The Motley Fool calls on Microsoft to kill the Zune:

I get why Microsoft wants to bury the iPod. The player’s success created a halo effect, winning over Mac converts. They’re using Mac’s operating system over Windows, surfing on Safari instead of Explorer, and not necessarily relying on Microsoft Office, even though it’s popular and available for the Mac.
[…]
Unfortunately, there comes a point when persistence becomes embarrassment. No one laughs at SanDisk or Creative for taking up slings and stones against the Apple Goliath, but Microsoft is too big to settle for being a niche player. The whole social sharing distinction of the Zune becomes a joke when there are too few Zune owners around to share tunes with.

A couple of things I didn’t know:

Critics can point out that Apple commanded a whopping 76% of the market two years ago. [As opposed to the company’s 70 % share today.] However, what about the brisk-selling Apple iPhones, which also double as iPods? Apple is looking to move five times as many of its pricey iPhones this year than all the Zunes Microsoft has sold to date. Even [RIM’s] new BlackBerry Bold smartphone syncs up to Apple’s iTunes, further entrenching Apple as the digital-delivery standard.

Isn’t that Blackberry news (emphasis added) odd? It would seem that if Apple licenses iTunes for every Tom, Dick and Harry of a cell phone, demand would go down to iPods. Apple doesn’t care about being “the digital-delivery standard” except to the extent it builds up iPod sales.

The Blackberry item is particularly strange in that the Apple iPhone is aimed squarely at the Blackberry market. Why is Steve Jobs allowing Blackberry users a iTunes workaround?

Also:

There’s little reason to get excited about the Zune, especially since the second million units have sold slower than the first million, despite their generational enhancements and Microsoft’s costly marketing campaigns.

Not a good week for Microsoft.

First, Yahoo and Google are being cliquish and won’t let the Borg play with them on the internets.

And now there’s more bad news from the Zune division. (Team colors: Poopy brown.) The WSJ ($) reports:

Videogame retailer GameStop Corp. plans to stop selling Microsoft Corp.’s Zune media player due to insufficient demand.

GameStop’s already pulled its stock of Zunes from its stores. The media players will be available via GameStop’s Web site until supplies are exhausted. The Zune “didn’t have the appeal” that GameStop expected, a spokesman said.

Adam Sohn, Microsoft’s Zune marketing manager, said in response that Zune sales “have seen good momentum” during the last few months, and that there’s been a “great response to our spring release.”

This didn’t look like that big of a deal until I noticed that GameStop had 4500 retail outlets. Who knew? (EB Games stores are part of the same company, it turns out.) Microsoft has allegedly sold two million Zunes since its debut a year and a half ago. If GameStop had fifteen percent of the Zune market (I’m pulling that figure out of a hat) it would mean the company averaged about one sale per store per week. (Apple, by contrast, is selling iPods at the rate of nearly a million per week.)

Meanwhile, tucked away in the Times today was a story about how Microsoft has quietly stopped scanning books for its Live Search service. In the modern world of search, book scanning is one of the brave new frontiers, and Google, of course, has encountered all sorts of heat for its attempts to scan everything it can get its hands on. The Times:

Digitizing books and archiving academic journals no longer fits with the company’s plan for its search operation, wrote Satya Nadella, senior vice president of Microsoft’s search and advertising group, in a blog post Friday.

Microsoft will take down two separate sites for searching the contents of books and academic journals next week, and Live Search will direct Web surfers looking for books to non-Microsoft sites, the company said.

Nadella said Microsoft will focus on ”verticals with high commercial intent.”

“Verticals with high commercial intent.” And Microsoft wonders why consumers aren’t connecting with its products.

It seems like only yesterday I was reading all those full-page ads for Microsoft’s big plans for “Live Search.” It was in fact just 18 months ago, or right about the time the company started rolling out the Zune.

If I recall correctly, the ads said, “We’re in this for the long haul, or until we decide instead to focus more on verticals with high commercial intent.”

The company’s interest in those verticals, incidentally, will soon come back to bite hapless Zune owners in the ass. Recently, we saw what happened to customers of Microsoft’s previous music service, the MSN Store, when it was shut down last month. (The MSN Store sold music, like the iTunes Store.) The company could have easily transported its customers there to the new “Zune Marketplace.” Instead, it’s basically disconnecting the service. The songs you bought on it, tied up in digital rights management, will work as long as you keep your current computer. But when you upgrade, you’re screwed, and they disappear.

I don’t think too many people will be re-buying the songs from the Zune Marketplace, but I suppose the company could be a little more aggressive in trying to market their way out of this mess.

(Confidential to B.G.: Try to convince folks that “MSN” had nothing to do with the operation that suddenly repossessed all their music. It was the “Store” part, and the new Zune operation isn’t a “store,” it’s a “marketplace.”)

(By the way, Apple uses DRM, too, and it should be noted that, in theory, the company could pull the same sleazy trick.)

Once the Zune, inevitably, gets 86′ed by the company for its poor verticals, no doubt the company will again forgo allowing their customers to move the songs they paid for to a new computer. For that operation, the customers, far from being verticals, will be horizontals, and not face up, either.

It’s hard to write about “DRM,” or “digital rights management,” because just the name—you have your choice of an acronym or mind-numbing phrase—puts one to sleep.

So, imagine this: You’re reading a book—or listening to a CD. Suddenly, the words evaporate off the page, or the music goes silent. You investigate, and find out that there’s a guy somewhere with a magic wand able to make that happen.

That’s basically the state of affairs in the digital age: Many of the things we buy are magically connected to a company that has the power to do that. DRM is the wand.

Certain Microsoft customers will be finding out about this in coming year, as the company announced this week it was ending its MSN Store, which sold DRM-encased songs. The music isn’t going silent right away, but it will, as people move on to new computers; in Microsoftspeak*, folks will not be able to “authorize” the songs on new computers after August of this year. Over time, restrictions in the DRM will mean the customers can no longer hear them. Says Ars Technica:

The news will likely upset a number of Microsoft’s customers, who bought music from MSN Music before the company launched the Zune Marketplace and decided to ditch the old store. Microsoft’s decision to turn off the MSN Music authorization servers serves as a painful reminder that DRM ultimately severely limits your rights. Companies that control various DRM schemes, as well as the content providers themselves, can yank your ability to play the content which you lawfully purchased (and now, videos) at any moment—no matter what your expectation was when you bought it.

Emphasis added. Microsoft has tens of billions of cash on hand, so as a matter of principle it could easily shell out the small amount of resources it would take to keep “authorizing” the songs, or just turn them into mp3s; it could do that to make it clear that the company’s commitment was to its customers; that DRM is there just to stop piracy, not to stiff users.

But then, it wouldn’t be Microsoft.

*Possibly the most enraging word in the digital lexicon, incidentally, is “support.” The email from Microsoft said:

As of August 31, 2008, we will no longer be able to support the retrieval of license keys for the songs you purchased from MSN Music or the authorization of additional computers.

Support in the IT sense is directly synonymous with “trouble our sorry asses to bother to make this work for you so you can use the product we sold you/do your job.” I can’t tell you how many times I’ve had to deal with IT folks to get my staff iTunes, or RealPlayers, or IM programs on their computers, only to be told blandly, “We don’t support that.” You can always get around it, but it typically involves a long educational process with higher-ups, who initially allow the phrase an entirely unwarranted talismanic force.

Culturally not financially speaking, this is disappointing news for anyone who appreciates Yahoo’s special flair in online services, all of which will certainly disappear if Microsoft takes it over. Financially of course it may or may not make sense to Yahoo’s shareholders. For Microsoft, it’s yet another another multibillion-dollar admission of its almost utter lack of consumer sprachgefuhl. Here the WSJ, in a story analyzing Steve Ballmer’s strategies, compares the company’s success selling to companies rather than, you know, actual people:

Despite a tough climate of business technology spending, Microsoft has expanded sales of Windows, Office and new products to companies large and small. One example: Microsoft’s server and tools group has posted more than 20 consecutive quarters of double-digit-percentage growth.

On the consumer side, Microsoft is struggling. Mobile phones, music players and online services have sucked up tens of billions of Microsoft’s profits in the past 10 years. It has failed to make a significant dent in the market share of leaders. The company’s Xbox videogame business has a strong place in the market and will probably make its first profit this fiscal year. Still, the business has lost untold billions of dollars since Microsoft sold the first Xbox in 2001.

Nowhere is the consumer challenge more stark than in online services, where Microsoft has bled money as Google has churned out profits.

Next comes the funny part of the Journal’s story:

Those losses come as Mr. Ballmer followed a proven Microsoft approach to new markets through what executives call “ground wars”: Microsoft’s engineers would build new technologies from scratch and improve them until the company bested a market leader.

That Microsoft would make such a big bid in such an important business is another sign its old ways are no longer working — and that Mr. Ballmer is willing to adjust his thinking to try to remake Microsoft’s culture.

Um, wasn’t the “proven Microsoft approach to new markets” just, uh, waiting for other companies to be successful at something the Borg couldn’t, and then either a) copying them or b) buying them up? (This of course is after the company’s perennial option one—tweaking Windows coding to give its latest product an advantage there, whether consumers want it or not—is thwarted legally.) The Yahoo bid is really an admission that, when it comes to getting actual people to voluntarily use its products or systems, both approaches don’t work.

The offer quantifies one other thing, as well. The Journal refers to some 500 million monthly users of Yahoo services. That number includes many tangential interactions with the company, I’m sure; let’s say Yahoo has 250 million regular users. Microsoft, meanwhile, made an initial $44 billion dollar bid that is likely to rise. In other words, Microsoft, like a rich kid with whom the other kids won’t play, is saying, after years of schoolyard frustration, that it is willing to buy some new friends—at about $200 each.