Zune, Will it Succeed?

By Richard Menta 11/14/06

I listen to CBS News radio as I shower in the morning and one of their lead stories today - the second one to be exact - was the launch of Microsoft Zune in stores today and can it challenge the iPod?. I find it interesting how much the press has embraced this competition, mostly because they feel that any legitimate challenger to the iPod in newsworthy. Microsoft gets the nod, because it has the name and the bankroll to contend.

But Zune has also garnered some mixed reviews from that same press, who while they like the hype are also going to make Microsoft earn it. Nonetheless, the visibility Zune is receiving, both good and not so good, is exactly what it needs to mount an assault on the iPod's dominance of the MP3 player market. The big question is will Zune succeed and by what standard will this success be measured?

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Let's say that Zune immediately upends SanDisk for second place in the market, taking 11% of the marketplace. By one standard this is a significant success as only the iPod was able to grab so much market share so fast. But with Microsoft pumping ten-of-millions in ad money another standard will call Zune's barely double-digit market share a disappointment. Maybe even a modest failure.

With the free press Microsoft has generated mated to their try-to-be-hip commercials on television you can understand the argument, though I suspect the later pundits are really looking for a big market battle to muse about rather than an improved player environment that serves the consumer better. I can easily see conflicting stories in the coming weeks, all using the same figures, but interpreting them in different ways.

My personal take is that Zune is offering very little that has not already appeared in other MP3 portables. The difference is that Zune has a lot of marketing muscle behind it and that will count for something. Also in Zune's favor is the fact that it is built by Toshiba who know how to assemble a decent unit.

The savviest portable player owners - the ones who bought 64MB players for $250 a few years back - are looking at brands like Archos who are delivering feature sets designed to satisfy the early adopter. Microsoft is aiming for the tweens and teens who have yet to get an MP3 player and are not yet locked into Apple's propritary system. There are many more DAP deficient kids looking for their first unit than early adopters.

That's why I am convinced Zune will achieve some success. How that will be defined in the opening weeks is not known yet, but remember this: only 10% of households have an DAP right now. What really counts for Apple and Microsoft and all the other makes is what their marketshare will be four years from now when 90% of homes are expected to have such a player in the house. That's when you can truly identify who has succeeded and who hasn't.

Of course, if Zune can match iPod sales from the start then you already know the answer. If that happens then the next real battle will begin - that between the consumer and the manufacturer. That's because these systems, and the music tracks and video files purchased for them, are not interoperable.

Other MP3 stories:
Podge and Rodge: YouTube Brings Gem from Ireland
iPod Killers for Christmas 2006


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