Up Close and Personal With Zune, Microsoft's 'iPod Killer'

Nov. 10, 2006 — -- What looks like an iPod, acts like an iPod, plays music, videos and photos like an iPod but isn't an iPod? If Microsoft has anything to say about it, the answer is Zune.

The 30-gigabyte Zune, a portable media player created to unseat the reigning king of digital media players, Apple's iPod, arrives in stores Nov. 14.

"It's coming into the market at the cusp of the holiday buying season, and I would expect some aggressive advertising," said Ross Rubin, director of industry analysis for the NPD Group. "But the iPod remains a very strong competitor. It's a smaller device, has a longer battery life, is well-marketed and, arguably, has more media support out of the gate."

Priced at around $250 to compete with Apple's 30 gig iPod, Microsoft will launch a digital download store à la iTunes, where Zune owners can buy songs for about $1 each and albums at prices comparable to iTunes'.

With Apple in firm control of more than 70 percent of the digital media player market, Microsoft has its work cut out for it, even though close to 70 percent of Americans don't even own a player yet. A recent survey by ABI Research showed that 58 percent of existing iPod owners and 59 percent of the people polled who owned other players said they'd consider buying a Zune instead of an iPod or another player -- all good news for Microsoft.

"Micrsoft is a very strong global brand. It's going to help the consideration factor, but ultimately, it's just a factor," said Rubin. "People are going to make choices on features, on form ... and on the quality of the integrated experience."

At a private event in New York City -- hidden from the prying eyes and ears of gadget geeks and audiophiles -- Microsoft rolled out the welcome mat for ABCNEWS.com and other journalists for a hands-on look at the Zune and music download store it hopes will be the next big thing.

'Welcome to the Social'

With images of coolly dressed 20-somethings gleefully playing with their Zunes projected on the stark white walls of a Chelsea loft, the target audience for Zune is obvious. So is the company's urge to make Zune a social movement rather than just a way to listen to music.

The slogan "welcome to the social" appears on Zune Web sites and was prominently displayed throughout the event room, further evidence of the company's intentions.

"Our goal is to change the way we think about and consume digital music," explained Scott Erikson, Zune product manager, to a small group of media professionals.

How? The "big deal" surrounding the device is that owners can beam music and photos from Zune to Zune through a wireless connection -- but they can't send or receive video. Microsoft hopes it'll bring Zune owners together and motivate more customers to pick up the product. If your buddy has a Zune and you want to share music and pictures with her, you'll need a Zune too.

"One of the problems is that there's a high barrier to entry for the peer-to-peer sharing because you have to buy the device to participate," Rubin said. "But who knows? Maybe it'll become a date-screening device: 'You don't like the music I like, so forget it!'"

The device lets users know what other Zunes are in the vicinity and what the owners are doing, though users cam block others from seeing them. It takes less than 20 seconds to send and receive a song, and just a few seconds for a photograph.

To respect copyright laws and not alienate the music labels that wouldn't be too happy about people buying a song or album and simply zapping it to all their friends, Zune owners can accept and send a song only once. The recipient has only three days or three plays to listen to it.

Some critics have blasted Microsoft's strategy here, saying that the target market for such a device may find the digital rights management, or DRM, scheme restrictive.

But a recent move by Microsoft to share revenues from Zune with Vivendi Universal Music suggests the company may seek to placate the studios, which could open the doors for future promotions and changes to the plan.

A Zune by Any Other Name

The device itself is slightly larger and heavier than the 30 gig iPod, has a larger screen and a more rugged exterior. (The iPod has a reputation for scarring from even minor scratches.) The Zune comes in black, white and brown.

Though Zune's circular controls appear to work like iPod's click wheel design, they're just a cover for the four navigation buttons hidden beneath. But a play-pause button and menu button make for easy navigation through Zune's interface.

Featuring a bright, vertical, rectangular 3-inch color screen, the Zune needs to be turned on its side to view photos and video horizontally. But the device's controls shift 90 degrees with the image, so owners don't have to fumble with them when the Zune's on its side.

Zune includes a built-in FM radio that uses the attached headphones as an antennae -- it works only if the headphones are plugged in. Using a kind of digital fingerprint, the device gives information about what you're listening to, such as the name of the station or the song that's playing.

Purchasing music from the Zune marketplace will be done using Microsoft points. Each of the more than 2 million songs costs 79 points, which can be purchased through the marketplace or through a prepaid card sold at various retailers.

If you prefer a buffet, Microsoft gives access to the complete Zune Marketplace library with a monthly or three-month subscription plan called Zune Pass, for $14.99 and $44.97 respectively. Though you don't need a Zune to download and listen to music from the marketplace, there's a 14-day free Zune Pass trial for Zune owners.

It's hard not to listen when Microsoft releases a product, but whether Zune will dethrone iPod or not may be irrelevant when so much of the market is still up for grabs.

"It's [Zune's] hardly a knockout in the first generation, but this is an area where Microsoft is still gearing up. It's going to be a holiday season where they're going to learn some lessons and come back in '07."