Fixed Mobile Convergence

Hoping to steal some thunder from Apple, Inc. (News - Alert) and the iPod Touch, Microsoft Corp. announced the latest iteration of the Zune music player, to be called Zune HD.

 

The portable media player, which is due out this fall, will feature an HD radio receiver, HD video output, a touch screen, Wi-Fi and a Web browser. Zune HD will also carry a high-definition video output that will let users play files through a docking station on HD televisions. In addition, the screen will use organic light-emitting diodes, a technology that helps improve battery life and image quality.

 

That’s not all. Microsoft also plans to integrate Zune’s video service into Xbox Live, part of the Xbox 360's online service, bringing the Zune brand to more than 17 million international Xbox Live subscribers, the company said. The move is designed to better strengthen Microsoft’s (News - Alert) video-game and portable media systems.

 

Visitors can get a glimpse of how Zune integrates into Xbox Live to create a game-changing entertainment experience at the Electronic Entertainment Expo (E3) next week.

 

“The Zune music player is an integral part of the overall Zune experience, and we’re proud to be growing and extending our offering beyond the device,” Enrique Rodriguez, corporate vice president of the Microsoft TV, Video and Music Business Group, said in a statement. “Delivering on Microsoft’s connected entertainment vision, this news marks a turning point for Zune as it brings cross-platform experiences and premium video content to living rooms around the world.”

 

The new device, shown below, will mark Microsoft’s latest attempt to compete against Apple Inc.’s iPod Touch. The company has high hopes that the product will also expose consumers to different platforms, including Xbox. Microsoft has not yet released pricing information on the product.

 

Despite earlier research that 58% of teens said they were likely to buy a Zune over an iPod, Microsoft has only received a single-digit market share for the Zune since its 2006 debut. But the company continues to invest in the product as an alternative to Apple Inc.’s iPod, according to Yahoo! Tech.

 

Innovation is something that may help revive the Zune brand from sluggish sales. According to a Wall Street Journal report, the company experienced a $100 million drop in Zune revenue during the holiday quarter compared to the same period the previous year. Revenue dipped to $85 million during the holiday period in 2008 versus holiday 2007 when it was $185 million, the report said.

 

“At its much faster rate of decline, the Zune player looks like it’s headed from low to no market share—unless Microsoft jazzes up the product soon,” writer Nick Wingfield speculated in the Wall Street Journal blog.

 

The jury is still out on how well Microsoft’s subscription service for the Zune has been received. Last fall, the company announced a plan under which users can access tracks for a monthly fee. As TMC (News - Alert) reported, subscribers can also select 10 tracks each month to own for no additional charge.

 

The Zune last made national headlines when users experienced a technical glitch with the devices that left music-lovers without tunes for part of the Christmas holiday. According to TMC, a number of Microsoft’s Zune media players froze up on the last day of 2008 because of a glitch involving their internal clock. The devices reportedly were back to normal when the New Year began, the company said.