J Allard: Microsoft’s Plan to Be King of All Media

By Saul Hansell
J AllardJ Allard of Microsoft. Photo: John Froschauer/Associated Press

In November 1994, I had breakfast with Nathan Myhrvold, then the chief technology officer of Microsoft. He talked about how the soon-to-be-introduced MSN online service would best America Online. Central to his thinking was that MSN would give publishers a higher percentage of the per-minute fee for using the service. This would draw more content and thus more users to Microsoft and allow it to earn a smaller fee on a larger block of minutes.

This strategy was misguided for so many reasons. Most notably, the open standard of the Internet allowed publishers to reach out directly to users, without MSN or AOL as the tollbooth.

That conversation jumped into my head as I talked earlier this week with J Allard, a key force behind the Xbox who is now driving the Zune music player business (and, he said several times, a few other secret product efforts).

We talked about the Zune and Microsoft’s approach to cellphones, about which I’ll post shortly. The most significant thing he talked about was the way the company is building an online service that will be the back end for all sorts of communication and entertainment. Xbox Live, the rather successful online aspect of Microsoft’s video game franchise, uses the same back end as the far less successful online service for Zune. Indeed, users get one account for both.

This service will at some point add more options for video and mobile phones, Mr. Allard said, without offering details. Actually, Microsoft has been quite successful selling video downloads and online movie rentals through the Xbox Live service already.

This seems a bit too much like the initial plan for MSN. This new network would be the switchboard through which all entertainment content and communication flows.

Pretty much everything else in the technology world now is revolving around open systems where the Internet, and some simple standards, are in the middle. The biggest and most interesting exception is Apple’s iTunes, which has a shot at extending its central role in music to video and mobile applications. (I think the odds are against it, but I’m not sure.) But how does it make sense to compete with a market-leading closed system, and the enormous momentum of open systems, with a proposal for a monumental everything-is-better-if-it-goes-through-Microsoft megaservice?

Here is what Mr. Allard said about these plans.

Even though the Zune and Xbox product brands are separate, they are ultimately meant to connect to the same central network.

The Zune guys have to run really fast. The Windows Mobile guys are on a two-year release cycle. The Xbox team now needs to focus on cost reduction, distribution and quality process. Everyone is on their own cadence. The one thing that transcends all this is the network as the nexus.

If you are in an MP3 aisle, we want to be the connected MP3 player. That’s mainly connecting artist and audience together, mostly around the culture of music. Yes, we’ll do video. Yes, we’ll do games. But the heart and soul of that brand is music.

Xbox is the most connected game experience. When you go down the gaming aisle, you’ll see we can do things others can’t do. We keep hitting on the idea of connections.

The online services for Xbox, Zune and future products will merge.

Today we have Xbox live for $50 a year. We have Zune Pass at $15 a month. We don’t have a rationalized premium version yet. Fast forward a little bit, and you can image a menu like DirecTV. There is basic, there is enhanced, there is movie pack and NFL Sunday ticket.

Video will be a key part of this service.

What I want to do at E&D [the entertainment and devices division] is build an entertainment service that can connect, that has a screen and buttons and a speaker, so you can watch what you want, where you want, how you want.

Maybe the business model for you is rental. God bless you. Maybe you want to download and own it. Maybe you are a physical goods guy. You want to prove you have physical goods, and watch on the seatback while you fly to New York. Say you like the phone. Maybe you are a commuter, and what you are all about is ESPN. I’ll give you ESPN your way. You like Formula One, downhill mountain biking and ice hockey, I will show you a SportsCenter designed for you.

Content providers like ESPN, in this vision, will need Microsoft to handle the technical details and marketing of selling their products.

We go in as a platform company and say to ESPN that we can offer preference information so you can curate programs in a way that has never been done before. And you don’t have to worry about multiple formats; we do it all for you on the back end. And you can reach all these eyeballs without lifting a finger.

Comments are no longer being accepted.

Christiano November 16, 2007 · 2:04 pm

Sounds like Bawlmerese to me. What did he actually say? That Microsoft wants everyone to be forced to go through them and no one else? Well, duh. That’s not exactly a plan is it. Maybe M$ should try to get a nuke and hold everyone hostage.

Richard November 16, 2007 · 2:05 pm

Another dump-on-Microsoft rant?
While Microsoft certainly isn’t perfect (which large corporation is?), Microsoft has been a leading innovator that has enriched our world.

KMCGAR November 16, 2007 · 2:19 pm

I thought we already had a “King of All Media”. Does not Mr Howard Stern hold that title?

coolrepublica November 16, 2007 · 2:26 pm

I have to give credit where credit is due. Xbox Live is a cohesive product. No complaints there. People who use it seem very happy. Steve Ballmer should watch out. I see a rising star.

But now that Google(I could not resist. Sorry Mr. Allard) is practically in the phone business, and may possibly become a carrier, it will be a stones throw away from entering the video game business(GBox). Isn’t that right Nokia?

Apple fanboys, hold the firing squad.

Daniel November 16, 2007 · 2:51 pm

I have Xbox live, a Zune, windows media center PC with tv tuner and I hope what I have set up for my ultimate expieriance is the same or better in the future. All MS, and all peices of my digital enviroment are easy to use, and work well to keep me entertained. 360 lets me watch all my Video off my computer and watch live TV from my computer, I rent about 2 movies a month from Xbox live and I play lots of Halo, Call of Duty 4, Madden, orange box and Bomberman LIve.

If I watch TV, I use Microsoft software, play games MS, listen to music, MS. watch dvds, rent movies, buy seasons of TV shows I did not record MS. You can watch media center recorded tv with your Zune with that free app and now an automatic zune update will let me do it easier, to watch shows on my commute. I am happy to see an update for full support.

You could say he wants to be King, but in my house Microsoft is Kill,

Since a lot of people hate Microsoft, there is a cheaper way to get completely connected like I have, but I am not a nerd and do not want to waste my time trying to figure that stuff out, when you can call microsofts customer support and they walk you throught it just does not get better than that.

coolrepublica November 16, 2007 · 4:23 pm

Daniel#5,

Wow! God forbids your Xbox gets the ring of death the same week your media center computer crashes, I am afraid that you might not make it.

#2

MS fanboys rival the Apple fanboys in overstating the facts.

“Microsoft has been a leading innovator that has enriched our world.”

This quote is classic. Have some t-shirts made.

Elder Norm November 16, 2007 · 5:39 pm

While I use MS OS at work, I have way too much trouble with it to bring it home. I use iTunes as a jutebox, some generic mp3 players and actual DVDs for movies. Call me old fashioned but, in general, I am pretty happy.

If Vista ever gets its act together, I may consider media center, but I am not holding my breath. Hmmm, might be time to give Apple a try??

Elder Norm

Ayrkain November 16, 2007 · 5:45 pm

Allard is a rising star, and Ballmer should look out, but no one in the MP3 market is in any danger from the Zune. I’m glad Live works for people (and it does so well), but others want to do something besides point and shoot with a games console. Zune is cool, but the store program is terrible. Media Center is neat, but you basically have to be prepared to build your system around it, buy an expensive pre-built, or upgrade a cheap pre-built. MS has a loooong way to go before it’s “King of All Media”.

Marc November 16, 2007 · 5:52 pm

Leading innovator… hahaha! The product they made their billions off of was a product they didn’t even innovate! And off the top of my head I can’t think of a single innovative, market-changing product they’ve created. Microsoft’s a me-too company and they use their monetary leverage to push better products from smaller companies out of the marketplace.

This is all par for the course for Microsoft. All their attempts at business strategies in the web space have been centered around locking users into their network. Now it may work in locking in some users (i.e. Daniel (above)) who are just too lazy to bother or completely apathetic about a company literally owning them and their personal information, but closed networks are on their deathbed. Open networks are the future and will ALWAYS beat closed networks. But the concept of open is so completely foreign to Microsoft, there’s no way they’ll get it.

Koen van Hees November 16, 2007 · 6:09 pm

Not to belittle good marketing – they are king, both in the good, bad and ugly marketing wise – MS’s saving grace, product wise and innovation wise is creating a good developers environment. The rest? Bought and stolen.

Evan November 16, 2007 · 6:54 pm

Every time I read an article about Microsoft it inevitably leads to people proclaiming how their products always break in the comments section.

Personally, I have been running Windows Vista since launch without a crash. I had Xbox 360 from launch and it never got a RRoD. I now have a 360 Elite which has also had no problems.

Looking objectively at the Zune at the iPod it was pitted against when it was released, that was a no brainer decision. The original Zune had a lot more to offer than any iPod ever had. With the exception of the iPod Touch, the Zunes easily beat the competition in terms of functionality.

It is obvious to see where Microsoft is going. Media Center, the 360, and the Zune, are all becoming integrated. I can easily take my photos, recorded TV, and music from one product to another. It will only be a matter of time until the content on Xbox Live will be available for the Zune and Media Center. How is this a bad thing?

It would also be laughable for someone to suggest Apple isn’t trying to do the same thing.

roark Burney November 16, 2007 · 9:06 pm

M$ has no hope of toppling apple. As good as xbox is, windows is not, and, in my opinion, neither is Zune. They lack the ability to come up with a feature that we want that doesn’t require everyone buying the product.

dave November 16, 2007 · 10:21 pm

With MS, heaven is always just around the corner. Soon, they’ll have everything working just the way you want it. Then, when they actually deliver something, they go, oh, we didn’t have time for all that stuff we said it would do, so be happy with whatever you get and wait for the next rev, which will have everything we promised in the past plus these new things. Just you wait…

CK November 16, 2007 · 10:26 pm

Microsoft is digital slow death, the term innovate should never be used in reference to it. What Bill Gates is is the world’s greatest salesman. The author is correct, you gotta wonder how they get the nerve to suggest they should hold a central role in modern media. Microsoft is exactly who I don’t want managing my access to anything at all.

Bryan November 16, 2007 · 10:52 pm

I wonder how many people that are commenting on this forum actually know or remember PC and Media before Microsoft. 1980 is is a long time past and the only apt quote (by Newton)that fits Micosoft is “If I have seen further it is by standing on the shoulders of Giants”. And to apprecaite what I’m talking about you really had to live through the 70’s, 80’s and 90’s.

Young C. Kim November 17, 2007 · 2:08 am

No matter what people say, the inventions and ideas
Microsoft provides are doubtless, practically.

Kontra November 17, 2007 · 7:10 am

In “Zune 2: Mediocrity grows on trees” I contrasted the approach MS took with Zune 2 against the iPhone:

//counternotions.com/2007/10/03/zune-2-mediocrity-grows-on-trees/

In “In the shadow of the iPod: Microsoft Zuning out of the Social” I explored Microsoft’s ineptness at being cool:

//counternotions.com/2007/11/06/zune-no-longer-social/

And after considering Microsoft utter failure in competitive consumer markets (XBox *is* a financial disaster), I invited the MS board to finally fire Ballmer in “Consumer markets: Time for Microsoft to exit?”:

//counternotions.com/2007/10/12/microsoft-vs-consumers/

horus November 17, 2007 · 7:17 am

As was said, M$ is trying their cut-n-paste tactic of invading a market built and innovated by brighter brains than theirs and attempting to claim it in their name by locking it down under their network. I dont think M$ has been the “first-to-do-it” in any media at all. The Zune didnt come out until ipod was long since established and delivered nothing new.

The solution to marketing is not to take over the media by forcing people into a network. The guy even mentioned all the fees (and fee rates) for Microsoft subsciptions. If this network is ever established, buying a basic account will only let you turn your devices on. A subscriber account lets you experience demo versions of tv, games, music. etc etc etc… this is the same old microsoft business model.

The real shame is that this company has limped along so long with these tactics that the bright and young assume this is the way to succeed. All the new talent is recycling the same playbook and it cannot work forever. Microsoft is losing ground for the first time in its history and is trying to make up for it by grasping at straws. In the end, it will be a minor subscription service like AOL.

Nathan Kurtz November 17, 2007 · 9:39 am

“M$ has no hope of toppling apple. As good as xbox is, windows is not, and, in my opinion, neither is Zune. They lack the ability to come up with a feature that we want that doesn’t require everyone buying the product.”

Wait, don’t you always have to buy the product to get the feature? I can’t get ice from my fridge unless I bought a fridge with an icemaker.

camel jockey November 17, 2007 · 11:02 am

I couldn’t decide whether to laugh or gag. Anybody who works for or uses Microsoft is a loser. The very name Zune is a permanent embarrassment which will live forever. Microsoft long ago stopped being innovative, and now they just put out junk.
If it ever got to the point where all things went thru Microsoft, I would have to resort to sending envelopes filled with anthrax to Redmond.

Roy Fox November 17, 2007 · 11:24 am

I actually see this as a good model for Microsoft. Lets them capitalize on their existing technologies in other formats. I think the entire industry now is at a point where there are a lot of services, so converging them is a step in the right direction. Plus I see this as the first good idea Microsoft has had in a while that hasn’t come about just because Google did it.

rocco November 17, 2007 · 12:17 pm

What a waste of time. This freak should join a circus and peddle snake oil. No wonder MS is going down the tubes.

snitch November 17, 2007 · 1:43 pm

the kid got lots of hopes but the truft is that microsoft will never be better than apple at nothing, why? Windows vista for example, microsoft has to catter it to hundreds of Pc manufactures, Apple in the other hand Catters to only Apple, when they fix a bug on a system thats it there done, microsoft fixes a issue on a dell an that same fix conflicts on a Sony or a Hp, and they are back at square one. but my guess is microsoft could be worse and there not, thats why apple will never open up to others because they have learned that already from microsoft

ADAXL November 17, 2007 · 2:29 pm

The big problem with MS is that they have become autistic. Microsoft makes products that work only with other Microsoft products, and sometimes not even that. The MS Media Player for Mac and MSIE for Mac went dead years ago. None of Microsofts new media products work on any other platform than Microsofts own.

This gives users the impression that they are totally locked in. No good policy.

Joe November 17, 2007 · 2:44 pm

Apple did not invent the DAP so get over it. They, like MSFT, take ideas and make them better. Both do good and bad things. To say Apple is an “open, friendly innovator that only cares about the customer” is blind loyalty at best. Apple, just like MSFT, want to dominate and control their markets. Period. That’s what *for profit* companies do. If they didn’t, they’d be *non profit* companies.