Microsoft adds to Zune lineup

After nearly a year in the business, Microsoft on Tuesday unveiled an expanded line of portable digital media players in a bid to compete against market dominator Apple's iPod.

Microsoft will have four Zune models on sale next month, still fewer than the array of iPods Apple offers. The company is also revamping its software and adding more features to help users find new music and tell their friends about it.

"We want to help people discover new music or rediscover old music that they love," said J Allard, a leader of Microsoft's Zune effort.

Music sharing was a central feature of the first Zune, which came equipped with a Wi-Fi radio that allowed users to pass songs to other Zunes. The shared songs could be played up to three times within a maximum of three days.

The Wi-Fi feature is present in the entire Zune line — only high-end iPods got this technology in September — and will now allow users to synchronize the media player with their PCs wirelessly.

But users still can't buy music directly from their Zune player using the wireless feature. Apple put that capability in its new iPod Touch.

Matt Rosoff, an analyst with Directions on Microsoft, was surprised to see that capability omitted.

"The first company that does that right could reap some real benefits," he said.

Overall, he said, the new Zune lineup would have been more impressive if it was included in the original release a year ago.

"I just don't see Microsoft getting a lot of traction this year from Zune," Rosoff said. "It's going to be really tough."

Since launching with a 30-gigabyte, hard-drive-based player last November, Microsoft has sold about 1.2 million Zunes. Apple, in the nine months ended June 30, sold more than 41 million iPods.

Granted, the iPod line includes flash-based players in addition to the hard-drive-based player category. But with Tuesday's announcements from Microsoft, the comparisons become more direct.

The new Zune lineup, set to launch sometime in mid-November, now includes the 30-gigabyte, hard-drive player; a slimmed-down 80-gig hard-drive player; and smaller flash-based players with capacities of 4 and 8 gigabytes.

The prices, ranging from $150 to $250, are largely equal to what Apple charges for its comparable players. Rosoff said price parity with the iPod might not be enough to pry users away.

"If Microsoft is going to try to go head to head, I think they have to discount them," Rosoff said.

Robbie Bach, president of Microsoft's Entertainment and Devices Division, said he's comfortable with the Zune pricing strategy.

"I'd much rather differentiate with the consumer experience," Bach said. "I think that's the place where we can add the most value."

In particular, he pointed to the software and social-networking features Microsoft has built to complement Zune.

Zune Social, for example, will allow users to create an online musical identity — similar to services offered by Seattle startup iLike.

Microsoft has also negotiated more lenient digital-rights management regimes with record labels. It will sell more than 1 million songs in the DRM-free MP3 format, and songs shared wirelessly from one Zune to another will expire after three plays with no time limit.

The new Zunes will now be able to connect and synchronize content stored on Windows Media Center PCs and will be able to play television recorded on high-end Windows Vista PCs.

Microsoft Chairman Bill Gates was on hand at Zune's crowded headquarters building in Redmond Tuesday to give some perspective on the company's commitment to the music business.

He said Microsoft didn't "knock the market dead" with some of its early forays into productivity software more than a decade ago, but with "persistence and innovation," it built its multibillion-dollar Office business.

The same things apply in what Microsoft calls connected entertainment, Gates said.

"When we think about videos and games and music, you've got to be great at each of those individually, and you've got to create a great overall experience," he said. "... It's a long ways to go to achieve the full vision, but really fun to see the milestones."

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com

Information in this story, originally published on October 3, 2007 was corrected on October 10, 2007. The headline said new models of Microsoft's Zune digital media player are due out this month. The new Zune lineup is set to launch sometime in mid-November.