Microsoft Explains its Zune Strategy

Speaking here just now on Microsoft's Redmond campus, Robbie Bach, president of the Entertainment & Devices Division, explained the strategy behind the company's planned Zune media devices and services -- the company's forthcoming iPod and iTunes challengers.

Bach cautioned the audience of financial analysts that the project will require an investment of hundreds of millions of dollars over the next few years. He didn't show one of the portable players, or go into a lot of detail about the hardware or software. But he did explain the company's reasoning and put Zune in the context of the other things Microsoft is doing. Excerpts from his comments:

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"From a strategic perspective it's very important -- it's important for us to to have a play in this portable entertainment space, in particular relative to music and video. ... We're not just introducing Zune to do the same thing that other people do. We think there are real advantages to what Microsoft has to offer here. ... "

Bach talked about how the Zune devices and services will incorporate community elements and give people ways to discover new media content. Then he explained more about where the company sees Zune fitting into its overall offerings:

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"In the case of Apple, they have certainly an iMac business, they have their iPod business, and they've sold a few things into the home that compete with (Windows XP) Media Center, although the numbers there are actually quite small. Look at our business. We have a burgeoning IPTV business that we think is going to grow and be successful in the home. We have Media Center with over 14 million units and growing around the world. We have Xbox 360 in place and growing around the world. We have Xbox Live, MSN and our Windows Live initiatives. Put all of those things together and then take Zune and put it in the context of that. It enables us to complete the picture. It enables us to have the full entertainment, connected entertainment experience that we want to have."