Article
It’s All About Customer Behavior
February 2, 2026
Field Notes Chapter Three: Zune
The year is 2006. Nintendo just released the Wii, Twitter was launched, Pluto has been demoted to dwarf planet status, and Microsoft drops their iPod challenger: the Zune 30.
This 30-gigabyte portable media player featured an original, bold and bright design that was intentionally more masculine and functional in appearance than the iPod, which was on the 2nd generation of its 8gb Nano and the 5th generation of its 80gb Classic. More notably, Zune sported a subscription music service (way ahead of its time!) that also gave users 10 free song purchases per month. Zune also made a huge innovation in wireless connection — users could “squirt” (share) songs to another Zune, which was briefly revolutionary until Sony and Universal blocked certain artists from being shared , effectively kneecapping the feature. They still weren’t done — along with hard drive improvements, Microsoft launched Zune Social within the next year, which was an online music community that allowed users to create profiles, share their music tastes, see what friends were listening to and then download those discovered songs (Spotify Wrapped, anyone?).
I don’t have to spoil it for you — you already know that Zune flopped. They never exceeded single-digital market share. By the end of 2008, sales dropped 54% (down $100M in revenue) and Microsoft laid off 1400 people from the division .
The reasons why it failed have been well-covered: smartphones on the rise made MP3 players obsolete and the remaining MP3 market went to the soon-released iPod Touch, Zune’s subscription model was ahead of its time, and ultimately, Microsoft was late to the game and just not as cool as Apple, which had been defining the category since 2001.
There are always lessons to be learned in failure. The design aesthetic and navigation system Microsoft created for Zune later became central to the Windows Phone OS (please don’t ask how that product fared). More importantly, the originality of the Zune and the effort from Microsoft to innovate on both the software and hardware sides was said to have had a positive impact on company culture and direction.
It’s one thing to talk about what a company did wrong. It’s another to propose how these sorts of mistakes can be avoided.
Perspective from Joseph Schlichting, Product Strategist, on how to avoid these costly mistakes:
Innovation is tempting. It’s easy to believe that if we just build the right feature, the right app, the right thing — customers will show up and the business will grow. But that’s not how it works. A product only succeeds if it changes customer behavior in a way that drives real business results. That means getting more people to do something more often, with higher satisfaction or efficiency. Zune didn’t fail because it lacked innovation; it had plenty. It failed because the team didn’t deeply understand what would make people change how they listened to, shared, or paid for music. And without that understanding, even the most impressive features fall flat.
Here’s the more useful question: How do you build something that actually changes behavior? Not by guessing. Not by waiting until launch to find out. And definitely not from inside a boardroom. The most successful teams build customer understanding into the way they work — not just at the beginning of a project, but every single week. They talk to real users. They dig into what people actually do, not just what they say. Over time, those conversations compound into something powerful: a clear picture of the patterns — what frustrates people, what they care about, what they’re trying to get done. This clarity helps teams make better decisions — not just about what to build, but what to skip, simplify, or stop.
That habit — small, consistent learning focused on behavior — is what separates products that flop from the ones that win. Want to hear more about how you can build a product that actually influences user behavior and drives your business outcomes? Let’s chat.
