Zune Viral Marketing

In its newest attempt at viral marketing Microsoft has created a buzz about a new product brand called Zune.  Just confirmed on Friday, searching on this Seussian term on Google News is already finding over 500 stories about it and the list keeps growing. 

Nobody really has what I consider solid specs about a product yet reputable news organizations have swallowed the bait and many analysts have jumped on board discussing how it will compare to the Apple iPod.  I have some decent inside sources at Microsoft and nobody really seems to know what the final product will be.

This isn’t the first I’ve written about Microsoft’s viral marketing approach.   In March, the Blogsphere was full of ::ahem:: leaks about the Origami Project.  I thought  it was all a plan to take advantage of the legal problems which almost caused the demise of the Blackberry. Luckily the Blackberry company, Research in Motion survived and we haven’t heard much more about the Origami Project.

I’m going to take a pass at Zune for now.  I get suspicious when I hear Microsoft describing a product as…  “It’s Microsoft’s new, holistic approach to music and entertainment.”

I see the whole Zune brand timing as more of a diversion. If the press is discussing a Microsoft iPod than they’ll ignore other stories like product delays. More than likely it’s part of the strategy to build up the Xbox (Home & Entertainment) division which recently reported a 1.26 Billion loss.  Amazing how that got so little press thanks to the timing of the Zune announcement.

Microsoft is proud of the base of 5 million Xbox 360’s users worldwide but they still lose money on every box they sell. According to the company…

“Our business model anticipates that while we currently sell Xbox 360 consoles at a negative margin, product cost reductions and the future margins on sales of games and other products will enable us to achieve a positive margin over the Xbox 360 console life cycle."

I hope I live that long!