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Zune Really Irrelevant Product (RIP)

March 17th, 2007 · 18 Comments

I have written a number of posts about the so called iPod killer, the Zune Player and it’s debut on the market. As of today, the Zune Player is a failure:

From Roughly Drafted:

  1. •Apple 72.7%

  2. •Sandisk 8.9%

  3. •Microsoft 3.2%

  4. •Creative Labs 2.9%

  5. •Samsung 2.0%

 Once again, NPD’s numbers only cover retailers that supply it with data, which excludes Apple, Costco, online sales, and mail order outlets.Based on NPD’s numbers and my math, it would appear Microsoft sold $7.2 million in Zunes in January via retail outlets, which at $250 each would be just short of 29,000 units, making its Dr Evil goal of “one million Zunes!” by June 2007 a bit of a joke.

Although RoughlyDrafted is partisan, the analysis does stack up. With retail margins of 30% puts the unit numbers between 29,000 at the low end, and 44,000 at the high end (depending on the whole sale or retail cost). The numbers that NPD uses are most of the major outlets, but they do exclude Costco, Walmart and Apple Stores.

As the wireless zapping thing turned out to be a gimmick, and that it relied on your friends not having iPods, there is no compelling reason to purchase the Zune over the iPod. It offers no benefits that cannot be found in the iPod and in many cases they are inferior to the iTunes/iPod combination.

The truth is that without a major market disruptor, Microsoft taking on the market for MP3 players and effectively competing with Apple is impossible. This is just like the battle with Windows Live Search vs Google Search, without a major shift in how and why people search, Microsoft (and for that matter Yahoo) will remain far behind in market share.

Although markets are constantly changing and evolving there are a few immutable laws that they are governed by. The first understanding is that markets are accumulated or aggregated consumer (read people) behavior that result in a metric, that is revenue or units sold.

The first being the law of motion and equilibrium, that is consumer behavior tends to be habit and does not shift radically over time unless their is a jolt from a shift in externalities that result in a shift in behavior. A good example of shift in behavior is the change in parking at your local Starbucks. Starbucks relies enormously on foot traffic and such changes in patterns of parking at your local Starbucks effects the sales of coffee over time.

In the MP3 player market, Apple took over market share from Sony Walkman because they were the first to create a truly integrated experience where as the Walkman stumbled badly in this respect. In fact so badly that they missed the MP3 Player boat. In the music distribution market the disruption was the flow between downloading music from an online store onto the iPod and the standard distribution which is CDs. Suddenly you didn’t have to purchase those other 10-12 songs you didn’t really care for and could purchase only the songs you did like (what ever happened to the Vinyl Single). What Sony did not realize that adding another layer between the CD (the ripping part) and the user increased resistance to the product, where as Apple reduced a layer (the CD package) between the purchased music and the listener.

The bottom line is that the Microsoft Zune Player today offers no reason for the consumer to change it’s behavior and continue to purchase iPod/iTunes combination and no amount of advertising will shift that perception with out a radical departure from the model that Apple created. There are some radical things that you can do, for example you can completely remove DRM from the Zune Market and Player and completely open it up, but with the music industry determining the product design at Microsoft this is not going to happen.

The bottom line is that Zune is and will fail to ignite the imagination of music consumers because their imaginations of what they want to see in a omnipotent music player is currently beyond what the music industry will allow them to deliver………

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Tags: Apple · zune

18 responses so far ↓

  • 1 microsoft zune complaints | zune complain| zune sucks | zune problem |antizune |anti-zune // Mar 17, 2007 at 10:41 am

    [...] This article has a clear view on Zune’s performance on MP3 market. [...]

  • 2 tom B // Mar 17, 2007 at 2:47 pm

    “This is just like the battle with Windows Live Search vs Google Search, without a major shift in how and why people search, Microsoft (and for that matter Yahoo) will remain far behind in market share”

    MSFT is currently heavily bribing PC makers and IT directors to switch to Live Search. Typical– instead of designing decent products, like Apple of Google, they resort to threats and graft.

  • 3 Top Posts « WordPress.com // Mar 17, 2007 at 7:58 pm

    [...] Zune Really Irrelevant Product (RIP) I have written a number of posts about the so called iPod killer, the Zune Player and it’s debut on the market. […] [...]

  • 4 jbelkin // Mar 17, 2007 at 9:05 pm

    MS should know by now that by slapping their name on stuff, it’s not guarantee of success but since they only go by the criteria that if consumer aren’t buying, we’re morons 0 by that measure, they are the greatest company of all time - at least to them. Their only middling success is XBox - why? Basically it’s a $2,000 PC shrunk down with no driver or viruses issues that MS is willing to sell at a loss to you - what’s not to like if you play PC games? It costs less than a graphics card … but as for all their other CE devices, what’s the point? WebTV? Yea, the regular MS PC works poorly already, why would I buy a limited one that’s just as hard to use for the same price? MS PDA? Better than palm - slightly after 9 years … Home networking gear - closed shop - given a choice between any other barnd, people choose any other brand - just like MS’ Zune - given a choice, people rarely choose MS … BTW, here’s something even funnier - in their press release, they were quick to tout that they had 30,000 retail outlets on board … so after 6 months, we basically have an average of ONE sold per store … that would be great if they were selling Bentley’s but a $250 device? maybe those store copies of Vista flying off the shelf will placate those retailers …

  • 5 rojiverde // Mar 18, 2007 at 9:49 am

    When we can buy the next gen of iPods, Zune will be definitively history

  • 6 Sam // Mar 18, 2007 at 9:56 am

    It’s kind of amazing that Microsoft can’t do better with the Zune, considering Microsoft is and their investors are willing to take continual losses in their XBox/Zune business unit. It’s hard to compete against a company that’s willing to sell things at a loss indefinitely, and the XBox/Zune business area of Microsoft has yet to turn any profit. But despite this, Microsoft appears to STILL be losing this battle. If I owned MSFT I’d probably be pissed that Microsoft continues to pursue this.

  • 7 seenavincent // Mar 18, 2007 at 12:08 pm

    Nice Blog

  • 8 Oliver // Mar 18, 2007 at 12:15 pm

    The Zune was doomed for failure before it even began. I wrote about it in my blog in October or something.

  • 9 Wherefore Art Thou, Zune? « Mike Cane’s Blog // Mar 18, 2007 at 1:52 pm

    [...] Art Thou, Zune? Zune Really Irrelevant Product (RIP) I have written a number of posts about the so called iPod killer, the Zune Player and it’s debut [...]

  • 10 Jeremy Fain // Mar 18, 2007 at 2:11 pm

    I believe this post is slightly short-sighted. Who believed Microsoft would make into the game consoles, a market dominated by Sony, when the XBox was launched?
    The same goes on today with the Zune. Allright, the product portfolio is yet to be as exhaustive as iPod (shuffle, nano, etc. vs. 1 version of the Zune), but I don’t think Microsoft entered that maket to be N.3 or N.4 but to win.

  • 11 FraudWasteAbuse // Mar 18, 2007 at 5:00 pm

    Their only middling success is XBox - why? Basically it’s a $2,000 PC shrunk down with no driver or viruses issues that MS is willing to sell at a loss to you - what’s not to like if you play PC games?

    Actually, Microsoft is making a profit on every Xbox sold.

  • 12 FraudWasteAbuse // Mar 18, 2007 at 5:03 pm

    there is no compelling reason to purchase the Zune over the iPod.

    I find no compelling reason to purchase an iPod. I would never buy a Zune, but iPod’s popularity is due to it being a status symbol rather than a superior product.

  • 13 ZuneUK // Mar 18, 2007 at 5:15 pm

    Guys,

    The best reason for buying a Zune is simple = it sounds so much better!!! I have two Ipods and the sound just dosn’t compare!

    In the UK we can’t wait for Zunes!!!

  • 14 SBartholomew // Mar 19, 2007 at 2:59 am

    Zune sounds better? That’s odd… in every audiophile mag I’ve read the iPod Shuffle is the king of audio perfection with the iPod mini coming in with a close second and the iPod right on it’s heels.

  • 15 SBartholomew // Mar 19, 2007 at 3:02 am

    Micro$oft might be in the MP3 marketspace to win… however… Apple isn’t making the colossal mistakes that Sony has made in the game console market.

    iPod is still a better product overall than the Zune. Especially when you weigh in the entire user experience from music store to walk-around-playability.

    Zune did one thing right though… they cannibalized the interface connector so that they could use the vast amount of iPod accessories out there.

  • 16 DotMySpot // Mar 19, 2007 at 8:04 am

    Hmm.. too bad for Zune @@”..

  • 17 Too tough for Zune « Just a Kiwi Bloke // Mar 19, 2007 at 11:37 am

    [...] point is that the Zune has been a miserable failure (29 - 40K units see here) by any consumer product which is why the VP for Zune was fired. It offers no compelling features [...]

  • 18 Hawk // Apr 20, 2007 at 11:46 am

    ZuneUK said: “The best reason for buying a Zune is simple = it sounds so much better!!! I have two Ipods and the sound just dosn’t compare!”

    That is an incorrect claim. I have used both an iPod and a Zune and the Zune’s sound is far inferior. Also, the name Zune is frikkin retarded.

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