Microsoft's (NASDAQ:MSFT) Zune HD officially hits the market on Sept. 15, and death is in the air.
Another installment in Microsoft's moribund line of portable media players makes about as much sense as a sequel to Norbit. Earlier versions have been flops, and the new version of this non-Apple gadget doesn't fall far from the tree.
A year ago, Microsoft's digital music player commanded a mere 4% sliver of the market. Even the Xbox-worshipping GameStop (NYSE:GME) stopped stocking the Zune.
This doesn't mean that a dusty brand can't be refinished. Palm (NASDAQ:PALM) was making tracks to the smartphone-pioneer graveyard until its breakthrough Pre hit the market.
To be fair to Microsoft, the Zune HD does raise the bar in a few ways:
- The new player one-ups its original built-in FM tuner by adding access to local HD Radio offerings.
- The multitouch organic light-emitting diode (OLED) touchscreen will look sweet, especially now that it's HD-video compatible.
- If the screen is too small for you, the Zune HD can play high-def clips when hooked up to your TV.
Microsoft is also putting more marketing muscle behind the brand, repositioning its Xbox Live digital video downloads as a Zune-branded service.
Impressed? I'm not. Instead, I'm ready to call this Microsoft's next paperweight. Let's go over a few of the reasons why Zune HD is unlikely to succeed beyond its thin fanatical fringe.
1. Microsoft is not Apple
Sorry, Mr. Softy. You're no Apple (NASDAQ:AAPL). Quite frankly, neither is Apple, at least when it comes to the market-defining iPod.
Apple moved 10.2 million iPods in its latest quarter, a sobering 7% decline from its throughput a year earlier. This doesn't mean that the iPod is fading. Apple also sold 5.2 million iPhones during the period, a 626% spike since last year's fiscal third quarter. Since iPhones also double as iPods -- with one-tap access to Apple's iTunes -- Apple's digital reach is growing.
However, it does illustrate how far behind the times Microsoft's Zune HD is. Folks don't want a multidimensional portable media player. They want a smartphone that doubles as a multidimensional media player. Zune fans will be toting around one gadget too many in the consolidation phase.
2. Microsoft is not Nintendo or Sony
"Games" is one of the selling points promoted on Zune HD displays. Users have been able to play casual games on earlier Zune models, so this isn't necessarily new.
Microsoft competes with Nintendo (OTCBB: NTDOY.PK) and Sony (NYSE:SNE) in the video console space, and those two companies have their own handheld gaming devices. And Microsoft's Xbox Live has been selling downloadable digital diversions long before the birth of Apple's App Store.
However, the Zune HD will fail as a gaming device for the same reason that gaming hasn't really taken off on the iPhone, beyond the occasional free ad-supported offering: A touchscreen is nice, but gamers need buttons.
3. Microsoft is not Sirius XM Radio
HD Radio is a bold terrestrial radio initiative. Participating broadcasters can split their signal into three distinct channels, tripling the amount of available content. Stations have used HD to dive deeper into neglected genres.
Unfortunately, this format's still no match to the broader depth of commercial-free music and premium talk content that Sirius XM Radio (NASDAQ:SIRI) subscribers can experience. And since many Zune HD features, such as Web browsing and social networking, require Wi-Fi connectivity, free Internet radio will also trump the choices available on HD Radio.
Add it all up, and the Zune HD will fail. Smartphones do more, and every single feature is already being done better by someone else.
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