Overview / Main Features
Microsoft's Zune digital media player is a competitive entry into a consumer electronics market dominated by the Apple iPod [and iTunes]. The Zune attempts to differentiate itself with its wireless music sharing and syncing (via WiFi) as well as music discovery service on a proprietary software platform similar to Apple iTunes. Microsoft's strategy to transform music players into social networking devices was received with limited market acceptance. To date, the Zune platform commands only about 3 to 4% of the North American market (where it is sold exclusively) some 2.5 years after introduction.
Aside from the inclusion of WiFi capabilities, the 80GB hard disk based media player sports a large 3.2 inch color display along with an integrated FM radio. These 3 prominent features arguably best the similar-in-class 80GB Apple iPod media player. Microsoft further differentiates the product by offering personalized "tattoos or etched graphics on the rear casing of the player. The media player is powered by a Freescale applications processor and features a novel touch pad controller with a pair of physical control buttons.
Mainstream media player consumers
Per press releases, first release on November 2007.
- North America
For the purposes of this teardown analysis, we have assumed a lifetime production volume of 3M units.
As a reminder, teardown volume production assumptions are primarily used for our cost analysis in terms of amortized NRE and tooling costs, especially for custom components specific to the model being analyzed (mechanical components especially). Unless assumed, volumes increment by an order of magnitude. Minor changes in volume (say 1 million vs. 2) rarely have a large net effect on our final analysis.
Microsoft is a relatively new entrant to the portable digital media player market. To date, the Zune has only been made available in the North American market (US & Canada). Other, more popular, media devices such as the Apple iPods are globally available and enjoy a large install base. In terms of comparative market performance [specifically in the US] the Zune product line commands only a small fraction (3 to 4%) of the overall digital music player market and even smaller share in the overall PMP/MP3 player market.
Main Cost Drivers Representing ~83% of total materials cost
Toshiba - MK8022GAA - HDD - 80GB, 1.8', 3600rpm, ATA-3/4 Interface, 16MB Buffer, 99MB/s
Samsung - LMS320GE01 - Display Module Value Line Item - 3.2' Diagonal, 65K Color TFT, 240 x 320 Pixels
Freescale - MCIMX32M6VK - Application Processor
Taiyo Yuden - WYSBCVSX2-xx - WLAN Module Value Line Item - 802.11b/g
Amperex Technology Limited - Battery - Li-Ion Polymer, 3.7V, 700mAh (Estimated), w/ Charging/Protection Circuit
Wolfson Microelectronics - WM8350G - Audio Codec/Power Management - HiFi Audio, Stereo, DAC, ADC, Programmable HP Filter for ADC, 6 DC-DC Converters, 4 LDO Voltage Regulators, Integrated Battery Charger
Enclosure, Main, Back Panel - Stamped / Formed Aluminum, Anodized, Etched, w/ 2 Spot-Welded Aluminum Inserts
Hynix - HY5MS7B2BLFP-6 - SDRAM - Mobile DDR, 512Mbit (16M x 32bit), 166MHz(CL3) / 83MHz(CL2), 1.8V
Display Window - Glass, Black Paint on Edges, w/ PSA
Wus Printed Circuit Co. - 8-Layer - FR4/RCF HDI, 2+4+2
The total materials and manufacturing costs reported in this analysis reflect ONLY the direct materials cost (from component vendors and assorted EMS providers), AND manufacturing with basic test. Not included in this analysis are costs above and beyond the material manufacture of the core device itself - cost of intellectual property, royalties and licensing fees (those not already included into the per component price), software, software loading and test, shipping, logistics marketing and other channel costs including not only EMS provider and the OEM's margin, but that of other resellers. Our cost analysis is meant to focus on those costs incurred in the manufacture of the core device and exceptionally in some circumstances the packaging and literature as well.
OEM/ODM/EMS Relationships / Manufacturing
Since Microsoft's core competency is within software, they naturally have to outsource all of their manufacturing to EMS partners. According to iSuppli EMS/ODM analysts, we believe Microsoft leverages a division of Toshiba to manufacture the Zune media players.
Country of Origin / Volume Assumptions
Based on markings, the unit was assembled in China. Furthermore, we have assumed that custom mechanicals (plastics, metals, etc. were also sourced in China.
Country of origin assumptions relate directly to the associated cost of manufacturing, where calculated by iSuppli. In the cases of 'finished' sub-assemblies (such as display module), we do not calculate internal manufacturing costs, but rather assess the market price of the finished product in which case country of origin assumptions may or may not have a direct effect on pricing.
Remember also that labor rates are applied directly only to hand inserted components and systems in our bill of materials, and although regional assumptions do, these new rates do not have a direct effect on our modeled calculations of placement costs for automated SMD assembly lines. ""Auto" inserted components (such as SMT components) placement costs are calculated by an iSuppli algorithm which allocates a cost per component based on the size and pincount of the device. This calculation is affected by country or region of origin as well.
Design for Manufacturing / Device Complexity
The Zune80 media player has a component count of 418 (excluding box contents), of which, 65 are mechanical in nature. This device complexity metric is very comparable to the 452 pieces within the Apple iPod Classic previously analyzed by iSuppli (which also happens to have a 80GB hard drive).
Component counts have a direct bearing on the overall manufacturing cycle times and costs, and also can increase or decrease overall yields and re-work. Our calculations of manufacturing costs factor counts and more qualitative complexities in the design. The cost of manufacturing is also, to some extent, decreased in this case because of assumed labor rate applied for China.
Note that manual labor has a much smaller effect on auto-insertion assembly lines (for the Main PCB, for example), where manufacturing costs are much more capital equipment intensive and driven by these investment costs.
Central to the Zune80 design is the Freescale application processor. This is not a surprising choice for application processor by Microsoft since they have had previous experience running their embedded operating systems on similar Freescale designs. To support the applications processors, Microsoft uses a Wolfson Microelectronics audio codec and power management solution.
As a whole, the Zune media player design does not appear to be dramatically different from other PMP/MP3 hard drive based players on the market. The Zune has taken a more modular design approach separating the user input controls (touch pad and buttons) from the main PCB - perhaps introducing additional cost to the overall manufacturing process. Besides the custom physical design, the Zune player does rely on major commoditized components such as the 80GB Toshiba hard drive, Samsung display module and Marvell WiFi chipset (which happens to be identical to the one found in the first generation Apple iPod Touch) to minimize BOM costs.
Here is a summary of the major components used in the Microsoft Zune 80GB design:
- Application Processor - Freescale - MCIMX32M6VK
Audio Codec / Power Management
- Wolfson Microelectronics -WM8350G
I/O & Interface
- Bus Transceiver - Texas Instruments - SN74AVC32T245ZRLR
- SDRAM - Hynix - HY5MS7B2BLFP-6
- Flash - ST Microelectronics - M58WR016KT70ZB6
- WLAN chipset - Marvell Technology - 88W8686
- Hard Drive - Toshiba - MK8022GAA
- Display Module - Samsung - LMS320GE01