From Argo To Xbox Music: The Birth, Life, And Death Of Zune

…And Then Dropping It

Between January 2003 and January 2006, Apple’s profit margins doubled to 10%, largely on its success with the iPod. Apple Inc. would later drop the ‘Computer’ out of their name as their dominance in music players grew into success with the iPhone in 2007 and iPad tablet in 2010. Microsoft’s Entertainment & Devices unit under Bach had overseen the creation of PlaysForSure, which floundered in the wake of the iPod revolution, but it had also seen some success in the Xbox. The console still trailed far behind Sony’s PlayStation 2, but it had bested the Gamecube console by the once-legendary Nintendo, which had floundered against the original PlayStation with their Nintendo64 console in the late 90s. For 2004, NPD reported that the Xbox was the best-selling console on a month-to-month basis in the US and with the record-setting release of Halo 2 that November, the console had begun to build a lot of important mindshare, a tool that would help them when the Xbox 360 launched the following year and remained sold out for nearly half a year afterward.

But Microsoft was beginning to see the advantage of controlling the music experience end-to-end like Apple did with the iPod. While a central platform like PlaysForSure gave other, smaller services a shot at being successful by being easily implemented into Windows, which was still deployed on 90% of home computers, none became strong enough to chip away at the iPod/iTunes juggernaut. There was no doubt that Microsoft was leaving billions of dollars on the table by being the party house rather than the party itself. PlaysForSure was designed to keep eyes on Windows Media Player and Microsoft’s services, but it was failing as tens of millions began to load iTunes to replace it for all of their music management needs. With Xbox, Microsoft was learning that an internal, quasi-proprietary solution could succeed, even when their UltimateTV DVR couldn’t. They just needed the right talent behind it.

Seeking to give him more responsibility, Bach brought up Bryan Lee to head Microsoft’s “iPod killer” effort in November 2005 while J Allard aided with look and feel. Serving as Executive Vice President in charge of business deals for Sony Pictures from 1987, Lee had joined Microsoft in 2000 and become a key player in the Xbox project, becoming the E&D’s first Chief Financial Officer. At the time of his appointment, he was in charge of the E&D’s eHome division, which oversaw Media Center and Microsoft TV. (Media Center proper was helmed by… DUN DUN DUN… Joe Belfiore!) J Allard had joined Microsoft out of college in 1989, writing an important memo in 1994 about how important the internet would be to Windows, which caught Bill Gates’ eye and perhaps lead them down the path to their anti-trust suit involving the “monopolistic bundling” of Internet Explorer with every copy of Windows. Allard would later be appointed as the General Manager for the Xbox, which, opposite of Media Center’s attempt, ditched the Windows-based living room strategy entirely in favor of an isolated, proprietary experience. The Xbox included stark black and green menus, cutting edge 3D graphics, a broadband-only internet gaming service, and not a single Office application or web browser to be found. On E&D’s strategy, Allard later said, “What I want to do at E&D is build an entertainment service that can connect, that has a screen and buttons and a speaker, so you can watch what you want, where you want, how you want.”

While Bach and his crew no doubt felt confident about their new unnamed music strategy, or that Microsoft under CEO Steve Ballmer would be more than happy to commit billions of dollars toward their effort, they had little over a year to put together all a unique experience that would give the iPod a run for its money.

Codenames

As Microsoft’s “iPod killer” began to take shape, its various elements began to surface as codenames throughout the media.

Alexandria

There was no sense in reinventing the wheel in coming up with a closed standard for their new player. The new service, which would include a subscription option similar to MTV’s URGE service (which Microsoft had highlighted in their CES 2006 keynote) would use a forked version of PlaysForSure that was incompatible with not only other players like the iPod, but other PlaysForSure devices from Creative and Archos. Microsoft would run into some resistance as they sunset the PlaysForSure standard that so many services relied on for their cross-device compatibility and protective DRM wrappers, waving off the notion stating, “Zune competes directly with an integrated device/service like iPod/iTunes, not with companies opting out of the integrated experience.” The desktop software, a requirement to manage and upgrade the player (and later, Windows Phone), would be a reskinned version of the Windows Media Player 11 software that had served as Microsoft’s workhorse for PlaysForSure. Microsoft would, naturally, sunset their own MSN Music service in favor of Zune’s Marketplace, initially offering 2 million tracks, a number that would bloom to thirty million over the next six years.

Argo

Microsoft realized early on that they would need to be able to compete in both hard drive and flash-based players. In retrospect, it’s no surprise that the first generation Zune seemed like a patchwork solution and that only one player, their 30 gigabyte hard drive-based version, would make it for their November 2006 launch. The hardware was slightly bigger than iPod’s similar hard drive model at the time, but came equipped with a large 3″ color screen, an FM tuner, a segmented circular directional pad that favored the Media Center-derived Twist interface for navigating menus, and a pair of buttons on its face mirrored by a shallow concavity on the backside. The player’s software was also a direct descendant of the Portable Mobile Center OS. The casing came in five iridescent color schemes. Connectivity was provided by a proprietary 30-pin connector similar to ones used by the iPod. As a highly customized version of their Gigabeat S player that had launched earlier in the year, the Argo was deemed the Toshiba 1089 by the FCC. These first-generation players were thought to have bricked on February 29th, 2008, but were instead affected by a bug in the included Freescale chipset that failed to manage leap days, restoring to normal operation the following day.

The players were also designed for upgradable firmwares, something that Microsoft offered as a benefit to the ‘once a year’ iPods. As new features were created, players could be updated via the Zune’s software, something that kept even the oldest players up to date until the arrival of the touch-based Zune HD in 2009.

Pyxis

A key pillar of the Argo philosophy was community (or “Welcome to the Social”), similar to how Microsoft had approached the Xbox, becoming a household name when it came to LAN-based console deathmatches and over their successful Xbox Live subscription service. The player came with a wi-fi radio, but its use was limited exclusively to a music swapping service code-named Pyxis. Had a friend with a Zune? You could wirelessly send them some of your favorite (or, well, not) tracks and they’d be governed by a special DRM that allowed them to play the track three times or within three days. These tracks could then be flagged for download in the Marketplace when the listener returned their player to a computer connection. As much sense as it makes, the idea of syncing or purchasing music through a wireless network was attributed to ‘user feedback’ and added by firmware update later. Ultimately, a dearth of Zunes available in the wild made the idea of trading songs great on paper and unrealized in reality.

Zune

So Zune is a new name. It doesn’t mean anything. It was a name that we looked at and said it does connote some action. There are a lot of things people have already kind of come up with different twists. I saw some retail stuff put together by one of our partners that said, “Coming Zune”. And you can see all kinds of little plays on that.

– Bryan Lee

Before it became infamously rumored that Ballmer was running the naming game at Microsoft (for example: refusing to shed the “Windows” from “Windows Phone” in an attempt to keep the brand strong across all of their products), E&D managed to craft an original marque for their music player, perhaps on good will from the success of their originally-titled Xbox (a portmanteau of ‘DirectX’, their audio/video API set for PC games, and, well, ‘box’). But Microsoft couldn’t bring themselves to birth their own name and hired linguistic branding company Lexicon and their rows of Ph.Ds to devise one. In reading their in-depth study of the Zune name vs. the iPod, the process required to come up with the new title seems outrageous, but Lexicon’s services are visible in everyday use. Have you ever used a BlackBerry, or Febreze, a Swiffer, a Scion car, or perhaps a Pentium processor? All of these brands were generated by Lexicon. JDK, who had previously worked with Microsoft on the Xbox 360 identity, was brought onboard to devise Zune’s logo and design standard. The logo displayed an interconnected projection of a Z while the first generation artwork a brown base tone and their famous orange-to-pink gradient as an accent.

With all of these components in place, Microsoft still faced an uphill struggle as Apple would sell 14 million iPods over holiday 2005.