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4A’s Analysis of a Marketing Failure: Microsoft Zune (October 7, 2009)

4A’s Analysis of a Marketing Failure: Microsoft Zune (October 7, 2009)

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Published by Armen Chakmakjian
This was an analysis of the failure of the Microsoft Zune using the 4A's framework from PF506 Marketing Management
This was an analysis of the failure of the Microsoft Zune using the 4A's framework from PF506 Marketing Management

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Published by: Armen Chakmakjian on Dec 20, 2012
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PF506
 –
Introduction to Marketing Management Armen Chakmakjian
4A’s Analysis of a Marketing Failure: Microsoft Zune
October 7, 2009Page
1
of 
6
 
What is a Zune?
Microsoft Zune was a constellation of products and services created as a beachhead inthe market for digital entertainment previously and still dominated by iTunes and the iPod byApple. With Zune, Microsoft has attempted to win some market share from Apple by creatingan integrated handheld, PC and Web ecosystem. As their current product webpage
1
 says,
“Zune
is everywhere you
are”.
Microsoft has made several attempts to provide media playing software for streaming throughtheir PC channels, but has had limited success. Their products have been sleek and usuallyquite excellent from a technology point of view. However they have had several resets over theyears and have not made significant traction. Their history of software for handheld productsbased on the Windows CE operating system and successfully became an alternative to theoriginal non-phone Palm handheld devices. With the popularity of the Rimm Blackberryhandheld and later the iPhone, simple handhelds became obsolete.Zune was announced in September 2006 to much fanfare
2
.The product was releasedon November 14
th
, 2006. The battle for digital entertainment was joined. The initial Zune 30handheld was a brick-like device not dissimilar to the original iPod. It had some innovativesharing features hitherto unavailable on any other handheld players. It came in 3 colors, Black,White and Brown. This was coincident with the release of the LG
“Chocolate” Phone
, and that3
rd
color seemed like a direct response to a perceived opportunity (or threat) from the phonemarket.However, by early December 2006, the buzz had worn off as a result of decisions andadoption issues overlooked by Microsoft. Within a day of the November 14
th
announcement, itwas discovered that the Zune was incompatible with music that was already on users Vistamachines.
6
On December 2
nd
, analysts were pointing out that the holiday sales of the new
“need to have” device we
re off to a slow start and that the device was not necessarily targetedcorrectly.
7
By Mid-December 2007, even Microsoft was backtracking on the Zune plan by
pointing out the Zune was a “1.0” product and that this slowness in adoption was expected.Finally in February 2007, Microsoft’s executive in charge of the Zune, Bryan Lee, announced hewas leaving to “pursue personal interest”.
8
Microsoft continued to upgrade the Zune ecosystem with new products and services,and in 2009 announced the Zune HD. The Zune HD again has technologies that the iPod andiTunes do not have such as handheld HD video playback, music rentals and a subscriptionservice. The new model is sleeker than the original Zune 30 but now is competing against theiPhone and iPod Touch twin juggernaut.
4A’s An
alysis: Target Market in 2006
It appears that Microsoft’s initial target was users who wanted to share music. "The idea
is to legitimize peer-to-peer sharing in a healthy way that works for everybody," said J. Allard, a
 
PF506
 –
Introduction to Marketing Management Armen Chakmakjian
4A’s Analysis of a Marketing Failure: Microsoft Zune
October 7, 2009Page
2
of 
6
 
Microsoft vice president in charge of the Zune product line.
3
Prior to the introduction of theiPhone and iPod touch, music sharing was an affair of conversion and transport via other media
(thumb drives, CD’s, email for example
). In this sense, Microsoft was appealing to whatappeared to be a legitimate market gap. In order to get around this, Microsoft allowed songs tobe transferred wirelessly between Zunes that were within 30 feet of each other.
5
 The other market that Microsoft was appealing to was the broader digital music market,which in 2006 also included Sony, Amazon, Creative and Wal-Mart in various forms. Thesevendors had a hodgepodge of services and allied devices that they tried to knit into theirbranded coherent offerings. Microsoft, with the Zune 30 and Zune Marketplace seemed totrying to show that it could provide and end-to-end experience matching the closed system of Apple rather than the device agnostic experience that the other vendors attempted.
4A’s Analysis: Awareness
 
Everyone knows who Microsoft is. I wrote this paper on my Apple MacBook Pro using
Microsoft Word. Ninety percent of the computers used in the world run one of Microsoft’s
operating systems. Brand awareness as a company through its various product lines in 2006was not and in 2009 is not a problem for Microsoft. However, the specific product awarenessof the Zune product set has had some issues. As a Christian Science Monitor article points out,
The online community that determines what's hot and what's not has turned on the Zune in aparticularly vicious fashion. The Zune has been savaged in two popular videos uploaded toYouTube (the audience that Zune really wants to capture). In one of them, late night talk-showhost Craig Ferguson wisecracks, "It has all the features of the iPod, only it's not as good, and it'sfive years too late."
 Even the name, unique as it is, is cause for derision and will drag down psychologicalacceptance. In an article
titled “
A guide to help
you stop talking like such a Zune” in
AdvertisingAge 
 which poked fun at a range of different products, Simon Dumenco, creates a newmetaphor using his definition of Zune:
 ZUNE: Microsoft's new music player. Also [slang]: a poseur; a wannabe. Usage: "Dude, youlook like such a Zune in that shirt." 
 Given that kind of notoriety, the public would probably be very aware that Microsoft has anMP3 player. The public might also know to avoid it. In general, people understand MP3players, and most people that have one, if handed a Zune, would probably understand itsfeatures. Given the derogatory nature of the coverage, they might not actually care.In a twist of good news for the product, the iPod carrying president-elect Obama, was seenusing a Zune during a workout. Within a day of that news being broken, the website thatreported it crashed due to the amount of traffic.
 People know about the Zune for good or ill.My Awareness Rating: 90%
 
PF506
 –
Introduction to Marketing Management Armen Chakmakjian
4A’s Analysis of a Marketing Failure: Microsoft Zune
October 7, 2009Page
3
of 
6
 
4A’s Analysis: Acceptability
Psychological acceptability (product differentiation, cool factor, association with groupsand personalities and personalization) and functional acceptability (does it have the featurespeople need) are interesting areas to analyze for this product. People want to feel cool andaccepted. Given the jokes made at the expense of the name Zune, there is little cachet inowning one. Microsoft has recently tried to update the line and make it less brick-like with theZune HD, adding HD radio and other neat features.
 However, features and a nice shell areprobably not going to be enough to rescue it from 3 years of derision. Personally, I think that
the name “Zune” sounds like someone snoring.
On the Functional side of acceptability, Microsoft did come up with an innovative feature withrespect to peer-to-peer music sharing. The issue with this functionality is that it requiressomebody else with a Zune to be within 30 feet in order to share the music. Given the slow
rollout of Zune’s in 2006 and beyond, this feature is probably not used much. Microsoft did
make sure that 3
rd
Party accessories became available coincident with the release. Belkin, whichhas made accessories for computer and handheld electronic devices for years, released a seriesof add-ons on November 6, 2006.
As add-ons, cases and doo-dad are expected with thesedevices, it would have been controversial if they had
not 
done this.However, upon release Microsoft made a serious mistake in the rollout by making it impossiblefor Vista users to move their music libraries to the Zune device because their new OperatingSystem, arguably the software behemoths most highly anticipated product launch in years, didnot support the Zune.
6
This was a PR disaster. People had just recently migrated their existingmachines to Vista or bought new hardware and migrated their music libraries only to find outthat their new Zune could only talk to their old machines. And even for those luddites (like me)who did not move their computers to Vista immediately, installing the software was apparentlymaddening. Andy Ihnatko, of the Chicago Sun-Times, described the experience as "about aspleasant as having an air bag deploy in your face."
 My Acceptability Rating: 30%
4A’s Analysis: Affordability
 
The initial pricing of the Zune was in the range of the nearly ubiquitous iPod. The initialprice of the device was $249 and would not be a barrier to entry. Microsoft also created aninnovative music rental service for $14.99 a month which was comparable with another deviceagnostic service called Rhapsody from Real Networks.
4
 Fifteen dollars a month, on top of the$249 would make the device have a first year cost of $428 and then $180 a year subsequently.This might be affordable from a economic viewpoint. People will pay $180 a year for satelliteradio service, essentially renting the right to listen. On the other hand, even XM and Sirius hadto merge to stay economically viable.From a psychological affordability perspective, renting the right to play music does nothave the same following that renting a movie from Netflix or ITunes has. People are used torenting a video and
renting something that you’ll play once or twice
because it is a concept that

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