The core problem is a lack of overall innovation from Microsoft in entering the digital music Player market. Their core strategy of providing this device as a networking tool only appealed to 11% of the target market.
Their use of innovation around the integration of wireless technology was not taking advantage of a key component, connecting to the internet to download additional media. The lack of innovation was also depicted by their proprietary use of the media that was compatible with the devices.
You could only purchase music from the Zune Store, alienating partners such as Napster who standardized on the Microsoft PlaysForSure standard. There was also a lack of innovation in its marketing launch and overall campaign of Zune. The brand introduction of “Welcome to the Social” is confusing and non appealing.
The limitations with sharing music in a “social” and “networking” capacity were in themselves limiting, providing only 3 days and 3 times of playing a song for even those songs that haven’t yet been copy written. Microsoft, who was the leader in alliances and marketing, missed the mark with a lack of innovation here as well.
Microsoft in many aspects wrote the book on alliances and partnering (Dell, HP, IBM, etc) and missed a significant opportunity in leveraging their own existing partners, such as Napster. Alternatives: 1.
Forming key alliances that offered some element of exclusivity, with artists, retailers, or market leaders. Microsoft needs some element of unique feature/function and access that the market leader, Apple could not touch. Pro’s: By forming an alliance with Napster or the Rolling Stones, as they had in the past launching their Windows 2000 operating system, would give them immediate redibility and access to a significant existing market, an install base to capture. Con’s: To the partner, they’d have to overcome the threat of alienation of Apple and other leaders in the MP3 market, Creative, iRiver, SanDisk and Sony.