How Microsoft Lost The Consumer Electronics War
So, as a result of scoring an Apple gift certificate, I'm now the proud owner of a 16GB iPod touch.

Now, before I start down this rant, let me just say that I have mixed feelings about the touchPod. First off, it's a distinct departure from the classic iPod, and it takes a little getting used to. In all honesty, it's more "Mac-like" in UI than the iPod ever was, which meant "unlearning" a lot of things again.

But, iPod touch at the same time represents why Apple is, without question, winning the "music player" war, and why Microsoft has to steeply discount the Zune (and also make a 4 GB version comparably priced to the iPod nano) to get it traction. It's a well-designed piece of consumer electronics: sexy, easy to use, and no goofy features. Things work the way you expect them to, and there aren't any features that are hard to explain or difficult to understand what you'd use them for.

For starters, the WiFi in the touch is used for.. well, web browsing and downloading songs from iTunes on an impulse. That's it, that's all, nothing else. You want to share the song with a friend? You hand them your headphones. Yeah, "it's the social" with Zune.. but realistically, until the whole world has a Microsoft PlaysForSure player, the file sharing function in Zune really isn't very usable.

Oh, wait. Zune isn't PlaysForSure compatible, is it? So, all the strongly promoted services like Rhapsody and Yahoo's Music Store won't work with the Zune. So, instead of my friend being able to zap me a copy of the song and I can add it to my library back home and obtain a license however I would do that (either by buying the song to burn or just keeping it in my library just for use on my portable player), I'm left with.. well, the exact same choice I'd have on the iPod.. but at least I don't have to remember the name of the song now. Oh, wait, I would.. because on the Zune it doesn't migrate back up to my library because my computer isn't licensed for the song.

So, I'd like to award the Snapping Defeat from the Jaws of Victory award to Microsoft. Only they could take the strongest feature of their old platform ("music rental" services like Rhapsody), make a new platform that comes pretty close to the primary competitor's classic product, and then.. throw out the feature that made their product different and compelling.

I've had Rhapsody now for a couple of months, with a compatible player (a Sandisk Sansa Clip: a cute little 2-gig player with an even more sexy OLED display). It's awesome to have at my fingertips pretty much the whole damn RIAA back catalog, literally a drag-and-drop away from being able to take it with me. Like we were promised back in the old Qwest commercial, I have pretty close to every song ever recorded in my jukebox, and if I want to gorge myself on Elvis Presley, Elvis Costello, or Abbot and Costello, all I have to do is search Rhapsody and drag it to the Clip.

That had me sold on PlaysForSure more than any other feature available on any other player. And, since Apple has no similar service, it makes the PlaysForSure players stand out of the crowd.

And, that shows how Microsoft will lose the Consumer Electronics War, and why Steve Ballmer should be throwing chairs over Apple and Nintendo more than Google. I'm sorry, Steve: Google isn't a threat to Microsoft like Apple and Nintendo are. Google will, in the end, still be accessed by users with Microsoft software on their computers.. at least at some level. But, Apple (with both iPod and Macintosh) and Nintendo (with Wii) contain no Microsoft components. Worse, they exist so far outside the Microsoft Monoculture that even analysts in the computer and console video game spheres didn't see the success coming, and in many ways continue to not understand why music consumers buy iPods, upper-middle-class yupsters with Masters degrees buy Macintoshes, and why late-20 and early-30-somethings are buying Wiis.

Apple has, for better or for worse, masterfully played their position as "hey, we're not the big guy, but dammit we're cool!", and in the end, that's what sells music players. The "I'm a Mac, I'm a PC" ads work so well for Apple because John Hodgman and Justin Long are not only how Apple perceives the difference between the two companies, nor even that's how the rest of the world views the two companies. Ultimately, Microsoft's own internal view of themselves and their corporate culture is not unlike John Hodgman's representation: 40-ish, wearing "business" attire that's somewhere in between "business casual" and "three-piece suit" (often in subdued browns, and with loafers), and they view Apple as the young 20-something dressed in jeans and a collarless shirt. They seem to quickly forget that this "young kid" is almost as old as they are in this business, and actually changed the business from sloppy-assembled kit machines sold out of a garage to.. well, sloppily-assembled kit machines sold out of a "computer" store.

Point is, even today if you go to Amazon and look at the Portable Audio Player category, you will see how the sub-categories are defined. iPods, "and all the rest" of which Zune is clumped in to.

And that's a pretty sad statement of where Microsoft really ranks in the realm of product differentiation, which is how you make money in consumer electronics.

That should really have Ballmer throwing furniture.