Yesterday Microsoft unveiled its Xbox Music service, which is essentially service a blended service offering; subscription, personalized radio and al-la-carte download service rolled into one. It is the first fully released end-to-end offering, which delivers a mix of consumption offerings along with desktop, mobile, web and tablet usability.
However, let’s not forget Microsoft has to date had a pretty dismal record in the digital music space. Anyone remember Zune? Despite this TMV does believe this latest foray has the serious potential to be a total game changer in terms of digital music consumption and market share between services on a global basis.
Surprisingly, TMV believe Xbox Music ticks all the boxes and that it delivers what iTunes should have provided years ago. In the process Microsoft has also no doubt that this launch has irked streaming music services like Spotify, Deezer and Rdio, with its offer of 6 months free use of its streaming and personalized radio service. Not one of the aforementioned streaming services can offering six months of free access to their streaming services.
So, what are the positives in Microsoft’s favor that could potentially provide a serious threat to Apple’s monopoly status in digital music? Firstly, there is the fact that Apple OS X makes up only 12% market share whilst the windows OS makes up the lions share with over 80% on a global basis.
Why does desktop OS market share matter? Quite simply because with this new Xbox Music offering it comes pre-installed within the Microsoft OS – that in itself delivers incredible market-share potential, which surpasses Apple’s market share options in the desktop arena by a very wide margin.
Delivering the king-hit is the fact that analysts estimate Microsoft will shift 350 million units of its OS by the end of this year alone. This makes Deezer and Spotify’s combined free subscriber base of 50 million combined look insignificant by comparison.
Secondly, Xbox already has over 150 million registered credit cards from users of its current games service. This immediately brings Microsoft close to a level playing field in terms of current billable subscribers. This is the area that should scare Apple, as registered billable customers, is generally the hardest area to scale for new players in the digital content marketplace. Reinforcing this is the fact Xbox was a gaming platform that has now been evolved into a total cross content and media platform.
What should really scare Apple is the fact they do not have such a sizable registered gaming community from which to call upon, little own such a dynamic gaming platform. All in all if executed properly the fact Xbox Music combines multiplatform with a blend of access, ownership and personalized radio – it could represent the single most important music place of this second decade of the 21st century.
On the flip side, what are the key areas that may suggest Microsoft will not deliver on the hype?
Firstly, there is the obvious fact of several previous failures in the music arena from MSN music to Zune. Intertwined with this was lack luster user experience coupled with poor operational execution and devices that quite frankly were as appealing as a brick. So, Microsoft’s history is what is working against Xbox Music.
It is unarguable that user experience will be one of the critical factors in determining the success of Xbox Music. Seamless usage between devices including desktop, tablet and mobile will all be key to ensuring optimum consumer uptake.
However, the fact Microsoft holds only a tiny 7% market share in the mobile OS space is a massive mountain to climb and one which it must do as a matter of urgency if it is to serious take on Apple and it’s iPhone little own Android which is outselling iPhone on a 4:1 ratio on a global basis.
A key advantage held by Apple is that its iTunes platform works across both the PC and iOS platforms. It will be hard to wean the Apple sheep of their addiction to low spec’d and substandard quality component iPhone’s regardless of what desktop platform they use. In this respect Mobile could well be the key battleground that determines the winner in this shoot-out of the titans.
The fact that Xbox Music is bundled into Microsoft’s OS may present some problems for Microsoft both in the US and EU in terms of anti-competition – anyone remember the IE anti-trust court case? However, the fact remains iTunes comes bundled as part of all Apple iOS sales and so technically it could be stated Apple is in the same boat – apart from the market share differences between the two competitors…
Overall, TMV are excited by the Xbox Music offering and do see it as the only real fully integrated service to be launched to date. We hope music fans are also as excited as we are. Most importantly we hope Microsoft is able to execute a groundbreaking user experience, which cannot be faulted – as this will be the deal breaker!
