Seeking Alpha

Seth Gilbert


About this author:

If you type “hate Vista” and “Microsoft (MSFT)” into Google, the search engine returns 91,200 results. “Vista Sucks” and “Microsoft” returns 124,000. It’s no secret Microsoft’s latest operating system offering has its critics. Xbox and Zune owners are far less venomous. Many, in fact, are fiercely loyal to the products that come out of Redmond. This new year, however, the ranks of Zune-faithful may thin by a few.

On December 31st, some owners of first generation 30gb Zunes were forced to ring in the new year with silence after a program error temporarily rendered their MP3 players into digital paperweights.

Some fan forums and web message boards stacked up with complaints.

Microsoft attributed the problem to the Zune’s internal clock driver. Apparently, the program in first generation Zunes was unable to handle the 366 days in 2008, a leap year. The devices crashed when they were connected to a computer that correctly handled the calendar.

It was only a few years ago that Bill Gates singled out the Zune’s software as an area in need of improvement. In 2007, speaking of the first generation devices, he said “it was just so-so on the software side. I’m sure a year from now we’ll do even better.”

It seems he wasn’t exaggerating…. While firmware upgrades made improvements to the older Zunes, the “Leap Year Bug” buried in the "so so" offering went by unnoticed.

There is good news, however. The problem only hit first generation Zunes. Thanks to the Zune’s limited market penetration, that means only a relatively small number of people were impacted. (Microsoft has only about 3% of the U.S. MP3 market (according to NPD) compared to Apple’s (AAPL) 70-plus percent. The 30gb Zune represents only a small segment of that.)

More recent models were free of the Y2K-like bug.

Also good news, the problem was self-correcting.

“The issue should be resolved over the next 24 hours as the time change moves to Jan. 1, 2009,” Microsoft said in a post on the Zune blog.

Not so good is the negative P.R. The Zune’s crash is another blemish on what is already a marred track record for Microsoft’s consumer hardware offerings. A year and a half ago, in July of 2007, the company took a more than $1 billion accounting charge to handle repairs and replacement costs associated with failures in Xbox 360 consoles. The boxes suffering what from what was tagged “the red ring of death” have since been blamed on poor in-house chip design.

Print this article with comments

This article has 9 comments:

  •  
    I am sorry to break the news but Microsoft sucks, their business model has to change the bully atittude towards other buisness it obviously not a good business model that works anymore.
    Jan 04 11:44 AM | Link | Reply
  •  
    OK Seth now tell us how you really feel. Jeez, why not just proclaim MSFT the source of all evil and someone pissed in your cheerios today. There are always 2 sides to every story.
    Jan 04 12:01 PM | Link | Reply
  •  
    Anyone fail to realize this issue only effected year 1 Zune players? That's players that are 3+ years old.

    I wish I had an Ipod that lasted me more than 9 months, these guys have Zune players lasting them 3 years . . .

    Not only that, but they're still using them actively enough for the world to know there was an issue with them!

    Must have some strong consumer satisfaction there.
    Jan 04 12:44 PM | Link | Reply
  •  
    The article clearly states that the big affected first gen Zunes only, which was introduced in November of 2006, not 3+ years ago.

    I have a fourth generation iPod that still does a great job. I got it three-and-a-half years ago. Replaced the battery myself for $18.99.

    When people lie, it's most often because they fear the truth.

    Everyone is entitled to his own opinion; no one is entitled to his own facts.


    > Anyone fail to realize this issue only effected year 1 Zune players?
    > That's players that are 3+ years old.
    >
    > I wish I had an Ipod that lasted me more than 9 months, these guys
    > have Zune players lasting them 3 years . . .
    >
    > Not only that, but they're still using them actively enough for the
    > world to know there was an issue with them!
    >
    > Must have some strong consumer satisfaction there.
    Jan 04 06:10 PM | Link | Reply
  •  
    It's fortunate that the bug didn't affect all Zune owners. That limited trouble to dozens, not hundreds, of people.

    Some say that in recent years, Microsoft has spread its business activities and its marketing messages too wide and thin. I (and my happy 4-year-old iPod) think otherwise. Every seemingly-uncoordinate... activity and apparently-haphazard campaign put forth by Microsoft is actually part of a laser-focused strategy to emblazon a single thought in every mind on Earth:

    "MicroWHO?"
    Jan 04 09:40 PM | Link | Reply
  •  
    Funny - you guys are lucky.

    I had two 20GB ipods. I used both for less than 20 hours. Both broke, HDD failure.

    I have original Zune, no problems, no worries - AND original zune is 100% the same as the new ones, I just have less HDD space.

    Also I was just off in my time frames - not lying. I thought it launched in 2005 November . . In fact, you lie - it launched in september 2006, not November.

    When people lie, it often means they fear the truth.
    Jan 05 01:35 PM | Link | Reply
  •  
    <blockquote>Also I was just off in my time frames - not lying. I thought it launched in 2005 November . . In fact, you lie - it launched in september 2006, not November.

    When people lie, it often means they fear the truth.</blockquote&...

    No, in September they announced its actual, november 14, 2006, launch date, and that month they let some of the trades see a very beta version with really, really bad software (as Bill Gates basically said). It's true that MicroSoft intermittently called <i>that</i>... a launch, but none of the trades followed suit. They all called November 14, 2006, the launch date. You wouldn't have wanted to buy one in September and fortunately, you couldn't.

    To say someone's lying is pointless. the commenter above should have simply said you're doing inaccurate shilling.
    Jan 05 03:56 PM | Link | Reply
  •  
    >>Funny - you guys are lucky.

    I had two 20GB ipods. I used both for less than 20 hours. Both broke, HDD failure.

    I have original Zune, no problems, no worries - AND original zune is 100% the same as the new ones, I just have less HDD space.<<

    What's funny is your claim that you bought a defective iPod, and then went ahead and bought another one.

    Even funnier is the iPod's failure rate is much lower than their nominal competitors, even given the fact that Apple has sold over 100 million units compared to, well, almost nothing among other digital music players.

    Funniest of all is that, even when you had an opportunity to correct your supposed "error" regarding the Zune's launch date, you stil got it wrong.

    Do Microsoft products encourage people to screw up and dissemble, or is it that people who tend to screw up and dissemble are drawn to Microsoft products?
    Jan 06 12:38 AM | Link | Reply
  •  
    I don’t doubt that many or even most Zune owners are satisfied with what they have. Here’s my thing: Apple dove into the MP3 market when that market was already well on its way to maturity. The iPod quickly made a big splash, and iTunes has played no small part in helping the iPod acquire a 70% market share. Apple did not engage in illegal, monopolistic business practices in order to achieve that level of prominence; nor did Steve Jobs hypnotize buyers, steering them towards the iPod.

    When the iPod was released in October of 2001, it succeeded during a recession caused by the terrorist attacks of 9/11. If the current economic climate adversely affected the Zune and other consumer products, then it stands to reason that it also adversely affected iPod sales. Yet, Apple reported a growth in iPod sales for the most recent quarter, versus a 54% drop in Zune revenues. How much better would the iPod have faired this quarter without the deepening recession?

    I believe that Microsoft and its investors need to re-evaluate the Zune with regard to how it affects other products, and how it affects shareholder interests. If I’m a Microsoft competitor — and I don’t believe that Apple and Microsoft compete in the sense that they appeal to very different groups of customers — then I truly hope that Microsoft continues to throw money and other resources at the Zune. Let them and their investors learn the hard way. Again.
    Jan 26 07:45 AM | Link | Reply