After a somewhat half-hearted effort to compete with Apple (Nasdaq: AAPL) 
and the other digital music player makers, Dell (Nasdaq: DELL) signaled Wednesday that it will halt production of its DJ Ditty MP3 player.
The move comes as Apple continues to enjoy dominance in the digital audio player space -- it owns as much as 80 percent of the market. Dell's decision highlights the importance of integration between hardware devices and music services, something Apple is known for and delivers with its iPod and iTunes combination, Yankee Group Senior Analyst Mike Goodman told the E-Commerce Times.
"The challenge they continue to have is their device-service integration is not as good as Apple's," Goodman said of competitors like Dell.
Not Getting a Dell
While Dell holds a strong position in the PC market, the company is not associated with digital music, and it also suffered from a lack of a retail channel with its direct business model, Goodman said.
"It's not like the PC market where they are a dominant brand," he said. "In digital audio players, Dell has never been a top-tier seller to start with."
Dell had to fight with a variety of other music player vendors for the non-Apple, 20 percent slice of the market, but the firm never followed through on coupling the DJ Ditty with its popular desktop and notebook 
PCs, which sank the prospects for the player even further.
"I thought that was part of the plan, but it never really panned out," Goodman noted.
Playing a Different Zune?
Dell's move to drop the DJ Ditty was a matter of business and economics, at at time when conditions in the overall PC market and recent massive Dell notebook battery recall may have also played a role, Gartner (NYSE: IT) Research Vice President Mike McGuire told the E-Commerce Times.
"When you're dependent on being able to compete on a good set of features and price, you certainly have to re-evaluate what's moving and what's not," McGuire said.
He also speculated that by cutting the DJ Ditty, Dell may be carving out a place in its business to be a distributor of Microsoft's (Nasdaq: MSFT) coming iPod competitor Zune.
A lack of marketing and messages about compatible music services might also be to blame for the Ditty's demise, said McGuire. The lesson for Microsoft from Dell's failed effort is to recognize the importance of integration.
Integration Education
From what is known now, the concept Microsoft is pursuing with Zune is the same as Apple's, with a focus on tight integration between device and music service, according to Yankee's Goodman.
However, it remains to be seen if Microsoft can produce a solution compelling enough to compete with its old rival. One key indicator, he said, is Zune's user interface, which could be improved based on what Microsoft provides with its Xbox Live service.
"That is going to be a critical metric to evaluating the success or failure of a service from Microsoft," Goodman concluded.
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