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A Race to Reboot
Electronics Makers Try to Get Out of the Blocks With New Devices, but Some of Them Look Familiar

By Mike Musgrove
Washington Post Staff Writer
Wednesday, October 3, 2007

Microsoft brushed up its Zune music-player line yesterday; Sony just updated its Reader device.

Will consumers care?

So far, shoppers have largely shrugged at the gadgets. People who want to carry their digital music with them still prefer Apple's iPod, which dominates the market.

And as for Sony's Reader -- which lets users download books and read them on a screen -- well, so far, people still prefer actual books, finding them easier to use and cheaper than Sony's $300 device.

Microsoft's Zune holds only about 3 percent of the music-player market. Sony's Reader device exists in a market so small that analysts don't even track it.

For Microsoft, the Zune is an ongoing attempt to steal some of the thunder of the iPod, which has 70 percent of the market. For Sony, a company that has struggled to compete in the portable-electronics sector since the Walkman was eclipsed, the Reader is an attempt to build a market from scratch.

Across the $148 billion consumer electronics industry, this is the beginning of the all-important holiday season. Manufacturers are rapidly putting out the freshest versions of their gadgets in the hopes of reaching a wider audience than they captured during last year's holidays.

To try to compete with Apple's latest iPods, Microsoft's new Zune will come with a touch-sensitive button that users can swipe their fingers over to quickly sail through their music collections. Online, users will be able to connect and check out their friends' listening habits through a social-networking feature called Zune Social. And Microsoft just announced that it is adding about 1 million songs that are free of copy-protection software to its online store.

Jason Reindorp, marketing director of the Zune at Microsoft, walked through the new features in a phone interview yesterday. "We're really positioning ourselves as the alternative to the iPod," he said.

Analysts are skeptical about whether this will be the Zune incarnation that starts to get traction in the marketplace, but they also expect Microsoft to keep trying, even if this Zune doesn't turn out to be the one that clicks with consumers.

"They know this market is a big market that won't go away," said Tim Bajarin, an analyst with Creative Strategies. He said the new Zune features aren't innovative enough to cause Apple much anxiety. "I think they're in it for the long term," he said of Microsoft.

The second-generation Zunes will be priced at $149 to $249. Video iPods range from $149 to $299.

Microsoft isn't the only company that would like to take some of Apple's market share. Today, Verizon is to announce a high-end mobile phone, called the Voyager, that features a touch screen -- similar to the one on Apple's iPhone.

Verizon's new phone, built by LG Electronics, offers a few features that Apple's phone does not. The device can open up, for example, revealing a keypad like the one on the popular BlackBerry device. The Voyager also features a removable battery and a slot for memory cards; iPhone users do without those conveniences. Verizon has not announced a price for the device, which is scheduled to hit stores in November.

"A lot of companies are going to be trying to differentiate themselves from Apple this season," said Michael Gartenberg, an analyst with Jupiter Research. "You can expect to hear a lot of: 'This is like the iPhone but better -- here's why.' "

The new, slightly slimmer version of the Sony Reader device comes in new colors and features a crisper screen and enhanced memory. Instead of lugging 80 books around on the device, as on the original Reader, users can now take 160 with them.

That extra capacity doesn't mean much to users who would like more choices in their reading material. Users of the Reader are largely limited to downloading books from Sony. Bajarin, who has tried the new Reader, said he likes the product but wishes Sony's online store had a bigger library.

"I think there is a legitimate market here," he said. "[But] the real issue is the price. The entry price is still too high for mainstream consumers."

Steve Haber, senior vice president of Sony's digital imaging and audio division, maintained yesterday that the Reader is already a "great deal," though he would like to make more affordable versions available.

Less expensive versions of the device may come on the market "as time goes on," he said.

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