Until now, Microsoft has tried to downplay the fact that the Zune digital-rights-management system nixes the Windows Media PlaysForSure one that the company was championing until late last year.
However, in an interview this week with Knowledge@Wharton, Microsoft CEO Steve Ballmer finally admits on the record that the Zune DRM system is the one in which Microsoft's putting its future eggs.
"We thought that (PlaysForSure) was a brilliant strategy — [develop] an open ecosystem, get a lot of people [to support it]." What happened? As Ballmer puts it, "In this particular case, the whole was not bigger than the sum of the parts." And, as a result, "Apple — with one model that was simple and consistent — wound up taking 75%-80% of the market."
"So we said, 'Okay, what do we have to do here?'…. We had to make the market, not just let our partners make the market…. We needed to get an absolutely consistent…user experience [and] retailer experience…. We said, 'Look, we've got to take a different approach, build a new ecosystem and, by the way, we better do something that Apple hasn't done.'"