In the consumer space, we are hearing about a big shift to advertising-supported business models--a lot of predictions that consumers are going to spend less on software generally. What do you see as the role of ad-supported software?
Bach: What you are going to see is a diversity of business models. I think people are going to continue to buy packaged software--I'm a firm believer in that. It's a way people are comfortable with buying. I think that people will buy that packaged software in a store sometimes. They might buy it online. The idea that somehow people are going to stop buying physical goods is just wrong.
On the other hand, I do think download models are a valid model, and I do think ad-supported models are a valid model that people will add. You'll see us doing more ad-supported work across all of the things we do. In each of our platforms, we do work to support that type of advertising model, so that other people can do it. It's not just a Microsoft thing.
The real challenge on a phone and on any small device is, "What is the ad model? Is it the same ad model that we see happening online on the PC?" I'd be a little skeptical of that myself. Maybe it's more commerce-based on a phone. Maybe it is more location-based.
Another area that has been important in the mobile device space has been music. The biggest thing Microsoft has been doing in the music area lately has been Zune. What is the role of Zune in the phone market?
Bach: We get asked the question a lot--about whether we are doing a so-called Zune phone or some kind of phone device that plays music.
The Zune team is off to a good start and is very focused on delivering the music scenario on a music device. You can assume that's where we are going to be focusing most of our attention.
Now the company as a whole is very involved in the music space, across the board. We're doing a lot of work with operator partners who want to bring out their own music services. We continue to invest heavily in our video and music codecs, and in our DRM technologies around those products.
People have talked about the idea of a Zune phone. That wouldn't necessarily be the only way to get Zune content onto a phone. Presumably, any Windows Mobile phone could play Zune content, if you guys decided to go that way. It could be hardware partners. Do you see all of those as potential possibilities?
Bach: Any of those are possibilities in the future. Think of it as us being focused on music on a Zune device. That's our primary goal right now.
So things like having different form factors of traditional music players, video services--those things would be higher on the priority list?
Bach: Basically, expanding on the things we've done with Zune already is the top, middle and the bottom of the priority list right now.
It's taken Microsoft a long time to get to the place it is at in the phone business. What are the key things that the company still needs to do in the phone area?
Bach: Windows Mobile 6 is a huge stride forward. Of course there is more work we can do. One of the key milestones we have reached is getting great hardware design and great operator integration. As you look to the future, it's now taking advantage of that.
I actually think brand development is important to us in this space. If you look at a bunch of the devices out today--cutting-edge things like the Q and the Dash and the BlackJack--getting people aware that those are Windows Mobile devices, and that when they go into a store that they want to ask for a Windows Mobile device, is an important objective for us.
Today, people actually don't think about the company RIM (Research In Motion) as much as BlackBerry the brand. We want people when they think about these handsets, not so much thinking "That's a phone from Microsoft," because it's not. What we want them to think is "Oh, that's a Windows Mobile phone and that's what I want."
Who do you view as the most serious competitors in the phone space?
Bach: Certainly the two people that have the most attention here would be RIM/BlackBerry and Nokia/Symbian. We're ahead of RIM/BlackBerry today. We're still behind Nokia. They do a lot of feature phone work, so that makes the volume comparisons really tough for us. In the business space, certainly, we think we're getting tons of traction, even in competing against Nokia.
On the Xbox side of things, is there any update there?
Bach: Xbox continues to go quite well. We continue to see the kind of market momentum we had coming through the holiday. January went, I'd say, as we planned it to go. It's always a good month.
The game lineup continues to look awesome. Gears of War has continued to sell very well, and as an online phenomenon, is really driving Xbox Live in a big way.
So the shipment cut on Xbox is really just an inventory thing, then?
Bach: It's all part of managing the business. Everybody always asks me, "So when are you going to make money?" We've told people we're excited about the volume we're at. Getting to 10 million was a big milestone.
But we've also told people that next year, we're going to make money and we're going to run the business to make money. Given where we see competitors priced and where we see their volumes in the marketplace, we feel great about where we are. We're taking the opportunity to make sure we are optimizing the business model. That may mean a few fewer units in the short term, but we think it means a bigger and better business in the long term.
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i have a addition to the zune that would be an easy softwear fix that would make the zune unbeatable to the ipod
Posted by alan ross on Friday, April 06 2007 01:51 AM