Mac Greer interviews tech guru Bob Cringely, employee No. 12 at Apple, for The Motley Fool. A few choice snippets from Cringely:
Apple will stop making iPods the day that they can make more profit from an iPod license than they can make from selling an iPod. And that day will come. A switch will flip, and suddenly you will be able to buy an iPod from anyone, and Apple will just be in the iTunes business, but they will be making money from Apple IPE [intellectual property enforcement] and iPod licenses.
I think Microsoft is not stupid. Microsoft is big and lumbering and brutal, but they are not stupid, and what they know is that they have more resources than anyone, and they are fully capable of doing some little Zuney thing that is relatively meaningless except that every potential competitor has to take it into account. So Microsoft spends $500 million developing the Zune. Five hundred million is nothing to them, and they spend that much marketing it, which again, is nothing to them. And Apple and Samsung and all the other guys have to respond to it. In the meantime, what is Microsoft’s real strategy? Microsoft’s real strategy in the home has to be built around Xbox, and Xbox is actually doing some smart things, so I view Zune as a deliberate distraction; it is a decoy.
Full interview here.
Never confuse stupidity or the lack thereof with ineptitude, hubris, and mismanagement. With Zune, Microsoft is simply reinforcing their reputation for making mediocre products. Regardless of the amount, that’s not money well spent.
For $500 million the ZUNE was the best they could do! Un-frikkin’ believable.
M$ now has a bureaucracy like the Pentagon, what did they pay for hammers – $25,000?
Just for those good folk who have ‘casting’ problems.
The Emperor is MS.
Cringely is, of course, one of the courtiers holding the non-exsistent train.
The little boy is Apple Computer Inc. who people are finally starting to believe.
Seabasstin:
The Xbox is still an unmitigated failure. It’s a big suckhole for MS. It’s still sucking. Wii and Playstation 3 are selling much better.
“Apple is but a tick to MS’s Elephant.”
If the OS market is 90% Windoze and about 4.5% OS X, then that’s about 20X larger. Hardly a “tick” to and “elephant” let’s look at some numbers:
Mature Bull Elephant = 6 tons (12,000 pounds) / 20 = 600 pounds
What do you know, the weight of a mature Male Siberian Tiger is around 600 pounds!
I don’t know about you, but I wouldn’t ignore a 600 pound tiger! Even if I was an elephant!
Did you see the NatGeo issue where a pride of lions took down an elephant?
MDN: Don’t underestimate Microsoft. They are brutal and smart enough to get to the top back when they were small.
Then again, the Tiger is in its prime, whereas the Elephant is aged, decrepit and heading for the elephant graveyard.
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Apple tried licensing hardware in the past, the mac clones. All it did was take away market share from the Mac.
Apple is first a HARDWARE company, second a software company.
. So Microsoft spends $500 million developing the Zune. Five hundred million is nothing to them, and they spend that much marketing it, which again, is nothing to them
You, Cringley, suck.
$1 billion is real money at any organization. Even Ballmer isn’t stupid enough to spend that much on a mere decoy.
Zune was an honest effort. It was the best today’s MS could do.
MS competitors should be hoping for many more billion-dollar turkeys. Even the strongest corporations face judgement day when they screw up big enough long enough, throwing huge sums into high-profile duds. Just ask Detroit how it can happen…
Zune is a marker, that’s all. It’s marked out a space for MS in the MP3 market. That’s all MS intend it to be for the present.
Never underestimate the power of large numbers of stupid people working together. M$ are going to attempt to spend all the others in the sandbox into oblivion – it’s the same MO as XBox. They learned it from Ronny Raygun and are unfettered in prosecuting this strategy by BoyBlunder George W. since they are good cooperate donors.
in other news – Hell Freezes over, and Pigs Fly out of my ass. Back to you, Bob.
To AlanAudio and *anyone* that thinks Apple would enjoy being in the licensing business… they wouldn’t. They LOVE being in the end-to-end design-through-distribution business. That’s what makes them such as stand-apart company from the hundreds of thousands of PC cloner builders out there.
How could one company possibly make such an impact if they chose to do things because it “makes sense” business-wise. It’s bigger than that, and Apple knows that. It’s about the end-user’s experience.
What a bloody load of crap! iPod has to respond to the Zune? To what exactly?????? Its beautiful brown color perhaps? Its wireless wasteland?
What a laugh! If Cringely is Apple employee No.12, he must have joined the company before possession of a working brain was required.
Apple will not license the iPod because Steve Jobs is interested in much more than selling truckloads of gadgets for zillions of dollars. Steve Jobs wants to change the world; and with 5 billion dollars in his Apple bank account, plus a sizeable personal fortune, who’s going to tell him he can’t do it?
This entire Zune concept originated from my rectal orifice. Many other great Microsoft innovations have similar origins. So ya, go ahead and laugh at me.
P.S. I am NOT the real Zune Tang. The real one will come up with stupid reasons to dispute this.
Speaking of the Zune… THIS IS A TRUE STORY
I was at Circuit City the other day doing some Christmas shopping and went over to the iPod section. Some shoppers came over looking for some iPod accessories and asked a Circuit City associate some questions about their interest. Well, the associate purposely, mistakenly walks them over to the Zune section to show them an accessory similar to what they were asking for in regards to the iPod and then he goes right into a sales pitch for the Zune.
Later I ask him about some iPod related stuff and he admits to me in the conversation that he doesn’t like Apple or the iPod and that he is getting a Zune sometime soon.
I think I have come to the conclusion that the Zune was built for the Apple slash iPod haters of the world. Microsoft will build what little Zune success they have around those folks, plain and simple!
coolfactor: No matter what you wish, remember that, first and foremost, Apple is a “for profit” company. Their first priority is to make a profit for stockholders. period. Yeah, they have to satisfy the end-user/customer in order to sell products/services – to make a profit. If there is more profit in the “licensing business”, you bet Apple will move in that direction. If not, they will wither away and die.
macman: The mistake Apple made back then was the clone licensing enabled direct competition to Apple’s mainstay products. Today, with OSX and the shift to Intel, they have the opportunity to gain significant marketshare where Apple has no hope of grabbing much of that market, the huge PC market.
The Zune could also be nothing more than a spoiler to the whole MP3 market:
Strike 1: Abandon PlaysforSure partners.
Strike 2: Make ridiculous deals with music and movie companies that will make it extremely hard, if not impossible for rivals, including Apple, to make good pricing and DRM deals for the consumer.
The whole MP3 player market stagnates because of high prices or too restrictive DRM. Microsoft just needs to have a so-so product out there and they essentially win, or rather, the competition loses. Home run!
Zune Tang is a decoy.
I suppose Windows Vista is a “decoy” too. Microsoft has screwed up that project ten times as much as it will ever invest in Zune or XBox. Nice “distraction” though. Give me a break…
Xbox may to OK, but I don’t own one. I do have the need to use a Windows XP laptop, however, and MS Office. Microsoft needs to get its priorities in order. Microsoft is the one getting distracted by Xbox and Zune. Get your cash cow products completed on time and out the door. Or there will come a time when 2 times half a BILLION dollars is no longer just spare change.
You guys are taking Cringer too literally. He often speaks obliquely like that, and people think that’s all there is to the story — like the Zune is ONLY a decoy. Of course it’s not. Cringley wouldn’t say it’s only a decoy, but that’s how you guys are reacting.
The Zune probably has many functions for M$, including:
trial balloon,
possible spoiler for the whole MP3 market as TripleHead points out,
hardware market tester,
marketing/promotion testor to gauge strategy and market,
possible distraction for Apple,
decoy to distract from Xbox if fails,
later link with Xbox if succeeds,
possible realignment of Play For Sure,
experience with hardware partner, etc.
And I’m sure they knew it would be tough, they’ve said so and said they are willing to stick it out for the long term and lose money in the short term.
M$ investors like to hear that talk. All the above reasons, and I’m sure there are more, make the Zune look a lot less stupid.
And they probably have some good ideas for Zune G#2, #3, etc… and Apple would be foolish to ignore the possible threat.
Cringley is not way off base. He just doesn’t explain the whole picture.
I think Microsoft is simply hedging it’s bets. It’s not about music or music players, it’s about what the iPod has the potential to become. Bill Gates has already publicly admitted that Apple won this battle, by acknowledging the iPod’s sucess and claiming Apple has had two successes; he went on to predict that this was all they had. This is one of the strategic reasons Apple keeps things to themselves. What is coming next is what Microsoft fears.
Microsoft has for years been trying to push a mobile version of it’s OS — with minimal sucess. First it was the PDA market. They suceeded in marginalizing the Palm, but PDAs died. Now there in the phone market, and they are having some sucess, but it’s still limited. Treo and Blackberry still dominate.
Enter the iPod. The iPod is a phenom. It’s becoming a cultural icon. But music playing capabilities are only the beginning. Now there is rumor of a iPod phone and rumors of an embedded or mobile version of OS X. That is the real threat to Microsoft. It’s the tie in between mobile devices and the OS that will help drive OS sales.
If Apple “innovates” again, and morphs the iPod into something completely different, Microsoft has to be ready to answer. The Zune is the platform that Microsoft will use to mimic and copy whatever Apple does. Apple is preparing to leverage their OS X platform and add it to the iPod. To help drive sales of Macs and turn potential switchers.
If Apple and the iPod can have such an impact on the music industry with the iPod, what do you think they could do to the mobile handset market? Already the Internet is filled with the possibilities of Apple’s entrance into this market having the capability of completely changing the dynamics of it.
Microsoft must be ready to answer this. Microsoft has never really been able to predict where the market will turn; but Apple has, so Microsoft will do what it always does – follow the leader. Apple, up to this point, has not been able to really capitalize on their innovations. The iPod has changed all that. Microsoft is hedging it’s bets that it can dominate Apple like it has in the past, but it won’t be able to do it without an iPod like device. They need to be ready to answer if Apple can turn the market once again with a whole new type of device.
I have no idea what Apple will come up with, but I can be fairly confident it won’t look like anything currently on the market. Apple innovates. They create new things. They “Think Different”!
Apple is poised to accomplish what Microsoft has been trying to do for years. This really is a David and Goliath story. Apple is getting ready to throw the stone.
One might argue that the iPod is the stone; and we are just watching the giant fall.
Given time Zune will be a success. They will just take a few years to catch up with iPod. In the future most people will carry their music on the phones and M$ is already installed in many of these with Windows Mobile. Wheras Apple will likely never catch up with M$ in the desktop market.
Forget Cringely. You’ll get much more intelligent analysis of the state of affairs DRM-wise from Daniel Eran at RoughlyDrafted Magazine
http://www.roughlydrafted.com/RD/Q4.06/6565C879-3C4C-4014-95F0-EF1DF464D378.html
The article is not well thought through. Firstly, Apple does not even manusfacture the iPod themselves, so licensing does not offer much incentives. Secondly, the iPod pulls people into the Apple stores where people buy other Apple items, first and foremost Macs. And thirdly, the design of the iPod has become an important identifier for Apple. No way they are going to part with this.