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Thu, Mar 18, 2010 - 09:13 PM EDT  —  AAPL: 224.65 (+0.53, +0.24%)  |  NASDAQ: 2391.28 (+2.19, +0.09%)

Time for Microsoft to knife the Zune?
Thursday, September 11, 2008 - 01:43 PM EDT

"After two years in the music player business, Zune only has a 2 percent market share," Saul Hansell reports for The New York Times.

"When the Microsoft delegation arrived last year to unveil the second generation of players, Chris Stephenson, Zune’s marketing head, said the company’s low market share in its first year was because it had only offered a hard-drive model at the high end of the market. With the addition of less expensive flash players, starting at $149. Mr. Stephenson said the company hoped to vault to No. 2 in the market, leaping past SanDisk," Hansell reports.

"'Fifteen percent [market share] would be great for us,' he said," Hansell reports.

Hansell reports, "SanDisk still sells four times more music players than Microsoft does."

When Adam Sohn, the head of public relations for Microsoft’s Zune division, demoed the "new" Zunes models, Hansell reports, "I didn’t see anything in the third generation of Zunes that is going to shake up the market. Like Apple, it added capacity at its existing price points. It’s got a little trick to let you identify songs you hear listening to the FM radio and buy them from Zune’s music store."

MacDailyNews Take: Wonder where they got that idea?
Sony unveils four ‘Xplod’ Apple iPod-compatible car stereos with Apple iTunes Tagging - August 28, 2008
Clear Channel Radio now broadcasting over 340 HD stations compatible with Apple iTunes Tagging - April 08, 2008
• Apple iTunes Tagging explained - March 13, 2008
• Bloomberg News columnist William Pesek: Why doesn’t Apple just buy Sony (or Nintendo?) - February 18, 2008
Apple Stores to sell Polk Audio iPod, iTunes Tagging for HD Radio products throughout U.S. - February 04, 2008
Sony unveils Made for iPod shelf systems, car stereos, HD Radio with iTunes Tagging - January 08, 2008
Apple to push HD Radio boomboxes with iPod docks and iTunes tagging at Macworld Expo - December 28, 2007
High hopes for Apple iTunes tagging for HD Radio - November 05, 2007
How does tagging for Apple iTunes work? - October 10, 2007
Clear Channel teams with Apple on iTunes tagging for HD Digital Radio - October 03, 2007
Polk intros I-Sonic Entertainment System 2 with Apple iTunes Tagging - September 07, 2007
• Apple, iBiquity Digital, major radio broadcasters announce iTunes tagging for HD Radio - September 06, 2007

Hansell continues, "Two years after introducing the only really groundbreaking feature on the Zune — its WiFi access — Microsoft finally will let users buy songs directly on the device using the WiFi. (Yes, Apple, which has had WiFi devices since the iPhone and iPod Touch, added wireless purchases last year.)"

Hansell reports that Sohn "admitted that the new $229 starting price point for the iPod touch, which has a larger screen yet, was going to cause some trouble in that corner of Zune’s tiny market."

"Unlike Apple, Microsoft has a big division devoted to advertising. The WiFi connections on all the Zune players would be ideal to stream ad-supported video and maybe music," Hansell reports. "We’re working on it, Mr. Sohn told me."

MacDailyNews Take: There's a selling point. smirk

Hansell continues, "Meanwhile, Apple continues to weave its way deeper and deeper into the music, video and now telephone business. And it has a shot at defining the next platform for handheld computing as well."

Full article here.

[Thanks to MacDailyNews Reader "HMCIV" for the heads up.]


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Sep 11, 08 - 01:47 pm Comment from: Modbus

How do you kill something that was stillborn? Unless they think it's funnest to make it deader.

Sep 11, 08 - 01:47 pm Comment from: rahrens

"...And it has a shot at defining the next platform for handheld computing as well."

I'd say Apple has already begun that definition, and is expanding it with every new version of the iPhone and iPhone OS!!

He's a day late and a dollar short!!

Sep 11, 08 - 01:50 pm Comment from: Nick Fury

"Zune’s marketing head, said the company’s low market share in its first year was because it had only offered a hard-drive model at the high end of the market."

It's like a mentally challenged mechanic looking at a completely destroyed and mangled car. He points to a flat tire and says,

"Here's your problem."

Sep 11, 08 - 01:52 pm Comment from: ericdano

Ads huh? No way. No how.

Sep 11, 08 - 02:00 pm Comment from: Demon

At the very next iPod Announcement were Steve covers the iPod market numbers he should lump the Microsoft's Zune in with Other's if it's still around. So, there would be iPod, Others and SanDisk. This would so piss-off Ballmer that he'd have a blowout and need all new Office Furniture.

Sep 11, 08 - 02:01 pm Comment from: DreamTheEndless

@Nick Fury -

Wow - one of the greatest comments ever. I can see it in my minds eye...

The only thing that makes it worse is Balmer listening to the mechanic and saying is that all? Just the tire? Well - lets get that fixed - we'll be back on the track in no time. We should be able to pull to 2nd place for sure...

(Imagine chubby Balmer stuffed into a nascar suit urging his mechanic to finish with the tire while everyone else races past...)

Sep 11, 08 - 02:02 pm Comment from: Raymond in DC

"And it [Apple] has a shot at defining the next platform for handheld computing as well."

rahrens is right. The iPhone and iPod Touch *are* that next platform, and they're already here. With 3,000 applications and growing. How many apps did the PC or Windows have only months after rollout?

Sep 11, 08 - 02:04 pm Comment from: Peruchito

@nick

good one.

the zune might have stood a chance at beating sandisk if it was run by... lemurs, instead of ms.

Sep 11, 08 - 02:07 pm Comment from: DRM sucks

"Unlike Apple, Microsoft has a big division devoted to advertising. The WiFi connections on all the Zune players would be ideal to stream ad-supported video and maybe music," Hansell reports. "We’re working on it, Mr. Sohn told me."

Sounds like a barrel. This sounds like the subscription service in regards to it being considered only from the potential profit IF people use it, rather than considering how willing consumers will be to tolerate ads. Sure, it would be a great revenue stream. Too bad it will cause consumers to have even less incentive to buy a Zune.

Sep 11, 08 - 02:07 pm Comment from: 84 Mac Guy

Please MS, don't kill the Zune. Keep it so it can bleed more of your money with its 2% market share. The more failed products you are trying the support the better.

Keep up the good work Ballmer. We love your style.

Sep 11, 08 - 02:14 pm Comment from: Nick Fury

Thanks, DreamTheEndless and Peruchito. I've had the misfortune of dealing with a couple of mechanics like that (but not quite the hyperbole of the example I gave)!

Sep 11, 08 - 02:14 pm Comment from: MikeH

M$ could probably get 15% market share if they bought both Creative and Sandisk.

Sep 11, 08 - 02:15 pm Comment from: Nick Fury

"lemurs, instead of ms"

Good point. And yet they are both quite adept at flinging poo.

Sep 11, 08 - 02:26 pm Comment from: Lisa

That's Hansell. He's so hot right now.

Sep 11, 08 - 02:28 pm Comment from: Nick Fury

Lisa:

grin


"Gas fight!"

Sep 11, 08 - 02:36 pm Comment from: Predrag

The problem for Microsoft is, if their share remains at 2%, the bleeding on the Zunes they sell will be insignificant to their bottom line. They only lose a few hundred dollars for every Zune sold. Now, if they were to really shoot up to No. 3 (or even 2), then they would start bleeding money more seriously, assuming that their profit losses per unit remain stable and robust...

Sep 11, 08 - 02:37 pm Comment from: sMac

Don't knife it! it will squirt everywhere!

Sep 11, 08 - 02:42 pm Comment from: Modbus

It would be even more funny if MS started giving Zunes away and they STILL couldn't gain market share.

Sep 11, 08 - 02:44 pm Comment from: ChrissyOne

They still make Zunes?

Shit. Okay, I'll be back in 6 more months.

Sep 11, 08 - 02:50 pm Comment from: MikeH

What's the chance of M$ buying beleaguered Dell so M$ has a place to sell vista?

Sep 11, 08 - 02:50 pm Comment from: Wingsy

"The WiFi connections on all the Zune players would be ideal to stream ad-supported video and maybe music."

Gee Whiz, you mean, like one of those little portable TVs or an FM radio? That's really 21st century!

Sep 11, 08 - 02:52 pm Comment from: dogfriend

I can't believe MDN got the title wrong!

Its time for Microsoft to flush the Zune!

Sep 11, 08 - 02:54 pm Comment from: Wingsy

Just bought an iPod Touch for my daughter using MDN's ad. Are you happy now MDN? smile

Sep 11, 08 - 03:20 pm Comment from: drz

but if they kill the Zune, what becomes of Zune Tang?

Sep 11, 08 - 03:28 pm Comment from: Nick Fury

"but if they kill the Zune, what becomes of Zune Tang?"

He moves to Poon, buys some blue eyeshadow and a few frilly dresses and starts a new life as a cross-dressing call girl.
There's a happy ending for everyone.

Sep 11, 08 - 03:29 pm Comment from: G4Dualie

"Unlike Apple, Microsoft has a big division devoted to advertising.

Forever thinking about enterprise and how they can tap another revenue stream!

It's never been about an enjoyable consumer experience and therein lies the difference between the two companies.

Is Microsoft anti-consumer?

Sep 11, 08 - 03:37 pm Comment from: God

Poor Zune Tang...

Sep 11, 08 - 03:43 pm Comment from: Zune Tang®

You MAC dorks just don't get it, do you? The massive majority of Windows market share makes buying a Zune a no brainer. Ask anybody at Microsoft. You're just jealous.

Your potential. Our passion.™

Sep 11, 08 - 03:46 pm Comment from: alansky

No need to "knife" the Zune. It's already dead. Zune Tang will soon be in serious need of another loser-product to champion. How about Vista, Zune Tang? Don't you just swoon every time you picture it?

Sep 11, 08 - 03:48 pm Comment from: Peruchito

@ZuneTang

no brains is correct

Sep 11, 08 - 03:53 pm Comment from: TimD

Things are looking bad for the Zune with Dell set to enter the alsoran market.

Cheers,

Tim.

Sep 11, 08 - 03:54 pm Comment from: G4Dualie

"The massive majority of Windows market share..."

aren't buying Zunes. They're buying iPods!

The percentage of Windows-using consumers who own iPods exceeds the percentage of Mac users who own iPods by an order of magnitude.

Sep 11, 08 - 04:19 pm Comment from: G4Dualie

@TimD

Things are looking bad for the Zune with Dell set to enter the alsoran market.

That's right, and the Dell player, though lacking in many respects, will eclipse the Zune market share within two holiday seans. If it ever makes it to market.

People aren't buying the Zune because of the baggage that comes with it. The problem with the Zune is it comes with Microsoft.



Personally, I don't believe this is a good investment for Dell right now. Dell should reel in any spending whatsoever and use the money from the sale of its factories just to get through this holiday season.

They've lost 19 billion dollars of market capitalization in the last few months! I can't believe the Dell's board hasn't asked for Mikey's resignation.



It's too bad Dell failed to elevate the stature of Alienware. I've seen absolutely no advertising of this brand.

Man, if only Apple would scarfed up Alienware and produce a line of computers with Boot Camp embedded in the ROMS, loaded with both Leopard & Windows, Apple could have carved out double the Switcher rate, just by leveraging the iLife brand.

Instead of licensing OS X direct, Apple should sell OS X with a PC. Get it? Just as they do with the Mac, they should promote the hell out of a PC that comes with OS X. The PC consumer will think to themselves, "You know, I need a new PC and if this brand also comes with OS X installed, then my minds made up, I'll buy the Apple PC!"

Apple, it's all in how you deliver the message. Just don't tell them it's a Mac!

Remember, you heard it here first.

Sep 11, 08 - 04:21 pm Comment from: G4Dualie

That's holiday seasons, not seans. I dropped the so

Sep 11, 08 - 04:35 pm Comment from: Loru

This argument really makes me mad. As an avid Nintendo fan, years ago we heard the same thing. Nintendo wasn't selling like hot cakes but they were still selling and making money. Just because they weren't selling 20 million copies of Pokemon every day doesn't mean they are going under.

NOT ONLY THIS, but without a strong competitor, lets not give a small company a reason to say that Apple has a monopoly on MP3 playing...like a one certain Apple did to Microsoft years back over OS domination...

Sep 11, 08 - 04:50 pm Comment from: Modbus

"They've lost 19 billion dollars of market capitalization in the last few months! I can't believe the Dell's board hasn't asked for Mikey's resignation."

Why do you think Dell's bought up so much DELL stock lately?

Insurance?

Sep 11, 08 - 05:02 pm Comment from: Peruchito

@loru

apple never sued for the whole monopoly thing. it was for stealing the UI.

nintendo is more comparable to apple than to microsoft. i am sure others would agree. quality vs quantity. nintendo, apple = quality.... microsoft = quantity (except in the case of the zune). in the case of the ipod, they just got both going for them.

Sep 11, 08 - 05:07 pm Comment from: Julian

Who wants to listen to the rubbish on the radio when you have your music with you anyway. Maybe for the news?

Sep 11, 08 - 05:33 pm Comment from: Growl

Compare the look of the current Zunes to the current iPod Nanos. Microsoft should be embarrassed. Zunes are so ugly. No teenager or anyone else would be caught dead with one.

Sep 11, 08 - 05:50 pm Comment from: Driver

They could GIVE the Zune away for free and still not make an appreciable dent in that market.

Sep 11, 08 - 06:45 pm Comment from: other side

"After ... years in the ... business, (it) only has a 2 percent market share"

Remember, folks: market share never stopped Mac OS.

Where are the arguments about certain luxury car makers who'd be "ecstatic" with 2% of the market? Or of Apple having the "top" percentage of the OS market?

Not that Zune isn't a joke (it is). But let's be consistent on how we view market share.

Sep 11, 08 - 09:50 pm Comment from: MacSmiley

"On Wednesday, Adam Sohn, the head of public relations for Microsoft’s Zune division, told me: 'Babies are born every day without an iPod. We will get there.' "

And all but 2% of those babies are gonna buy an iPod... or whatever Apple comes up with that's better by then!

Sep 11, 08 - 10:21 pm Comment from: Jubei

"After ... years in the ... business, (it) only has a 2 percent market share"

Right and even if they continue to lose money on this POS, they will keep funding it with their guaranteed revenue stream. The whole idea is to wear down Apple. Apple can't afford to lose money, heck what company would continue to produce crap that loses money? None, they would discontinue it. Unless they have guaranteed profits quarter after quarter to blow their wads on.

Sep 11, 08 - 10:37 pm Comment from: LOL

M$ and Zune = ZZZZZZZZZZZ

Enough said.

ZZZZZZZZZZZZZZZ ...

Sep 12, 08 - 02:51 am Comment from: AA

Monopolies snuff out the competition, like Standard Oil did, undercutting the nearby gas stations, but with the iPod it's rather different because the competition is slitting their own throats. I bought a "Barbie" MP3 player for my 8 year old daughter and it took me two evenings after work to figure out how to load the 10 songs she wanted on it. The hardware on it is OK but the software and the manual were terrible. Neither the wife nor the kid would let me swap it for a Shuffle. I saw a SanDisk unit but the manual was so skimpy and vague, I didn't buy it.

Sep 12, 08 - 06:49 am Comment from: Road Warrior (NLI)

Zune Thang for 2 years you have been spewing your crap "MAC dorks."

For your information THICK HEAD the massive majority are buying iPods NOT Zunes. They are putting their money where your mouth isn't.

If you could I would think you may have considered another option. YOU ARE MORONICALLY STUPID.

But as I don't think you can.

Your stupidity. Our laughing at you.™

Sep 12, 08 - 10:12 am Comment from: @ Road Warrior (NLI)

Hey, Zune Tang is a satirist. Oh, and that does not mean he has taken too many blue pills.

Sep 12, 08 - 02:13 pm Comment from: AAPLguy

"On Wednesday, Adam Sohn, the head of public relations for Microsoft’s Zune division, told me: 'Babies are born every day without an iPod. We will get there.' "

So that's their marketing strategy - they are advertising to newborns. Must be why I have not seen a Zune ad in months.

Sep 13, 08 - 05:31 pm Comment from: @loru

I agree with Pechuro, Apple is a lot more like Nintendo in your analogy. Also, technically (and legally) speaking, having a monopoly isn't illegal. Abusing one is. That's why Microsoft gets into so much trouble-their abuse of their monopoly. I won't get into all of the legalese here, you can google it if you're interested, but being successful and providing the product that people happen to want to buy the most is not against the law. It would have been fine for Microsoft if their business practices weren't so underhanded.

Sep 13, 08 - 05:33 pm Comment from: Peruchito

sorry man. got your name wrong. My bad.

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