Pushing Zune: Is Microsoft fighting an uphill battle?

Indeed, the Zune HD has received positive reviews from the technology press and it has features that the iPod doesn’t.

For instance, Microsoft has bet on high-definition video to differentiate the device.

The Zune HD is among the first handhelds able to play high-definition video and receive digital HD Radio signals.

Apple’s iTunes software supports high-definition video, but only when displayed on Apple TV (a set-top box) and on PCs.

The Zune HD’s OLED screen is more vibrant than typical touch displays— a potential selling point for tech-savvy consumers looking for state-of-the art features.

Microsoft has also differentiated its Zune line with a subscription service called Zune Pass.

For $14.99 a month, Zune Pass subscribers have unlimited streaming access to six million songs in the Zune Marketplace and are allowed to permanently download 10 songs a month.

(Apple’s iTunes store allows listeners to hear samples of music, but they must pay for each download.)

Microsoft executives acknowledge that the Zune is a work in progress.

“We [are continuing] to expand the brand presence for Zune and ... to build our capability in the music and video delivery marketplace,” said Robbie Bach, president of Microsoft’s entertainment and devices division at a July 30 financial analyst meeting.

However, Microsoft is going to need more than new features to boost the Zune’s presence.

Saikat Chaudhuri, a Wharton management professor, notes that other competitors are likely to follow Microsoft’s HD lead relatively quickly.

The company will need savvy marketing and strategic positioning for the Zune HD to be a contender. The biggest challenge, he says, is out-marketing Apple.

“Apple made the iPod a fashion item. The problem is that Microsoft doesn’t have a fashion-oriented approach to marketing. Microsoft is very functional [in its approach], but somehow it has to tap into fashion sense.”

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