Nice little touches...

Check out the bitmap - two colors of Zunes plugged into my PC....

www.zunester.com/zunes.jpg

Scoble's Post

http://scobleizer.wordpress.com/2006/10/26/my-thoughts-about-zune-vs-ipod/

Scoble's points are mostly good ones. Some specific thoughts:

• A lot of the points make me say "yeah, but wait a bit." It's not that we don't get Podcasting (Robert knows I'm among the loudest voices about Podcasting at Microsoft), it's that podcasting wasn't done in time. I don't expect anyone to buy based on my promises, but it's important to separate things we don't have at launch from comments about Zune's long term prospects.
• Like everyone, he liked the brown better once he saw it in person. Yay!
• From my previous post - updateability is key.
• Conversationality created by white headphones. I don't agree here. In 2002, when white headphones said something about you - you were an early adopter cool geek guy with an iPod. Now all white headphones say is that you've got a body temperature over 96 degrees.
• His point about the edge case - early adopter geeks like me - is a good one. We very solidly focussed on mainstream use cases this release (e.g., 99% of ipods get used for music, only 15% for podcasts, video and everything else is less). I think his scenarios (Rocketboom, ZeFrank, Videoblogs, etc...) are good ones, but only if you make those experiences more mainstream rather than focussing early adopters. Many other mp3 player manufacturers (e.g., Archos, Audiotron) have gotten sucked into this early adopter trap in the past and ended up with a loyal, fervent - but niche - user base.
• Free me from DRM? Huh? Zune works great if you're 100% into DRM-free mp3, aac, mpeg-4, or h.264 content. Go be free.
• Robert likes subscriptions; I agree the potential there is huge. The key will be building out the experiences around subscription music until they're irresistable.
• *sigh*. The round dpad. I think Robert is 100% right here. iPod users think the round thing will be a scrollwheel like the iPod. They "get it" after about 5 seconds on a Zune, and then don't look back. The iPod was like this at first for most people - they didn't expect the scrollwheel and struggled for 5 seconds, then figured it out. He's right that the team did a great job a making the dpad usability great, and even giving it some advantages over the scrollwheel.
• Robert remembers someone showing off the "little things" that ipod got right - the color coordinated iPod icons, the fact the device pauses when you unplug the headphones. Nice touches. Trust me, we're doing the right stuff here - I was the presenter in that meeting.

Zune updater

Scoble has posted about Zune. I will comment on the overall post in more detail in a bit (and Robert and I come at things from somewhat different angles in general), but he does rightly note one key asset - the Zune updater. A great deal of effort has gone into making periodic firmware updates reliable, seamless, and automatic.

This is definitely a nice, tactical feature - we couldn't get everything we wanted into the box right out of the gate. But more importantly, it's a strategic feature. We plan to be very nimble going forward, and there are a lot of great ideas for things to do with a small portable media box with wifi (many mentioned on this blog's comments). Must...be...nimble.

xbox 360 owners have experienced this - every now and then a new software update automagically appears on their box, bringing new features and improvements.

Zune Charity Event! Tomorrow night!

Tomorrow Night at 7pm, we're holding a charity concert. I'm personally (not an official Zune team thing, me personally, no affiliation with Microsoft, etc... legalese, sorry) giving away a limited number of tickets to give out to Zunester readers! Details:

Charity Concert
When: Tuesday, October 24th, doors open at 7pm
Where: Showbox (http://www.showboxonline.com/)

Included:
Entertainment provided by touring artists Band of Horses and Simon Dawes (check them out at the links below)

• http://www.bandofhorses.com/
• http://www.simondawes.com/

Live auction including:

• Trip for two to the Grammy Awards in Los Angeles with round trip airfare and two night hotel stay at the Mondrian Hotel!
• Trip for two to The Apprentice wrap party including First Class airfare, hotel, limo and dinner!

Come one, come all. Actually, come a limited number in pairs, come all. Email tix@zunester.com with your full name, and I'll arrange for a pair of tickets to the event to be at the box office at the showbox in Seattle.

If you're a Microsoft employee, please give to the giving campaign and get your tickets that way! email me for instructions.

Gartner: Apple should license the mac to Dell?

Garnter has a nice report entitled Apple Should License the Mac to Dell out. I'm not surprised to see this suggestion, but it's dead wrong. I'll happily confess my spotty Apple's prediction record (remind me to show you my past position, "Why Apple won't switch to Intel..." sometime), but I think this one is pretty farfetched. Some reasons:

• Apple isn't a partnership/platform company. They've never been good a partnerships, and don't really know how to do it very well. This hasn't hurt them on the iPod, but it's just not in their DNA, and it's not where they add value in a marketplace. Indeed the main point of differentation for the Mac is that it's an end-to-end play, running Mac OS, iLife, all Apple hardware, plugging in your iPod, etc... Ok, overstated - you probably also run Microsoft Office and plug in an HP printer, but you get the point.
• Apple doesn't want the headaches of supporting the universe of intel/pc hardware. Dell customers expect to be able to customize and swap out parts. You really, truly have no idea how much work it is to work with Acme videocards, and Foobar sound cards and Randomcorp motherboards. Really. Windows can do it because it has amazingly massive scale and, as the leader, foobarcorp, Acme, and Randomcorp all do a lot of the work for us. Apple would (at least for a while) have to do it all themselves.
• Apple may not need OEMs to achieve share gains. Yesterday's earnings at least imply they're doing nicely on their own.
• It's hard to get the hardware monkey off of your back. When apple sells the average mac for $1400, they make 40% profit or $560. Last quarter they sold 1.61M macs, for a total profit of $902M. If they instead sold Mac OS to dell for $25, they'd need 22x the volumes, or 36M macs per quarter. Not bloody likely.

I'm certain Apple thinks about this a lot, and they must talk to Dell and HP occasionally. But in this case, Jobs was right in 1997 when he shot software licensing in the head, just like he was wrong to do so in 1985 (when he had the opportunity to be the leader).

More stuff from Cupertino

I've been waiting for this: Jobs' first public discussion of Zune: http://www.appleinsider.com/article.php?id=2143

Hey, I'm just happy we're making enough of a mindshare dent that he's having to talk about us. I think it's a mistake for him to bring up sharing at all. When Realnetworks' lead was huge, they never mentioned Windows Media at all until they were more or less forced, and then they referred to us a "brand X" for quite a while. Smart - why feed the competition's buzz?

I won't write a huge refutation, but some of the comments ring true to me: http://forums.appleinsider.com/showpost.php?p=982007&postcount=11. The leader can't get too cocky.

Brains and Guts in Cupertino

A while ago I posted some commentary about Apple's retail strategy and how they treat those partners. Some folks took offense at that, so I thought I'd pause to say something nice about the gang from Cupertino's strategy so I could be fair and balanced.

Remember that the iPod started out as a typical move - it was based on 1394 (an Apple technology that few PCs had) and only worked with iTunes on the mac. Someone at Apple thought a really good mp3 player might be a good differentiating "feature" of the Mac. The iPod was an iMac peripheral.

Someone at Apple was prescient and gutsy with the iPod early on. Remeber that after the first year of sales, they had only moved a few hundred thousand iPods. But someone at Apple realized the potential to move beyond the geeky niche into a completely new mainstream market. The company then did several very risky things:

• Turned around $50M of their $200M per year marketing spend over to the upstart business and brand.
• Brought iTunes to Windows - very un-Apple thing to do that removed an important differentator for the Macintosh and iLife.
• Pulled 1394 in favor of the more ubiquitous USB 2.0 (and switched to a proprietary connector, creating a future supplemental revenue flow).

It's hard to argue at this point that Apple "got lucky" - the were smart. Had they not made these moves, the iPod would have languished in it's Mac-Niche. With these moves, they unshackled the product which then promptly took off, surely beyond their expectations.

I don't know who deserves the credit - Steve Jobs, Tony Faddell, or someone else - but it's a pretty impressive business strategy story.

White and Nerdy?

Ah, Weird Al has a new album. It's not his very best, but it's very good if you like this kind of thing. White and Nerdy is one of the better songs.

Straight Outta Lynwood

$1.6B? For YouTube?

sputter. sputter.

Mark Cuban says it well http://www.blogmaverick.com/2006/10/09/i-still-think-google-is-crazy/

$1.6B for a lot of eyeballs is basically what they're paying. The question is what the eyeballs are worth. Youtube has approx 20M users, which means goog needs to eventually make back $80/user to break even, plus the future value of the money. A really tall order. Can you say "Web 2.0 Bubble"?

I have friends at goog, and it appears to me that goog is a little bit insane. Sometimes that can be a good thing, but in this case it feels like they've just got too much money and are living the bubble.

Another theory from the Gerstner (IBM) book. Sometimes when an exec is faced with a very tough challenge, a merger or acquisition looks really good because it's concrete, exciting, and holds analysts at bay for a while. The gang a goog certainly are facing just such a challenge in goog's slowing growth.

We'll see. This appears less nuts than the warner/aol deal or the ebay/skype deal, but it's up there.

Two related links:

http://blogs.zdnet.com/ITFacts/?p=11434
http://online.wsj.com/public/article/SB115447712983624018-FL_lppTZciifs_1jNmqUXbemyWg_20070801.html?mod=rss_free

• The first shows that the top 10% of the content on Youtube accounts for 70% of their traffic. It would be interesting to know what % is copyrighted.
• The second makes the point that most of the profits of online biz still comes from "hits", not from the "long tail".

These don't invalidate the rising importance of the long tail, but they do refute the "strong" version that the long tail is more important than the hits, or that hits don't matter anymore.

Doom Rocks!

thanks to xbox 360 live arcade, I've been playing Doom for the first time since the 80's. My biggest surprise is how fun Doom is, and by extension how little the first person shooter universe has improved in 20 years. I can't look up and down and can't jump, and there aren't nearly as many polygons, but Doom really is a lot of fun.

Amazing what a couple of visionaries can do. 

repost of dc photo

Trying reposting my photo... 

Scary sight on landing in DC

Haven't heard anything, so it must be a random fire - but imagine the things that were running through my head... 

Sucks to be them...

I think there's a Zune opportunity is the way Apple partners with retail (poorly).

The image to the left illustrates this. The Crutchfield catalog came today, and as they enter the holiday season they've got no iPod images. Why? Because Apple didn't bother to tell them what was coming this holiday, so they had to go with this bland image to avoid showing last year's video iPod and iPod nano. They couldn't even list the products. Echhh....

Note that this was totally unnecessary - Apple could have warned them not to show Nanos but that the iPod wasn't changing, under NDA. But of course it doesn't break Apple's heart if more iPods flow through their own stores instead of others'.

Winter in Seattle

Personal note....

Drove in early to work this morning. It was pitch black and rainy. What happened to the summer? Yech. Time to pray for snow...

Zune's transcoding feature - 'splained!

Zuneinsider (Cesar) tells me that there have been some questions about transcoding in Zune. Here's the scoop.

Zune's software on the PC can play lots of formats and codecs. WMV, h.264, aac, wav, etc... And lots of sizes of video - 320x240, 640x480, even HD.

The Zune device, of course, can't play all of these - it's got a 320x240 screen and a less powerful CPU than your PC. So if you've got your beautiful 720x480 copy of Animal House on your PC, something has to change before it gets to the device.

Zune transcoding automatically takes care of this. When you go to sync the movie, The PC client checks your Zune, and Zune reports it can't play the video as-is. The Zune Software then transcodes (converts) the video into a copy in the device's target format, a 320x240 WMV file. This copy is kept in an invisible cache file on the PC's hard drive.

Once the transcode is complete, it transfers the copy over onto the device - voila, you're ready to play. It saves the copy in the cache so the next time you need to sync that movie, you don't need to transcode it again.

The same sort of thing happens with audio files that the Zune won't support (this will be much less common since the Zune supports most audio codecs).

The only limitation is that the Zune software can only transcode files that it knows how to play. So as always, Apple Fairplay songs and other unsupported DRM and codecs can't be transcoded. The rule of thumb will be that if it goes into the Zune software library, it'll be playable and transcodable.

Double shot with double shot

This could be an add for my Zune, or for Espresso Vivace. 

Zune in full sunlight

Another shot - this time in full sunlight - that shows off the green halo nicely on my device 

Zune double shot finish

I thought that a lot of the photos I've seen don't adequately show off the "double shot" effect on the Zunes.

Here's a shot of mine. I really like the green halo effect it produces. 

You haven't seen everything...

...until you've seen a schoolbus demolition derby. 

Good primer on search

Looking for things to talk about, it occurs to me I've read more books about the tech biz than most and some thoughts/recommendations might be useful. I'll start throwing some in.

One of the hottest topics in the strategy world at Microsoft is the Search business. There's been a lot of misunderstanding of now the search advertising business works, and how big the advertising opportunity is. I'm forever recommending this book to folks inside Microsoft. Battelle does a great job of balancing a realistic explanation of how search ads work with a futuristic look at where they might be going.

A key point is how crucial search is to search advertising. With search, the user pretty much sits down in front of your computer and enters the thing they want to buy. This enables supremely well targeted ads, which means that clickthroughs turn into sales at a frighteningly high rate and thus huge $ per advertisement. Whenever anyone talks about ad-supported software, or ad supported services, first ask if you can get decent targeting based on usage. Usually, the answer will be "no", and then you know the revenue opportunity is limited.