What Microsoft must do to make Zune a success

More features, drop 'the social'

3. Get some flash

A 10 percent market share isn't much to brag about, particularly when that's only 10 percent of the small hard disk-based media player market. What Microsoft desperately needs is a flash-based player, the analysts agreed.

"Microsoft needs an entry-level or lower-priced flash model," Chen said. "They're targeting a younger audience and those people don't necessarily have a lot of money. With Apple, a lot of people start with a Shuffle or nano, then upgrade."

Developing a flash-based player was one area in which Reindorp was circumspect.

"We're looking at how we can evolve the device family in terms of new shapes, price points and technology," he said.

4. Push subscriptions

One of Microsoft's biggest potential assets is currently a liability: Its use of a subscription model for providing music to its users.

Like the iPod/iTunes combo, Zune is paired with Zune Marketplace, from which users can purchase and download music. However, unlike iTunes, users can also subscribe to Zune Marketplace and, for about US$15 a month, download all the music they want. They can continue to play the music on their Zune as long as they keep paying the monthly fee, kind of like paying rent for the music.

Similar plans are available from other vendors such as Rhapsody and Napster, but Apple has stoutly resisted offering a subscription option, insisting that customers don't want it. However, McQuivey said the subscription approach could become a key point of differentiation for Zune.

"Subscription music is a benefit that almost nobody understands," McQuivey added. "But the reaction is amazingly positive once people try it. If I were in Microsoft's shoes, I'd focus on the benefits of subscriptions, how, if you use the device that way, you can get millions of music tracks overnight."

Added Chen: "They haven't exploited [subscriptions] enough. They have to go back to when Apple first started and they used iTunes as a way to sell iPods."

Reindorp said the subscription service is essential to Zune, but Microsoft is looking at new options.

"The subscription service was a solid move on our part," he said. "We've seen 65 percent growth in our subscription base, although the number is still small. It could be better and it could become different -- we're looking at what other flavors of subscriptions there could be."

Among the options the company is looking at is pricing the subscription service like cell phone service.

"We've been looking at the subscription model where you pay a certain amount and you essentially get the cell phone for free," he said.

5. Make it sexy, make it work

Few would maintain that Zune is as sexy as the equivalent iPod. Nor does it have as many features. Both are issues that Microsoft must address soon, Rubin said.

"The devices itself isn't as sweet and sexy as the market-leading competition," Rubin said. "And they have a lot of catch-up to do in terms of features -- podcasts, games and things like that. These are personal entertainment devices and these devices need more sex appeal."

Insisted Reindorp: "Sexy is a subjective term. But in our research, the colors and color treatment scores high. Also, we're looking at an urban, inner city demographic, and some say that demographic leads fashion trends and we score well with that demographic."

Not the least of that catch-up has to do with simply making the device work well. Some Zune users expressed their vexation in blogs that the product was buggy and, this week, Microsoft released its third Zune firmware update. That update addresses problems related to synchronization and songs downloaded from Zune Marketplace not playing back correctly.

Overall, Reindorp said Zune's first five months have gone about as expected.

"We're looking at the introduction of Zune as being a matter of months and years, and not weeks and months," he said. "Stay tuned because we're going to continue enhancing the design of the devices."

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