Comparing Microsoft Surface to Zune Music Player a 'Low Blow,' Analyst Says

The analyst firm Canalys compared the coming Microsoft Surface tablet with the company's ill-fated Zune music player, but another analyst, Rob Enderle, considers the comparison "snarky" as well as premature.

The U.K.-based tech industry analyst firm Canalys got some media attention recently by predicting that the Microsoft Surface tablet will suffer the same fate as Microsoft's failed foray into the MP3 player market with Zune, but a Silicon Valley-based analyst said the facts aren't in yet to make such a judgment.

"It's difficult to do a comparison when certain elements of the product are not yet in evidence," said Rob Enderle, principal analyst at Enderle Group. "It's premature and … a very negative view."

Canalys, in a report released July 31, predicted that the Surface, when it goes on sale Oct. 26, will be too expensive to make significant sales in the crowded and competitive tablet market dominated by Apple and Samsung. One Surface model will run Windows 8 RT, for models with ARM processors, while another version will run Windows 8 Pro for devices with x86 processors.

"The information available to date suggests the prices of both will be too high to capture significant market share, and a direct sales approach will prove inadequate. We expect the Surface pads to have a similar impact on the PC industry as the Zune did in portable music players," Canalys analyst Tim Coulling stated in the report.

The Sweden-based blog pegged the starting price for the Windows RT-based Surface at about $1,000 to $1,450, depending on the memory capacity, and the Windows 8 Pro version at $1,885 to $2,175. Other sources have pegged the starting price at $600.

But Enderle said that's just speculation, although he added that the x86-based Surface will likely come close to matching the price of the Apple iPad, which starts at $499 and rises from there, depending on memory capacity and whether the iPad carries a data plan from a wireless carrier or just connects to the Internet through WiFi.

Canalys also claims that the fee to license the Windows 8 OS to original equipment manufacturers (OEMs) is too high and that manufacturers, such as Hewlett-Packard, Dell, Lenovo and Asus, are further irked by the fact that Microsoft is competing against them by bringing its own Surface tablet to market.

Enderle, however, said OEMs get something in return for that license fee, namely cooperative marketing dollars that promote Microsoft Windows and the OEM brands of desktop and laptop PCs and their tablets. He notes that Google gives away its Android OS for free but, by doing so, provides no marketing support to OEMs. Apple doesn't license its OS software; it only goes into Apple-made devices.

The Zune was introduced in 2006 as a challenger to the Apple iPod music player, but it never caught on. Microsoft stopped making Zune hardware in 2011 and in June 2012 discontinued the Zune brand name, changing the name of its service for downloading music and videos to Xbox Music.

But Enderle said the Zune debacle is an anomaly-that a unique team was assembled to create the product that was dominated by people from the recording industry who didn't know hardware and software as much as the Microsoft members of the team did. By contrast, the Surface was developed by the Windows team, which has a much better history of success than the Zune team. Furthermore, Microsoft is making both the hardware and the software and plans to sell the Surface in its own chain of Microsoft stores, both successful attributes of Apple.

Enderle said the Canalys Zune characterization of Surface is akin to comparing every vehicle the Ford Motor Co. has made over the last 50 years to the Edsel. He said he believes Canalys made the comparison to Zune to get attention.

"It is kinda snarky, and it looks like they're punishing Microsoft for something," he said.

In a related move, Microsoft announced that the user interface (UI) for the Windows 8 RT version, which has been dubbed "Metro" in its media releases, is not the name it will use when the new OS goes on sale, also on Oct. 26. According to various news reports, Microsoft hasn't yet said what the new UI name will be. The UI formerly known as Metro uses a series of tiles on the start screen to identify various applications, such as Office, Outlook or PowerPoint, and is a look borrowed from the Windows Phone 7 OS.