come at the expense of its former partners.”

Full article here.
Contrary to Shinai’s description, reports we’ve seen have indicated that Microsoft’s Zune will not enable users to download music anywhere, untethered from a PC (see: Microsoft to sell single Zune model this fall, rumors of Wi-Fi capability were greatly exaggerated).

Steve Jobs was not with Apple when Microsoft Windows overtook Mac. Blame Jean-Louis Gassée, Sugar Water Sculley, and Al Eisenstat’s bad contract, not Steve Jobs. If Microsoft hopea to wait out Jobs, we pray that they’re left waiting for at least a decade.

Zune is too late. It makes a juicy story for the media, but it’s a canard. Zune is really a nonstarter. It’s just a bad management decision by Microsoft’s Ballmer, perhaps an ego-driven mistake, to go ahead with Zune. Even if, by some miracle, Microsoft’s Zune ever began to take hold, Apple could kill it simply by licensing FairPlay to either device makers or online content services or both. They’d all jump at the chance to tap into the huge iPod+iTunes economy. Microsoft would then be left all alone, boo-hoo, incompatible with the rest of the digital content world. “Xbox Live, but with music and video” wouldn’t matter a whit, it’d instantly be “Game Over.”

Related articles:
Attacks likely to prove futile against Apple’s iPod+iTunes de facto standard – September 01, 2006
Analyst: Microsoft’s Zune an ‘underwhelming’ repackaged Toshiba Gigabeat; no threat to Apple iPod – August 30, 2006
Microsoft confirms brick-like Zune to be made by Toshiba – August 25, 2006
Microsoft Zune is chunky brick made by Toshiba – August 25, 2006
RUMOR: Microsoft Zune’s user interface revealed in images – August 23, 2006
Details of Microsoft’s Zune interface, features exposed – August 17, 2006
Microsoft to sell single Zune model this fall, rumors of Wi-Fi capability were greatly exaggerated – August 10, 2006
Zune already shedding features? ‘iPod killer’ won’t offer video at launch – August 04, 2006
RealNetworks CEO Glaser a little miffed with Microsoft over Zune – July 28, 2006
Microsoft to spend hundreds of millions, several years on Zune trying to catch Apple iPod+iTunes – July 27, 2006
In wake of Zune announcement, should ex-Microsoft ‘partners’ join iPod ecosystem? – July 27, 2006
Zune: Apple cannot lose. Microsoft cannot win. – July 26, 2006
Analyst: Microsoft partners zune to be the biggest losers – July 25, 2006
In wake of Zune, Microsoft ‘partners’ consider abandoning PlaysForSure – July 25, 2006
Wi-Fi seen limiting battery life on Microsoft’s Zune – July 24, 2006
Why Microsoft’s Zune is doomed to fail – July 24, 2006
Bear Stearns analyst expects Apple to respond to Microsoft’s ‘challenge’ with new iPod innovations – July 24, 2006
Microsoft Zune? They should’ve called it the Microsoft ‘iClod’ – July 24, 2006
Enderle: Microsoft’s ‘iPod killer’ Zune is ‘brilliant strategy’ – July 24, 2006
Microsoft’s so-called ‘iPod killer’ Zune won’t zoom up the charts – July 23, 2006
Microsoft confirms ‘iPod Killer’ plans – July 21, 2006
Microsoft’s rumored ‘iPod killer’ poses little threat to Apple’s domination – July 18, 2006
Microsoft plans Super Bowl ad for ‘iPod killer’ – July 17, 2006
Sounds serious: Microsoft approaches iPod accessory makers for Zune would-be ‘iPod killer’ – July 12, 2006
Microsoft preps complete line of Xbox-branded digital-media products – July 11, 2006
Photo of Microsoft’s ‘iPod killer?’ – July 11, 2006
10 reasons why Microsoft’s ‘iPod killer’ will fail – July 11, 2006
Enderle on what it would take for Microsoft to kill Apple’s iPod – July 10, 2006
Microsoft: ‘iPod killer’ reports based on ‘speculation and rumors’ – July 07, 2006
Can Microsoft hit a fast moving target? Apple likely to debut wireless iPod this year – July 07, 2006
Analysts: Microsoft faces uphill fight to supplant Apple’s iPod+iTunes market dominance – July 07, 2006
Microsoft plans to convert iPod users by replacing iTMS songs with free WMA format songs – July 06, 2006
Microsoft to release wireless ‘iPod killer’ by Christmas to challenge Apple – July 05, 2006
Analyst Wu: Microsoft unlikely to dethrone Apple iPod+iTunes – June 21, 2006
Microsoft preps iPod+iTunes killer – June 19, 2006
Report: Microsoft readying Apple iPod+iTunes rival – June 16, 2006
Microsoft: No iPod killer planned – June 05, 2006
Microsoft, Toshiba, DoCoMo, Victor to develop Japan iPod+iTunes killer – June 02, 2006
MTV-Microsoft URGE music service not targeting iPod, iTunes users; Real CEO PlayedForSure? – December 13, 2005

Report: Apple to bring out Bluetooth adapter for iPods – August 25, 2006
Patent application shows iPod capable of live wireless video conferencing – June 13, 2006
Apple patent application filed for wireless iPod+iTunes distribution – May 04, 2006
Generator Research: Apple to Ship $4.2bn in Wireless iPods (WiPods) by 2010 – March 14, 2006
Ready for your wireless Apple iPod? – February 09, 2006
Wireless iPod? CSR and PortalPlayer to bring wireless connectivity to personal media players – February 08, 2006
Wireless Apple iPods coming in 2006? – December 09, 2005

More blood on Apple iPod’s Click Wheel: Dell’s ‘DJ Ditty’ flash-based MP3 player is dead – August 22, 2006
More blood on Apple iTunes Music Store’s play button: MyCokeMusic is dead – June 20, 2006
More blood on Apple iPod’s Click Wheel: iRiver gives up on digital media player market – May 23, 2006
More blood on Apple iPod’s Click Wheel: Sony’s Walkman Bean is cooked – February 13, 2006
More blood on Apple iPod’s Click Wheel: Dell dumps ‘DJ’ hard-drive MP3 player line – February 04, 2006
More blood on Apple iPod’s Click Wheel: iRiver pulling out of Europe? – February 01, 2006
More blood on Apple iPod’s Click Wheel: Thomson gives up on MP3 player, CE markets – December 12, 2005
More blood on Apple iPod’s Click Wheel: BenQ withdraws from MP3 player markets – November 28, 2005
More blood on Apple iPod’s Click Wheel: Olympus halts production of portable digital music players – November 09, 2005
More blood on Apple iPod’s Click Wheel: Rio is dead – August 26, 2005
Apple’s iPod has blood on its Click Wheel: Virgin Electronics is dead – March 08, 2005
Apple’s iTunes Music Store has blood on its play button: is dead – March 28, 2004


  1. The Zune will be a turd like MS operating systems.

    However he did mention something interesting. MS could fight until Job leaves. That may not happen anytime soon but MS certainly has the cash and hold in in the enterprises to last. Apple has never functioned well w/out Jobs

  2. “Apple has never functioned well w/out Jobs”

    The last time he was kicked out. When he leaves this time, he’ll make sure the right people are in the right places. If the post-Steve Apple that comes takes a fall, it will be years after Steve actually retires.

  3. You say Apple has never functioned well without Jobs, which is true, but then the last time he was ousted from the company it was doen very quickly, and he had no time to prepare a successor.

    At whatever time in the future he himself decides to go, you can be sure there will be a leader/team in place to fill his shoes (and black turtleneck…)

    He won’t leave Apple in the hands of incompetants, and Apple (the company) now know they need his input/preperation to survive and florish post-Jobs.

  4. M$ believes it can eventually win the overall market from Apple in 3 – 5 years time….

    Fat chance.

    Let’s do the math:

    – By the end of September, there will be 70 million iPods sold to Zero Zune’s (most likely). Just to catch Apple’s numbers, M$ must more than 50/50 split sales with Apple in the next 3-5 years, but absolutely crush Apple in sales figures. M$ must roughly outsell Apple in a 5-1 ratio to catch Apple’s overall share/install base.

    – To make matters worse for Redmond, the MP3 market is entering the top of the adoption curve, heading quickly towards the late majority phase of the market. Product will start morphing and moving in new directions – but the install base to establish a platform for these devices has been taken by Apple’s iTunes.

    – M$ is targeting the $300 and up MP3 market with the 30 GB Zune. This price range represents only 15% – 20% of the overall MP3 player market.

    – Apple holds 90%+ of the $300+ MP3 player market…

    – If M$ were to capture 25% of the $300+ market within it’s first year of sales, this represents only 5% – 8% of the overall MP3 market…

    – Being that iTunes/iPod is a closed ecosystem, all M$ looks poised to do is eat away at it’s own technology partners in order to establish a base – something it seems to be comfortable in doing – which could be very, very, dangerous in a year or two, and play very well into Apple’s strategy…

    – M$ will expand their product line as time moves on, but is likely to take 2+ years to achieve the lineup Apple will have in by the same timeframe. If M$ is wildly successful with Zune, they may have 20% of the overall MP3 market two years from today – but be massively behind in overall install base and reach.

    The Rub: The MP3 market is largely driven by popularity, and that popularity is initially driven by the innovators and early adopters. It is these two groups that set an overall market direction through choosing the superior market product.

    If Zune does not become wildly popular with these two groups, Zune will not become wildly popular with the the mass majority of people who have not yet jumped into the market for an MP3 player…

    Getting users to move off their iPod/iTunes investment in order to rabit-hole themselves in an untested, but highly branded, solution in Zune does not look historically favorable for Microsoft, but is rather arrogant or wishful thinking from Microsoft leadership…

    Bottom Line: There is virtually no way M$ can ever overtake Apple in this arena, even after five years time of losing hundreds of millions.

    Speculation: It would seem that in five years if xBox, Zune and some other livingroom solution are continuing to bleed profits away from Windows and Office, the shareholders should have Balmers head on a lance – and that’s putting it midly. To be completely rational, they should have had Balmer’s and Gates head years ago, as the company has been able to nothing but camp out on it’s past successes.

  5. Apparently Shinal can’t recognize a stumble; if he did he would have spent his time asking Lewin about the last five years for Microsoft and the past 12 months in particular. I’ve got Windoze users all around me asking about Mac, and they are excited about what I tell them.

  6. “any market share gains Microsoft makes in the digital music market will come at the expense of its former partners”

    oh yea, isn’t this the way MS always plays, why would anyone be a developer on the PC platform when MS steals anything that looks cool or the slightest bit profitable

  7. I’m sure that if Microsoft must wait for Steve Jobs to depart Apple before Microsoft can accomplish something of any significance that they may be in for a big disappointment. What if Job’s replacement is actually better than the Jobster himself? Does this mean that Microsoft will have to wait another one to three decades before they can hope to reinvigorate themselves? Rather than Microsoft hope that Apple fails or stumbles to gain some relevancy, why doesn’t Microsoft take the initiative and act now?

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.