Zune 2.0

Microsoft this week announced the next iteration of its Zune music player and related services. There are lots of details which you can read about elsewhere (Microsoft unveils revamped Zunes). In particular, note that Microsoft is now offering native MP3 format with no DRM, one-upping the iTunes store, which still uses its own music format.

Reader's of this blog and my book Attacking The Crown Jewels know that Microsoft developed Zune to threaten iPod/iTunes and thus distract Apple from threatening Windows by freeing OS X to run on non-Apple PCs. This strategy has been effective (see Why Microsoft Needs Zune, The Zune Attack Is Working and Apple Inc.-The Zune Attack Is Working).

To understand the Zune strategy is to understand the crown jewels attack strategy. First, attack away from the competitor’s offering that threatens your strategy, the strategic threat. In this case, that threat is Apple's OS X if freed to run on non-Apple PCs. Second, attack one of the competitor’s offerings that is essential to its strategy, one of its crown jewels. So Microsoft attacks Apple's iPod/iTunes crown jewel. Finally, attack with enough credibility that the competitor must defend its crown jewels by diverting resources away from the strategic threat, thus reducing or eliminating the threat to you.

Just keep in mind that Zune's success is measured by the effect it has on keeping Apple from threatening Windows with OS X unchained, not how well Zune performs in the marketplace. Seen through this lens, Zune has been a roaring success.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Zune, Microsoft, Apple