Technology

Microsoft Taps Thompson to Run Zune


Days after announcing new versions of the digital music player, Microsoft names a new business leader for the Zune unit

First, Microsoft's (MSFT) Zune digital music player gets a makeover. Now, it has a new leader.

Microsoft's Entertainment & Devices Div. President Robbie Bach sent an e-mail on Oct. 4 notifying staff that company veteran Rick Thompson will become Zune vice-president, responsible for overseeing the business operations of the Zune unit. Thompson will report to J Allard, the product design visionary who has held the position since Bryan Lee retired in April.

News of the appointment follows Microsoft's Oct. 2 launch of the second iteration of Zune (BusinessWeek.com, 10/3/07), introducing a new look and three new devices, as well as a revamped online store and improved software to connect to a PC.

From Mouse to Zune

Zune is a distant No. 2 to Apple's (AAPL) iPod among digital music players with hard drives. Both Thompson and Allard are sanguine about the product's prospects. Allard says that the 1.2 million devices Microsoft has shipped give the company a foundation for further growth. "It's not a business yet," Allard says. "We're anteing in. We've got a seat at the table." Microsoft Chairman William H. Gates III reiterated the company's commitment to building the Zune business at the launch of the new devices. It will be Thompson's job to make that happen. "Does this business need to be bigger? Sure," Thompson says. "We have to augment our capability from a business standpoint."

Thompson has built several businesses from the ground up at Microsoft. He joined the company in 1987 as a product manager on Microsoft's mouse business. Four years later, he was named general manager of Microsoft's hardware operations and became a vice-president in 1996. On his watch, the business grew from $30 million in annual sales to $600 million.

Allard and Thompson Reunited

Thompson first worked with Allard on the original Xbox business. Allard knocked on his door, pitching a game console business that Thompson had also been considering. Several of their early Xbox cohorts are already on the Zune team, making Thompson's new gig all the more appealing. "We're getting the gang back together," Allard says. And he believes that Zune is in much the same position as Xbox was in its early days—a largely dismissed laggard to industry leader, Sony's (SNE) PlayStation 2. Now, Xbox 360 leads Sony's PlayStation 3.

Thompson left Microsoft in 2000, for a stint at Internet startup Go2Net, where he was chief financial officer and vice-president of product development. When he returned to Microsoft in 2002, he led the division that oversaw development of the operating system software for Windows Media Center and the Tablet computers. And most recently, he worked in the company's online advertising unit.

The buttoned-down Thompson says he'll defer to Allard on product design and direction (BusinessWeek.com, 12/4/06) while he focuses on business strategy. "The vision and cool will continue to come from J," Thompson says. "No one would ever confuse me with being cool." But Thompson's track record suggests that his operational expertise is exactly what Zune needs right now.

Greene is BusinessWeek's Seattle bureau chief.

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