The Leslie Report: Zune HD Opens New Category of Radio Listening

Will it be a nudge on Apple?
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Several sources tell me they believe the Microsoft Zune HD product will be available in September. It would be cool if we see people walk around with the devices at the upcoming NAB Radio Show.

Finally! That little KRI armband MP3 player was getting tired of being the sole public representative of iBiquity’s portable efforts.

Microsoft told me there were so many rumors about the upcoming Zune that this seemed like a good time to get the word out to its fans, which is why it made the announcement yesterday. A spokesman said the new model will bring the brand to “millions” of customers.

IBiquity Digital chief Bob Struble said getting onto the Zune platform opens up a whole new category of listeners to radio. The company is especially pleased that IBOC will be built in to the device because its research shows people buy more devices than they do accessories.

We’re reported the upcoming Zune release is the first of several expected announcements regarding HD Radio portables. “We’ve consistently said we’ve been working with other companies. You will see multiple portable products” and multiple price points, Struble said. Look for other announcements, hopefully before the Philadelphia gathering, regarding accessories and radio-only products that are portable, he said.

IBiquity has been working with Microsoft for “at least” a year, coordinating the designing and testing of the new Zune. Though he couldn’t reveal specifics, Bob said this effort was more broad than just giving Microsoft an HD chip to work with.

An embedded antenna will help with reception issues, he said. Microsoft didn’t have a ready answer when I asked whether there was more than one antenna to provide diversity.

IBOC critics may question whether this is all such good news, given that the Zune has been considered by some to be a flop. Certainly Microsoft and the alliance members do have a job on their hands to push this device into consumer hands. According to NDP Group’s Retail Tracking Service, for the first nine months of 2008, Apple iPods made up about 71% of portable digital music player sales in the U.S., while Microsoft had about 3%.

Microsoft tells me those are the latest figures available, though a Wall Street Journal blog stated that Zune sales dipped for Christmas 2008 vs.’07 by some 54% (from $185 million to $85 million), attributable in part to lack of upgrades/new models. Apple saw a 16% decline in iPod revenue Q4 08 vs. Q4 07, but sales up 3%, so people were buying lower-price units.

Talks continue between Apple and iBiquity to get an iPod accessory going. Non-iBiquity sources have told me it’s a done deal and that Apple just didn’t want its name thrown around just yet. Perhaps the Zune announcement will make Apple think differently about that.

I believe the HD portables offer an alternative to drivers who want to hear IBOC in the car but don’t want to go through the hassle of installing an aftermarket radio. Those with newer cars (like me) can just plug in the portable device in the Aux. port in the dash and hear the audio through the existing in-dash system.

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