Microsoft Sees 'Hundreds of Millions' Spent on Zune Portable Music Player

By ROBERT A. GUTH
Wall Street Journal

July 27, 2006 3:47 p.m.

http://online.wsj.com/article/SB115401956709119294.html?mod=technology_main_whats_news


REDMOND, WASH. -- A Microsoft Corp. executive said that the company's newly 
disclosed effort to take on Apple Computer Inc.'s iPod music player will 
yield one product this year and cost "hundreds of millions of dollars" in 
coming years.

Robbie Bach, the president of Microsoft's entertainment division said that 
Microsoft will begin selling one device under the brand name Zune this year 
and will expand that with a new product line next calendar year, "as well 
as broadening the product lines over time."

Mr. Bach's comments, made at Microsoft's annual meeting with financial 
analysts, follows Microsoft's confirmation last week that it's working on a 
portable music player to compete with Apple's wildly successful iPod.

At the meeting, Mr. Bach confirmed that Microsoft is going to manage every 
part of the product's creation and strategy. In music devices to date, 
Microsoft has worked with a multiplicity of different device makers and 
Internet music service providers. Through that approach Microsoft has 
failed to dent the market share of Apple's device.

"Microsoft will be involved in the hardware and the software and the 
service." Mr. Bach said.

As with many of Microsoft's new product efforts, Mr. Bach emphasized that 
Zune is a long-term bet. "It is something that is going to take time. This 
is not a six month initiative," he said. "This is something that is going 
to be a three-, four-, five-year investment."

He said that the effort will cost "hundreds of millions of dollars in 
investment over time."

Mr. Bach, who also manages Microsoft's Xbox videogame business, was tapped 
last year to help rework Microsoft's approach to other entertainment 
industries including music and movies. He said that a key part of the 
strategy of Zune is to make it tie closely with Microsoft's other 
entertainment products, including the Xbox, Media Center, personal computer 
software for consumer PCs.

Building connections among those products "is a way that we are going to 
differentiate ourselves," he said. "It's a dramatically better experience 
than you have from just a portable music player."

Separately, the company also confirmed at the meeting that it sees no 
impediments ot its plans to launch Windows Vista later this year. Kevin 
Johnson, co-president of the division that includes Windows, said the 
company has test versions of the operating system in the hands of millions 
of users. So far, nothing has turned up to keep the product from shipping 
to business customers in November and to consumers in January as planned, 
Mr. Johnson said.


================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923  Fax: 713-743-3927
antunes at uh dot edu



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