Uh-oh. Here comes the hysteria. This morning, several news outlets, including AppleInsider.com, confirmed that Microsoft's (NASDAQ:MSFT) Zune music player isn't compatible with the soon-to-be released enterprise version (designed for business customers) of Windows Vista.
One reader greeted the news by shipping me an e-mail exclaiming, "This is the biggest news of the day!" No, it isn't. Not even close. It's only marginally important. But it's yet another reason why, despite what seems to me a no-worse-than-reasonable valuation, I just can't bring myself to invest in Microsoft's shares.
But I'll get back to that. First, here's the deal with Zune: According to this Microsoft support page, Vista is simply "not supported" for a Zune install, which means that whatever software drivers are built into the device are, for the moment, intended for Windows XP.
Frankly, that's not too surprising. Vista hasn't yet been officially released, and the consumer version is not due out until January. But I find it pretty mystifying that Microsoft won't let the millions of current Vista users (read: beta testers) sample the software aimed at sticking it to iTunes, especially since iTunes 7 is already reported to be working on Vista.
A Microsoft spokesperson I contacted for this story brushed aside any perceived issues: "When the consumer edition of Vista is available to the public, Zune will be compatible with all Windows Vista SKUs, including the enterprise edition. It will be up to individual companies and enterprise managers to allow internal users to access their Zune software via PC links to the enterprise."
But why, Mr. Softy? Though there will be technical differences between the enterprise and consumer versions, I can't imagine there would be enough to keep millions of users from upgrading when the enterprise OS hits the shelves Nov. 30. Why not stir the heartstrings of the music lovers among that crowd with a Zune teaser application, rather than wait till January, when Apple (NASDAQ:AAPL) will likely have introduced its newest iPods?
Chalk it up to poor marketing. That's right, marketing. Zune shows every indication of being a wonderful device. One review at Amazon, for example, cites exceptional sound and video quality. Apple, on the other hand, has experienced well-documented criticism over the iPod's audio tuning.
In a market crowded with also-rans from SanDisk (NASDAQ:SNDK), Creative (NASDAQ:CREAF), and Sony (NYSE:SNE), Microsoft seems to have a player that will at least be competitive. But to truly threaten Apple's iPod franchise, the whole product -- player, software, and store -- has to be nearly perfect. Missed opportunities, as today's news appears to be, won't help.
Which brings me back to my original reason for writing. For all of its history, cash, and market dominance, Microsoft has never seemed to me to be well managed. Yet it is managers, though their decisions, who produce returns. By swinging through an obvious opportunity with Zune, Mr. Softy's top executives suggest that portfolio-enhancing decisions aren't a top priority. Whistle a better Zune, Microsoft. Perhaps then you'll get me to take another look at your shares.
A playlist of related Foolishness awaits:
- Apple's latest iPod news was pretty underwhelming.
- Does Zune's social-networking capability make it an iPod killer?
- Get the good, the bad, and the ugly when it comes to Zune.
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Fool contributor Tim Beyers no longer owns Apple shares, or shares of Microsoft or any other company mentioned in this article, but he digs his MacBook Pro, which he occasionally uses to run Windows. Get the skinny on all the stocks in his portfolio by checking Tim's Fool profile. The Motley Fool's disclosure policy rocks.
