Microsoft Zune: A Case Study in Failure
This post is written for my DesignLab’s UX Academy course work. It outlines what led to the product failure of the Zune 30.
In late 2006, Microsoft released their competition to the highly popular Apple iPod: the Zune 30. Along with the Zune hardware, they released their version of the iTunes Store with the Zune Marketplace. Six years later in 2012, Microsoft shut down the Zune Marketplace along with production of the Zune 30; officially ending a product that was doomed from the start.
So why did the Zune fail? The answer lies in these few misguided assumptions leading to poor product planning:
Total Available Market
Microsoft started by making the assumption that there was marketshare available for the product they were bringing to life: A direct competitor to the iPod both in features and in price. Looking back it is quite apparent that this was an incorrect assumption, as the Zune failed to capture even 10% of the mp3 marketshare while the iPod absolutely dominated. At the time of the release there were lower priced mp3 players that were able to capture a significant portion of the market. But at only $10 less than the iPod, users had little incentive to purchase a Zune over the known market leader.
Timing
Microsoft assumed that in 2006 (5 years after release of the iPod) they could release a direct competitor. By this time Apple had soaked up so much of the market and established themselves as the standard in the industry. This put the Zune in an uphill battle from the start. To add to the poor timing of the product release, one year later Apple released the first generation iPhone and the iPod Touch. The iPhone kicked off the smartphone era and users now had smartphones with mp3 players built directly into them. In a few short years user demand for any standalone mp3 player like the Zune had diminished.
Product Features
Tony Scherba (president of the design studio Yeti LLC) said it best when he reflected on the Zune’s failure: “While Zune had some capabilities the iPod didn’t, potential users — many of whom had already bought an iPod — simply didn’t think the product addressed a pressing need.” He also mentioned that it was clear Microsoft did not do enough research or prototyping stating “If it had, Microsoft would have learned prior to release that consumers didn’t truly value Zune’s features. The company assumed they did, and that was its downfall.” Microsoft came out with a carbon copy of the iPod when it came to features and failed to innovate by solving any problem that users truly had. The only innovative feature that the Zune boasted was the Zune-to-Zune song sharing. This feature could not have been based off strong research as users did not take to the feature in any significant way.
Microsoft assumed that they were bringing a desirable product to a viable market at an opportune time. Because of these misguided assumptions, Microsoft dealt with a $289 million loss and one of their most infamous failures.
