Play It Again, Bill

Burlingame, Calif. --Few companies these days are as doggedly persistent as Microsoft--even in businesses that thrive on flair more than diligence. Case in point? Handheld music players.

Late Tuesday, Microsoft took the covers off the second generation of its Zune digital music player. That means Microsoft will offer consumers four classes of Zunes by mid-November, packing between four and 80 gigabytes of data and costing from $150 to $250.

Microsoft is also quietly retiring what managers delicately call the "definitely polarizing" brown player from the lineup. New Zunes will come in red, pink, green and black. All include an FM tuner and wireless connectivity for sharing music.

Even Microsoft concedes that its first Zune was, at best, a placeholder. Critics compared the devices unfavorably to iPods. Consumer enthusiasm was lukewarm. Microsoft sold about 1.2 million Zunes between November and June. By contrast, Apple sold more than 41 million iPods during roughly the same period.

This time around, the Zune is a tried and true Microsoft design. The erstwhile software giant has gotten rid of the first generation of Zune hardware blueprints (created by Toshiba) and reworked the device's design from scratch. That makes Zune one of only four devices that Microsoft does in-house. (The others are keyboards, computer mice and Microsoft's Xbox game machine.)

Software is key to the Zune's success, Microsoft figures. The company has poured great energy into developing a social-networking feature called "Zune Social." The application allows users to automatically share recent playlists with friends and peek at what they've been listening to. The application will be open to non-Zuners as well through existing social-networking sites.

Microsoft crafted a better deal with music companies, too. Zune owners will be able to share songs wirelessly with multiple friends. Friends can listen to a tune three times--over any time period--for free. Consumers will then get a message nudging them to buy the recording.

Even with all the updates and improvements, analysts yawned at the new Zunes. Van Baker, an analyst with market research firm Gartner says the Zune, "looks strangely like the [Apple] Nano, a couple of generations ago." He adds that Zune Social will be great for users, but is unlikely to make people drop their iPods. Microsoft might be able to woo customers away from other competing music players, including Sandisk, Creative Technology and Samsung, which together have about 16% of the market, according to the NPD Group.

So prepare for a deluge of advertisements heralding how Zunes will help you build circles of friends through music. No one will be hoping the promise comes true more than Microsoft.

http://www.forbes.com/technology/2007/10/03/digital-music-players-tech-cx_ec_1003zune.html

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