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Steven Ballmer Microsoft's CEO, in an interview some days ago on Knowledge@Wharton said PlaysForSure is the past and Zune DRM is the future. The reason? Microsoft couldn't stand still against Apple's iPod ecosystem using unsuccessful PFS partners. He also commented Zune is a product which will keep moving fast...
Following the model that made Microsoft's Windows so successful, Microsoft licensed PlaysForSure to multiple hardware vendors of digital music players. "We thought that was a brilliant strategy -- [develop] an open ecosystem, get a lot of people [to support it]." What happened? As Ballmer puts it, "In this particular case, the whole was not bigger than the sum of the parts." And, as a result, "Apple -- with one model that was simple and consistent -- wound up taking 75%-80% of the market." [...] Microsoft saw an opportunity in music sharing. "We believe in community; community means sharing.... How do I share my music with you? I want to be able to do that legally. So we said, 'We'll go out and negotiate for the rights.' If I share a song with you, you can listen to it three times, or for three days, whichever comes first, then you can mark it and buy. That's one of the features of Zune. But, as soon as you say that, it is inconsistent with PlaysForSure. The DRM information doesn't know anything about that." The change in strategy was, in Ballmer's words, a "very hard call." But his conclusion was: "We could be consistent with what is out there, which hasn't succeeded. Or, we can try a new approach, which we think has ... merit and can succeed." As for the impact on Microsoft's partners as a result of this change of strategy, Ballmer states, "Some of our partners will say 'This wasn't partner-friendly.' But having our partners only have 20% of a market share between them is also not very partner-friendly. One of the key things ... that I have learned about business partners is that business partners are your partners because they make money with you, they succeed with you. And if you don't succeed, eventually you don't have any partners." [...] Windows has to try to be more encompassing." Zune, on the other hand, is in a very different position, according to Ballmer. "Zune is nowhere in the market. So hit, run, work, find your niche -- go, go, go, go! This is a whole different agility profile than what you need in Windows."
Read more (and hear more) at Knowledge@Wharton [via ZDnet ]
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