Microsoft is opening up its arms to the music industry as it launches its new portable music player against rival Apple's iPod.
Microsoft's new Zune media player, which goes on sale today, is aimed directly at Apple's wildly successful, music industry-changing iPod. But what is gonna make it shine in the MARKET???
"Company breaks from Apple with promise to pay music producers a royalty for each music player sold."
"Under the terms of the deal, first reported by The New York Times, Microsoft will pay Universal a flat fee for each $250 Zune it sells. "
The revenue shortfall has made music executives anxious to find new ways to increase their slice of the digital music pie. Microsoft too is eyeing the market with the launch of Zune and its online music service Zune Marketplace. Although this isn't Microsoft's first foray into digital song downloads, this is the first time that it's rolled out an MP3 player meant to compete directly with the iPod. But Microsoft faces a tough battle. Apple has a lock on 75 percent of the market for portable music players, according to market research firm NPD Group.
BUT ... there are a couple of problems... one being: One of the reasons why YouTube is so popular is because anyone can post a video and share it with everyone immediately. In contrast, before a Zune user can share music, they have to find a friend who also owns a Zune player.
"That's going to be a slow transition," said Shawny Chen, a research analyst for Current Analysis.
She expects Zune to win over some consumers but doesn't expect it to attract a huge following this season, partly because of the sharing feature, but also because Microsoft is targeting a narrower audience.
Whereas Apple offers a range of music players - from its $79 shuffle to its higher-end video iPod - there's only one Zune option, and it's aimed mainly at college-aged buyers, she said.
To be sure, the iPod isn't flawless. Some consumers have been frustrated by its battery life while others have complained that some screens scratch too easily.
And while Apple dominates the market for portable music players, a survey conducted by technology firm ABI Research early this month suggests iPod users could be won over by rival products.
Fifty-eight percent of iPod users planning to purchase a MP3 player said they would consider buying Zune, according to the survey of 1,725 respondents.
As the battle plays out, one thing's for sure: Microsoft is in the digital music business for the long haul.
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