iPod, Apple's best innovation, holds a commanding market share of over 70% in the MP3 players market. In the latest quarter ending September 2006, Apple sold 8.7 million new iPods, generating $1.5 billion in sales, a third of Apple’s total quarterly sales. By the end of 2006, there will be over 67 million iPods in the world; Apple is poised to eclipse the 100 million iPods mark in 2007. iPod has revived Apple from the depths in 2001 when annual sales had plummeted to $5.36 billion and Apple was losing money. Apple’s shares were under $10. Compare this to 2005, when Apple had sales of $13.9 billion, and profits of over $1 Billion, in large part due to iPod. Apple’s shares have climbed sixteen folds since 2001. The Apple machine is kicking into high gear, in large part due to iPod Innovation Revolution. iPod’s halo effect is even evident in the latest quarter when Apple sold more Macs than it has ever sold before: 1.61 million.
Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world
However, will history repeat itself?
Can a Disruptor, a Challenger named Zune, backed by the mighty conqueror Microsoft unseat the King iPod made by the maverick Apple? The market for MP3 players is in the billions of dollars and growing 20 percent annually - plenty for Microsoft to become interested in and carve out a billion dollar business. Microsoft is launching Zune on November 14, 2006.
The Challenger: Disruptor Zune
Zune is Microsoft's stab at the MP3 market - directly aimed at the mighty iPod. Apple is enjoying the throne made of music, video, movies, TV shows and games - all in one super cool package dubbed iPod. However, can it hold on to this throne for long?
Zune is a worthy challenger. It packs a good punch and some.
For starters, it is very easy to use, and it contains all the cool features of an iPod - you can play your favorite music, buy and download songs from the marketplace for about 99 cents a song (Zune marketplace is similar to iTunes store), view pictures and photos, and watch movies - all for $249 (same price as the comparable iPod).
However, Zune player packs more innovation punch:
1. Wireless Sharing: Zune is first to market wireless sharing of songs, photos and pictures using standard wireless Wi-Fi connectivity. Microsoft's creativity is evident as it is trying to capture the rising tide of social networking. Anyone with a Zune player can send and receive songs, photos and pictures with anyone else with a Zune player. The only catch: if you receive a song, you can only play it three times within three days, after which you cannot play it any more. But that's ok. Since after you have received the song, you can "tag" it if you enjoy it, and you can then buy it from the marketplace. There are no restrictions on sharing pictures or photos. And, if you don't want someone sending you stuff, you can always block that person. And one other cool feature is that you can let someone know the names of songs and videos you enjoy. Microsoft has indeed innovated with the wireless sharing, and the fact that it is standards based means it can do much more with it in the future: for instance, web browsing and GPS navigation come to mind. Innovation in technology and trends.
2. Bigger Screen: Zune boasts a full three inch screen, half-inch larger than an iPod - which is literally 44% larger. The best part is you can use both portrait and landscape mode on the Zune screen, and even change background images on the screen - this customization is handy if you want to personalize your Zune player (a page out of the iPod book; however iPod does not provide such customizations). The bright screen with the extra half-inch is a visual delight. According to Zunescene, "It's (display) large enough to watch a music video, or movie and actually see the expressions on peoples faces. The pixel density is about double that of modern laptops, so it's more like watching a mini HDTV than a mini television. The refresh rate is also higher than a television, which means the frames move extremely fast to make the motion appear fluid rather than jaggy or digitized." Innovation in product design.
3. FM Radio: The very point of owning an MP3 player was to not listen to FM radio with all the advertisements. However, there are times when you want to listen to songs without paying for it and want to keep up with the news and gossip. Zune provides a built-in FM radio which is quite effective. Listen in to late night music, or simply use it for snoozing. What is unclear is whether you can record your favorite FM songs directly to Zune player. Innovation in customer need.
4. Unlimited Download Service: Zune marketplace includes an unlimited download service for the music lovers who simply want to listen to as much music as they want for $14.99 a month. The Zune Pass provides you the freedom of an "all you can eat" buffet for a low monthly price. You can always choose to pay by the pop for about 99 cents a song. Zune has copied the unlimited business model of a Napster or Real Networks; however, the flexibility of providing both business models creates innovation in Business Model, and provides the customer real choice.
5. Zune and Xbox 360: Zune works with Xbox™ 360. You can "access media right in the Xbox dashboard, or listen to music while playing games." For all the Xbox lovers, this could be a huge blessing. Will Microsoft eventually create a bundle of Xbox and Zune? Or provide Zune for a better price to loyal Xbox owners. The creativity in packaging together these systems could only help Microsoft further their market share of both Xbox and Zune. Creativity and Innovation in motion.
What are Zune's weaknesses?
The challenger often has one or two potent weaknesses that the king can exploit and essentially thwart the uprising. What are then Zune's weaknesses?
For instance, Zune marketplace has a confusing points system to download a song rather than paying it by the drink for 99 cents. It amounts to the same thing as spending 99 cents a song; however, the system is a bit complex. Microsoft needs to improve this and make this simpler.
Zune player is only available in English language for now. If you do not speak English or want Zune in your own language, you will need to wait. Expect Microsoft to offer Zune in multiple languages depending on the success within the next year.
Zune's hard drive "cannot be used as a memory stick for storing and retrieving word documents, zip files, and other such data." This could be an issue for many music fans who want to do more with their media storage for music. Perhaps Microsoft will tweak the Zune software in the future to accomplish this.
Zune player has limited accessories available today. Zune marketplace also has limited songs (about 2 million compared to 3 million plus for iPod). On the other hand, Apple's iPod has established relationships with several TV and Media houses which in turn provide more choice to the consumer. Whether Microsoft will be able to stretch these limits with Zune remains to be seen.
Bottomline:
Zune has the potential to cause disruption aka disruptive innovation in the market place. Zune combines the potent elements of a disruptor including great price, differentiated features and functionality, massive distribution, and Microsoft as the driver. Remember Xbox. However, the innovator iPod has a lion's share of the market, established partnerships, loyal cult-like following, and has been known to cause its own disruption. Who will win when the dust settles? How will iPod respond? For the final answer, we will check back in 2008.
Can a Disruptor, a Challenger named Zune, backed by the mighty conqueror Microsoft unseat the King iPod made by the maverick Apple? The market for MP3 players is in the billions of dollars and growing 20 percent annually - plenty for Microsoft to become interested in and carve out a billion dollar business. Microsoft is launching Zune on November 14, 2006.
The Challenger: Disruptor Zune
Zune is Microsoft's stab at the MP3 market - directly aimed at the mighty iPod. Apple is enjoying the throne made of music, video, movies, TV shows and games - all in one super cool package dubbed iPod. However, can it hold on to this throne for long?
Zune is a worthy challenger. It packs a good punch and some.
For starters, it is very easy to use, and it contains all the cool features of an iPod - you can play your favorite music, buy and download songs from the marketplace for about 99 cents a song (Zune marketplace is similar to iTunes store), view pictures and photos, and watch movies - all for $249 (same price as the comparable iPod).
However, Zune player packs more innovation punch:
1. Wireless Sharing: Zune is first to market wireless sharing of songs, photos and pictures using standard wireless Wi-Fi connectivity. Microsoft's creativity is evident as it is trying to capture the rising tide of social networking. Anyone with a Zune player can send and receive songs, photos and pictures with anyone else with a Zune player. The only catch: if you receive a song, you can only play it three times within three days, after which you cannot play it any more. But that's ok. Since after you have received the song, you can "tag" it if you enjoy it, and you can then buy it from the marketplace. There are no restrictions on sharing pictures or photos. And, if you don't want someone sending you stuff, you can always block that person. And one other cool feature is that you can let someone know the names of songs and videos you enjoy. Microsoft has indeed innovated with the wireless sharing, and the fact that it is standards based means it can do much more with it in the future: for instance, web browsing and GPS navigation come to mind. Innovation in technology and trends.
2. Bigger Screen: Zune boasts a full three inch screen, half-inch larger than an iPod - which is literally 44% larger. The best part is you can use both portrait and landscape mode on the Zune screen, and even change background images on the screen - this customization is handy if you want to personalize your Zune player (a page out of the iPod book; however iPod does not provide such customizations). The bright screen with the extra half-inch is a visual delight. According to Zunescene, "It's (display) large enough to watch a music video, or movie and actually see the expressions on peoples faces. The pixel density is about double that of modern laptops, so it's more like watching a mini HDTV than a mini television. The refresh rate is also higher than a television, which means the frames move extremely fast to make the motion appear fluid rather than jaggy or digitized." Innovation in product design.
3. FM Radio: The very point of owning an MP3 player was to not listen to FM radio with all the advertisements. However, there are times when you want to listen to songs without paying for it and want to keep up with the news and gossip. Zune provides a built-in FM radio which is quite effective. Listen in to late night music, or simply use it for snoozing. What is unclear is whether you can record your favorite FM songs directly to Zune player. Innovation in customer need.
4. Unlimited Download Service: Zune marketplace includes an unlimited download service for the music lovers who simply want to listen to as much music as they want for $14.99 a month. The Zune Pass provides you the freedom of an "all you can eat" buffet for a low monthly price. You can always choose to pay by the pop for about 99 cents a song. Zune has copied the unlimited business model of a Napster or Real Networks; however, the flexibility of providing both business models creates innovation in Business Model, and provides the customer real choice.
5. Zune and Xbox 360: Zune works with Xbox™ 360. You can "access media right in the Xbox dashboard, or listen to music while playing games." For all the Xbox lovers, this could be a huge blessing. Will Microsoft eventually create a bundle of Xbox and Zune? Or provide Zune for a better price to loyal Xbox owners. The creativity in packaging together these systems could only help Microsoft further their market share of both Xbox and Zune. Creativity and Innovation in motion.
What are Zune's weaknesses?
The challenger often has one or two potent weaknesses that the king can exploit and essentially thwart the uprising. What are then Zune's weaknesses?
For instance, Zune marketplace has a confusing points system to download a song rather than paying it by the drink for 99 cents. It amounts to the same thing as spending 99 cents a song; however, the system is a bit complex. Microsoft needs to improve this and make this simpler.
Zune player is only available in English language for now. If you do not speak English or want Zune in your own language, you will need to wait. Expect Microsoft to offer Zune in multiple languages depending on the success within the next year.
Zune's hard drive "cannot be used as a memory stick for storing and retrieving word documents, zip files, and other such data." This could be an issue for many music fans who want to do more with their media storage for music. Perhaps Microsoft will tweak the Zune software in the future to accomplish this.
Zune player has limited accessories available today. Zune marketplace also has limited songs (about 2 million compared to 3 million plus for iPod). On the other hand, Apple's iPod has established relationships with several TV and Media houses which in turn provide more choice to the consumer. Whether Microsoft will be able to stretch these limits with Zune remains to be seen.
Bottomline:
Zune has the potential to cause disruption aka disruptive innovation in the market place. Zune combines the potent elements of a disruptor including great price, differentiated features and functionality, massive distribution, and Microsoft as the driver. Remember Xbox. However, the innovator iPod has a lion's share of the market, established partnerships, loyal cult-like following, and has been known to cause its own disruption. Who will win when the dust settles? How will iPod respond? For the final answer, we will check back in 2008.
Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world
References:
Official Zune site: www.zune.net
Zunescene: www.zunescene.com
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