December 6, 2006 11:43 AM PST

Microsoft: Zune sales to top 1 million by June

Although the Zune has fallen some in the sales ranks, Microsoft says it expects to sell more than 1 million of the music players by the end of June.

The software maker said Wednesday it was pleased with response to the device, which debuted at No. 2 in research firm NPD's weekly sales ranks, but fell to No. 5 last week.

"We're forecasting just over 1 million units for the fiscal year," said Jason Reindorp, marketing director for Zune at Microsoft. "We feel pretty good about that number."

zune

The Zune went on sale in mid-November. In its first days, it ranked near the top of Amazon.com's electronics sales chart. According to NPD's recent ratings, though, it now holds about a 2 percent market share.

Reindorp said sales have been going "pretty well" and are "pretty much on track" with the company's initial forecast. "Microsoft has a very realistic view of the landscape," he said. "There wasn't any foolish thought of coming in and turning the whole market around."

IDC analyst Susan Kevorkian said that the company's projections are similar to her estimates. "We think that Microsoft had relatively modest expectations in terms of unit shipments and sales going into the Zune launch."

Kevorkian said that she expects Microsoft to have sold about a half-million of the devices by the end of December. As a point of comparison, research firm IDC forecasts that there will be 21.5 million hard drive-based music players sold this year, the vast majority from Apple Computer. Microsoft estimates that its better than 1 million devices will give the company about a 10 percent to 15 percent share of the market for music players with 30GB or more of storage. The company also projects that Apple and Zune combined will have 98 percent of that market.

Song sales
Beyond the device itself, Microsoft wouldn't say how many music tracks it has sold through the Zune Marketplace or say how many paid subscriptions to the Zune Pass music service it has sold. However, Reindorp did say that the company has not been heavily promoting the subscription option.

"We're being even more realistic with the Zune Pass," Reindorp said. "Our numbers are really small."

"We think a lot of Zunes are sitting underneath Christmas trees."
--Jason Reindorp, Zune marketing director, Microsoft

The company said it is seeing a gap between the number of devices that are being sold at retail and the amount that have been hooked up to a PC and activated.

"We think a lot of Zunes are sitting underneath Christmas trees," Reindorp said.

Microsoft tried for years to rival Apple's iPod by offering an underlying media technology that could be used by a variety of music services and devices. However, Microsoft and the industry struggled with compatibility and simplicity. Microsoft decided earlier this year to go it alone with Zune.

The software maker announced plans for the Zune in July, saying the device would stand out from the iPod through a built-in Wi-Fi connection. Although it eventually plans a family of devices, Microsoft opted to start in the U.S. with only a single 30GB device, though it does come in three colors.

The biggest surprise, if any, has been the demand for the brown version of the player. Although resellers generally haven't had trouble keeping any of the Zune models in stock, where there have been occasional supply issues, they have been with the brown model.

"Some (retailers) are surprised how well brown is doing," Reindorp said. "Brown is definitely a polarizing color. You either love it or you hate it."

Software fix coming
Microsoft is also readying its first software update for the Zune. The update will allow the Zune to work with Windows Vista, Microsoft's just-finished operating system, which is now available to businesses and goes on sale to consumers in January.

Click for gallery

The Zune software update, which is expected before Christmas, will fix some minor glitches and add some performance and other improvements, Microsoft said. The company won't include major new features in the release, however.

"It is plumbing stuff, but it is stuff customers will notice and appreciate," Reindorp said. "It's not going to be a whole new wireless scenario or anything like that."

But the real question is what Microsoft will do, over time, to expand and improve on its first Zune.

"We'll do more things," Chairman Bill Gates said in an interview last month. "But, you know, we're vague and mysterious about what that is. I mean, but we're not just going to do media; we'll do more."

One thing that analyst Kevorkian expects to see is the addition of video content to Microsoft's online Zune Marketplace. That could take several forms, she said. "Microsoft has some interesting options in terms of offering both user-created and professionally produced video," she said.

The company recently started selling TV shows and movies for download to its Xbox game console. It has also been testing MSN Soapbox, a Web site for user-generated video.

Jupiter Research analyst Michael Gartenberg said that Microsoft needs to play catch-up in other areas, such as support for podcasting and video content. It should also expand beyond a device based on a single hard drive--perhaps moving into a flash memory-based player.

"There is no flash Zune at a time when the (iPod) Nano is just flying off the shelves," he said. "Those are the things they are going to have to address in 2007 if they are going to be a credible player."

Kevorkian said that Microsoft also needs to expand how the Zune's Wi-Fi can be used, probably to allow a direct connection for downloading music from Microsoft directly to the Zune. Gartenberg notes, however, that such a connection is tricky to engineer in a way that is still easy to use on a device that has no keyboard.

Microsoft has said it expects to spend hundreds of millions of dollars over the next few years to develop and market the Zune. "We expect them to devote substantial resources over the long term to carve out a niche for Zune in the portable media player market," Kevorkian said.

In an earlier interview with CNET News.com, Microsoft CEO Steve Ballmer acknowledged that despite the company's satisfaction with the way things are going with Zune, it still has a lot to do.

"We think we have a great initial proposition, and we're happy with the initial response," Ballmer said. "But we don't fool ourselves. There's a guy who's got a lot of share, and we're coming later in the day...So we have our work cut out."

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57 comments

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This is Classic...
...Managing 'down' of expectations, so that all the analysts will be lured into underestimating that actual demand. Companies do this all the time when it comes to earnings guidance. And while it's going to be quite some time before Zune can positively affect MSFT's quarterly numbers, the coming announcement of 'higher Zune sales than previously expected' will be enough to cause analysts to lower their guidance on AAPL.

Gene from ZuneChannel.com
Posted by ZuneChannel (17 comments )
Reply Link Flag
Classic... Like Origami (nt)
-
Posted by mgreere (332 comments )
Link Flag
Classic Microsoft shill
The zunechannel.com web site is almost certainly part of the fake
grassroots zune movement. Don't fall for this BS.

Have a nice day!
Posted by lesfilip (496 comments )
Link Flag
Dude - you may want to sit back and rethink something...
[i]"And while it's going to be quite some time before Zune can positively affect MSFT's quarterly numbers..."[/i]

Like the X-Box has? Oh, wait... IIRC they still sell those things at a loss.

Dude - give up. Seriously. The Zune isn't even in the top 50 at Amazon during the very heat of Christmas Shopping Season (the black Zune is at #67/100...) meanwhile, iPods take 4 of the top 5 items sold there. Even Sandisk is eating Microsoft's lunch in this arena.

ref: <a class="jive-link-external" href="http://www.amazon.com/gp/bestsellers/electronics/51549011/ref=pd_ts_pg_1/102-5552503-7917729?ie=UTF8&#38;pg=1" target="_newWindow">http://www.amazon.com/gp/bestsellers/electronics/51549011/ref=pd_ts_pg_1/102-5552503-7917729?ie=UTF8&#38;pg=1</a>

Seems to be the same story with Circuit City, incidentally:
<a class="jive-link-external" href="http://www.circuitcity.com/ssm/MP3-Players-iPods/sem/rpsm/catOid/-13334/N/20012898+20012953+20013334/rpem/ccd/category.do" target="_newWindow">http://www.circuitcity.com/ssm/MP3-Players-iPods/sem/rpsm/catOid/-13334/N/20012898+20012953+20013334/rpem/ccd/category.do</a>
(Best Buy apparently doesn't have a top-seller listing anywhere convenient...)

Point is, the Zune is a flop, and is flopping even harder than anyone could imagine.

I realize you're really wanting to make your name online by pimping and talking all about the Zune... I can grok that.

But perhaps, you may want to direct your energies elsewhere. Seriously... the Zune is set to fizzle out, much like Microsoft BOB, you know?

/P
Posted by Penguinisto (5042 comments )
Link Flag
JUNE 2007?08?09?2010?
2010 more like it before ZunitTunes hits 1 million sold units...

Billionaire BaldyBot must be smokin' crack or something.

"Lots &#38; Lots of them under Christmas trees..."

Sure... I would not doubt that every Microsoft employee world wide will get a brown turd MP3 in their stockings this year as a "bonus" from Secret Santa Stever... THAT WILL BOOST THE UNITS SOLD NUMBERS!
Posted by Llib Setag (951 comments )
Reply Link Flag
Brown? Really?
"Although resellers generally haven't had trouble keeping any of the Zune models in stock, where there have been occasional supply issues, they have been with the brown model."

That's so weird! I'm surprised that the brown model is doing better than the black. Although, most people I know who've purchased the brown one swears by it. And a couple of friends of mine are looking to pick up a brown one this year, too.

Personally, I still prefer black, though.
Posted by toosday (343 comments )
Reply Link Flag
Sure
I for one am not surprised by the success of the brown model. People enjoy having something different. There aren't that many brown consumer products. It's eye-catching.
Posted by Chung Leong (111 comments )
Link Flag
Don't eat the yellow snow...
&#38; don't use the brown turd MP3 ZunieTunes.
Posted by Llib Setag (951 comments )
Link Flag
Figures don't match.
Amazon report sales of black Zunes far exceeding brown. The top
seller list was showing black in the 60s with brown in the mid
200s. (all electronics)
Posted by br208 (1 comment )
Link Flag
I hope I'm wrong about this
Truthfully, I don't see the Zune overcoming the iPod--in fact, I see MSFT spending zillions of dollars on 3-possibly-4 revisions of the Zune, marketing, and music licenses to come to a point where they will say, "Production of the Microsoft Zune has been halted until further notice."

I really hope I'm wrong, and I'll tell you why.

In terms of the iPod and the portable MP3 market, competition has been the only ally of the consumer and I think the only competitor for Apple is Microsoft. Microsoft has the capital, marketshare, and influence to do almost anything they want, but they still have to attach common-sense to those dollars. Creative Labs is doing ok, but not well, and lost a LOT of money trying to fight the iPod (in conjunction w/ Microsoft I might add--anyone remember that??).

I am no FANBOY of either company, but I do think Microsoft is exponentially more powerful than Apple, and can make this work, but I just can't see it.

That's my humble, objective $0.02.
Posted by close5828 (230 comments )
Reply Link Flag
Re: I hope I'm wrong about this
Well considering that the same design team that lead the XBox is now running the Zune I'd give the Zune better odds. People also said they would never buy an XBox and the things were flying off the shelves when it launched. Zune might not be the same as the XBox but it has a lot of opportunity to get the right features and performance that could match or unseat the iPod.
Posted by NPGMBR (281 comments )
Link Flag
I love the smell of astroturf in the morning
It smells like desperation. 3 or 4 of these posts are so obviously
written by M$ dupes, fanboys, or employees. There is no
groundswell of interest in the Zune, and the reason it will probably
fail is because it's not well designed and there's no compelling
reason to choose it over the iPod or even one of the "playsforsure"
players.
Posted by kelgraff (22 comments )
Reply Link Flag
Astroturf is Accurate
Well said. This article was nothing more than a puff piece for the Zune, and the MS "fanboys" are nothing more than paid marketing people, under a MS paycheck.

Truth is, Zune sucks.
Posted by R. U. Sirius (745 comments )
Link Flag
Compelling Reason to Choose Over iPod
I can think of a compelling reason some folks will choose it over the iPod: Subscription-based music.

mark d.
Posted by markdoiron (1138 comments )
Link Flag
It may be a good product for Apple haters...
And MS fanboys, but I saw one at Target the other day and it's awfully thick. Didn't pick it up; don't know how heavy it is. But my regular 20GB (4G) iPod I think is a bit too big. The iPod Mini I think is really the perfect size. Haven't put a nano in my hands but it almost seems too small.
Posted by chris_d (195 comments )
Reply Link Flag
I don't know
I seen the hipe and the ads, and I didn't even go to the store to see a sample of it on display, that's how much I was impressed with it.

But then again, I already have 2 iPODs, so no need for another MP3 player. Maybe people who have no MP3 player will fall for it :- )

Good luck with ZUNE.
Posted by rmiecznik (224 comments )
Reply Link Flag
There's a Zune under my tree!
Of all those Zunes under the Christmas Tree
this year, I wonder how many will be returned
or exchanged for an iPod?
For all you Zune givers...,
please include a gift voucher! ;-)
Posted by titanium667 (11 comments )
Reply Link Flag
There are better alternatives to the iPod
I mean, why should I invest in another mp3 player? The only thing that looks appealing is the whole zune music sharing thing they offer, but that isn't incentive enough for me to go out and buy a zune player. Besides, I can already share my music with my friends music and listen to internet radio with Mercora M, and I can do that directly through my phone for less than fifty bucks a year...seriously zune, not impressed!
Posted by cathleen_44 (12 comments )
Reply Link Flag
Creative Zen Vision M is better than June and iPod
Zen Vision M is better than June or iPod Video
- 30Gb or 60Gb sizes
- Plays most video files(divx etc)
- FM Tuner and recorder
- Voice recorder
- Better screen
- DRM friendly

Read the reviews yourself and decide
Posted by rtripathi (90 comments )
Link Flag
damn strait
I'm still loving my Palm T5. I got that and never looked back to mp3-player-only devices. With a media player, it's an mp3 and movie device. With the billion ther PalmOS apps, it's anything else I want. (bluetooth and wifi.. oh my)

I'm not saying drop your prefered mp3 player by any means; for me, an iPod or Zune would a downgrade and to a closed system no less.

With the Zen and all the rest of the market, there are far better options to the iPod and Zune if you can get over the msFanboys and Cult of Mac brand loyalty.
Posted by jabbotts (492 comments )
Link Flag
Actually... This is "Basic-Marketing 101".
When a product is failing-miserably in the marketplace...

...simply declare victory, ...even if this claim has simply no connection to reality, what-so-ever. This is a very old marketing-ploy. But, frankly, this approach actually doesnt really seem to work for genuinely -poor products- (especially, if there is any real competition).

And, this latest PR-stunt isnt even well-orchestrated. Apparently, Microsoft simply expects the consumer-market to actually swallow that this product is, somehow, a "success", ...because the product MAY, allegedly at some point in the future, START selling well-enough to meet new, drastically-lowered, sales-expectations.

Right...

Interestingly, Microsoft is also doing this same thing with "Vista". In fact, our company is actually receiving PR-flyers from Microsoft explaining how to deal with the "...overwhelming demand for Vista and Office 2007". But, we are simply dumbfounded by this complete-departure from reality, since NO CUSTOMERS, ...at all, ...seem to, in any way, even remotely be interested in moving to these new "...turkeys".

I think Microsofts absolute-desperation is plainly-showing.

I guess, in the end, it really does appear that if Microsoft cannot artificially manipulate a marketplace, ...they simply cannot, actually, be successful within it.

How sad...
Posted by Had_to_be_said (384 comments )
Reply Link Flag
Victory?
I don't see 1 million players in 7 months a victory. Their percentages seem to be pretty much on crack, but I could see 1 million players sold. It's a big market.
Posted by umcrouc0 (53 comments )
Link Flag
Remember when...
I seem to remember a day when there was a company that introduced a music player and people said...***..who wants that?

That company was Apple and the product was iPod.

Zune...from what I understand, is the beginning of a family of media products that will all fall under the same banner. With the marketing power and reach of MS I think it is silly to underestimate how far the Zune family may go.

Myself...I'm not a fan of buying music in a format that is going to force me to buy the same brand down the road if I want to keep listening to my purchases so I'm not interested in either (If I had to choose a 30g player I'd probably get a Zen for its format support)

MS Fanboys - you've got reason to be optimistic
APPLE Fanboys - competition from MS will only force Apple to make a better product
Posted by KsprayDad (375 comments )
Reply Link Flag
I bought one
the day it came out to replace my 3rd generation Ipod.

It does everything I need it to do, and very well. My Ipod worked well for a long time but I have never liked itunes, especially the fact that it CANT monitor folders on my home server where we store all of our music.

Almost all of these negative comments are about subjective material. Its to heavy or to thick, or why brown....well for some it is and others its not. I have brown and I think its really cool looking. I think the screen is great and the fact that it is really hard to scratch is nice too.

Only time will tell us if the Zune or its eventual family of Zunes will affect Ipod and its market share. I personally think just like almost everything else MS does if they stick to it, it will get better and better and intergrate with their other products eventually and they have mountains of cash to do so with. Its not hard to see this....just look at the Xbox, it had a tough fight and now the 360 probably will be the "next gen" console of choice.

I can easily see a 3rd or 4th gen Zune that is a Windows Mobile 2008 phone as well.
Posted by Zunelover (2 comments )
Reply Link Flag
360 next gen of choice ??
Are you watching the game market.
I think the 360 is in a very dangerous place.

Wii's are selling like crazy right now for the general market.

Whats 360 at, 10 mill in a year, were as Nintendo is talking 4 mill just by Xmas.

This is going to leave 360 vs PS3 for the hardcore market of which over time the PS3 will eat away at the 360 due to its extra power and features and larger game dev community.

In my opinion anyways.
Posted by David Turner (114 comments )
Link Flag
Man, I love your sarcasm
I got one, ran the painful installation, saw the zune marketplace
and went back to return the piece of crap.
Why setting a music player has to be so frustrating? Why you
have to buy blocks of points to buy a song that you cannot burn
into a cd? Talk about the seemless integration of the player and
software!
If you are a challenge oriented person, the zune is for you, but if
you just want to listen to music, you better try to stay away from
that brick.
The only appealing feature in the zune is the wifi "squirting" but
if there are not many out there, it does not make sense to have
one. ONE MILLION is nothing, how many people live in USA?
Microsoft has to give it away if they really want to have some
impact in the market...
I think the Zune will be death by June
Posted by MicroFreak (11 comments )
Link Flag
~ I Bought One ~
Hi Zunelover, congratulations that you are satisfied with your
zune. I wish to commment about the "success" of the XBOX 360.
MSFT's stock price has done zilch during that period it was
bleeding for XBOX in order to wedge itself into your living room.
MSFT has not done anything new or successfull in the consumer
space except to muscle their way by throwing money at these
"proven markets". These are cash generated from their
"convicted monoply practices" (for which they are now serving a
"sentence" lest we forget). They tried to get into our living
rooms years back via WebTV and setup boxes strategies but that
failed. And how well is Media Center PC (trying to get us to buy
another PC just for this?) doing? The only other gadget in
people's living room other than the fully wired up home theatre
system is the game console. So believe you me, MSFT is all
about subscription models (like debt, they want you to commit
your future cash resources so as to sustain them BUT what do
they give you? Look at how much adverse reaction they got even
from enterprises when they tried to move to a suibscription
based "software upgrade pricing model". Their culture is simple,
dominate and then go in for the kill. Perfect examples - Internet
Explorer browser. They killed the competiton and then they gave
us nothing for years; windows OS - how may windows OS was at
one time out there? ME, 95, 2000, NT, Home Edition, XP,
Professional Editopn? Why ? Why can't there be just one? or
maybe 2 ? Enterprise and consumer.

Therefore, my conclusion is , if MSFT ever dominates another
space like game consoles and MP3 players or downloads, woe
betide to our next generation.

I think Gates did a great job because during his time, IBM had
the hardware dominance and MSFT was the david against
goliath. But I believe he knows his contribution to the MSFT of
tomorrow is limited so he spends his time preserving what
history will write about him - the early years of MSFT and his
philantrophic years.
Posted by TheBoots (13 comments )
Link Flag
Prepare
...to be called "stupid", "ignorant", "idiot", "fool", "Appla hater", etc., by Apple fanboys.
Sadly, not everyone (in fact, not that many people) is not an Apple fanboy or unbiased towards Microsoft like you.
Posted by Ryo Hazuki (378 comments )
Link Flag
"Stay the course"
Microsoft's new motto.
Hmmmm. That's catchy. Wonder where they picked that up.
Posted by Norseman (1319 comments )
Reply Link Flag
your math is wrong dude
Dude, first check your numbers -- your percentages are off by a factor of 100!!!
Posted by hasstir (1 comment )
Reply Link Flag
Ballmer is "happy"?
Ballmer is "happy" with the fact that, according to the
Amazon.com sales tracker, the Zune is being outsold be every
single iPod model? That's right, every model of the iPod from the
Shuffle to the 80 Gb video iPod is currently outselling the Zune.
This makes me wonder: If Ballmer and Microsoft are happy with
this performance, what kind of sales performance would make
them unhappy? How do they define failure? If coming in at 5th
place among portable MP3 player manufacturers isn't a failure, I
don't know what is.

And what happened to all of the hype about the Zune turning
the color brown into a new fashion wave? The black Zune is their
best seller at around #70 and brown Zune sales are far behind at
around #200 to #300 on the Amazon sales chart. Perhaps we all
fell for Microsoft's marketing hype once again?
Posted by mofo111 (107 comments )
Reply Link Flag
yes "happy"
any company that would release a product into an established and overcrowded market would be happy to become the 5th best seller at launch.

Also Amazon.com is not the only retailer of electronics in the world. So their figures aren't the final say in sales. As the article states some area's are having a hard time keeping brown in stock.
Posted by DrtyDogg (3084 comments )
Link Flag
And yet Kanellos...
And yet Michael Kanellos enjoys giving Apple users a prod by
pronouncing an unreleased Apple product a "failure" before it
has been confiremed or has shipped.

No wonder peoplehave such a hard time taking C|net seriously -
they're afraid to call the Zune a failure because it might make
their largest advertiser mad, but their Editor will run an
inflammatory article about Apple because it's his birthday and
such articles make people mad.

What pathertic wankers.
Posted by Hep Cat (440 comments )
Reply Link Flag
Activation gap?
"The company said it is seeing a gap between the number of
devices that are being sold at retail and the amount that have
been hooked up to a PC and activated.

"We think a lot of Zunes are sitting underneath Christmas trees,"
Reindorp said."

I think the answer is more obvious: people have returned the
suspect units after the installation failed, or they found out after
purchase that Vista was unsupported, or that it wouldn't work
with their Mac, or that it wasn't actually an iPod...

The Zune is a failure - but C|net won't say so becuse it means
making Microsoft's ad-buying department unhappy.
Posted by Hep Cat (440 comments )
Reply Link Flag
The Zune Gambit Will End Badly for MSFT
The Zune thing, based on the most paranoid DRM scheme imaginable (payoff to the record labels) and burdened with a thousand tie-in schemes (MSFT lock-in as marketing ga-ga) is about as customer hostile as a car with no breaks that ignites randomly and runs on overpriced, watered-down gas sold by one company - which I guess is a fair analogy to Microsoft Windows.

Sure, great, yeah, they're on track to sell a million by next summer. Microsoft can loan money to orphanages in Africa to buy Zunes and get a million 'sold' by the middle of next year.

What does that do to the fact that most all the reviews for Zune on Amazon (not written by MSFT employees) say the device is the most calamitously malformed consumer electronics product ever assembled? How does that address the fact that every reviewer not directly employed or paid by Microsoft (there's a story to be written about MSFT's astroturfing sites) regards the Zune as a bundle of pathetic attempts to abuse the customer for every last dime and place them more in the thrall of the big media companies than even the old record labels could have ever imagined in their most diabolical dreams?

MSFT won the operating system market by manipulating the manufacturers and getting them to agree to preferentially treat Windows - (the boot loader issue that many old technologists asked Justice to investigate as the most potent and egregious restraint-of-trade behavior exhibited by MSFT and its unindicted coconspirators) - as the default operating system on most all assembled and shippped PCs. (Justice went for the simpler tale - Netscape, the abused billionaire's toy, was supposedly locked out of the Windows desktop. Sniff. It was so horrible, Judge Jackson. . . so very howwible how they, they bwoke my bwowser, boo-hoo, boo-hoo.)

Culturally, MSFT disdains of actual end users. They are completely beside the point in MSFT's universe. The PC ships with our stuff on it and they have to use it, end of story. Let one tell the boss they want to run Berkeley Unix. Good luck, clownface.

What MSFT will be left doing is throwing more royalties and levy payments to the labels in order to give them the precedents they need to attack Apple for the same fees and break Apple's business model. Again, the user, the technology and the experience are completely out of the picture. MSFT figures once they can bankrupt Apple's business model, they can shovel anything into the void, absorb the losses for years and drive Apple out of the business. The dev people and lawyers in Redmond are no doubt laughing themselves sick all over their Porches for dreaming up this scheme. . .

Predictable.

But Microsoft can't force the labels and consumer electronics companies to both accept a technology suite that bottlenecks the hardware and the distribution of content through MSFT technologies the way that the they managed with the operating systems they license to the manufacturers and, oh yeah, the end users.

Consumers can and do go to a lot of different sources for music and there is little that MSFT can do to change that in the downloadable music space except by buying Apple, Real, MP3.com, Emusic, Napster, Buymusic, AudioLunchbox and eClassical. Even if Justice let them buy a new monopoly they'd still be left to deal with the consumer electronics manufacturers who (like Sony and Philips) have their feet in both hardware and content camps and, of course, the record labels, probably the only industry on earth that can claim to have more diabolically ruthless characters than MSFT.

MSFT wins by creating chokepoints and exploiting them to control markets. The downloadable music scene is just too slippery an environment for MSFT to get a foothold and it's populated by monsters that would make the creature in the Alien movies look like Sister Bertrille.

MSFT, however, will not be able to game the labels they way they ultimately screwed over the PC manufacturers (who now complain all profit in the PC goes to MSFT) smaller companies they 'partnered' with (Latest victims: PlaysForSure partners. PlaysForSure? Wow, the lawyers must have lost another expensive lunch after coming up with that name, knowing they'd abandon it - 'Duh! Don'tPlayNow!' - when they were ready to roll their own player) and the competitors (Digital Research, Lotus Development) that they attacked with market-distorting tactics. (The IBM case - which included Lotus products IBM acquired in the claims - was settled last year.)

MSFT enjoys their badboy reputation because the company is chockablock with hyper-entitled, imagination-free, chair-throwing screaming child men like Ballmer but not in their most caffeine fueled, post-hoops hallucinatory fugue have they ever imagined the kind of monster they are playing with now. The labels will simply decapitate MSFT with endless demands for increasing piracy-levy payments and, finally, punitively expensive litigation if MSFT gives them the opportunity.

After all, the media industry is really one big litigation strategy masquerading as a business model. Before it's all over, it will look like The Flying Nun meets Alien and I know who Sister Betrille is in this analogy.

Couldn't have happened to nicer guys.
Posted by Sumatra-Bosch (526 comments )
Reply Link Flag
How Many of MS Employees Added To The 1 Mill
Just asking!
Posted by daveworld (123 comments )
Reply Link Flag
All the ridicule is deserved
I had my first look at the zune in Best Buy this weekend. It looked worse in real life than in the pictures. The zune has been the subject of much ridicule and the brunt of jokes. After playing around with it I can see why. I don't know of another product that has been so down trodden as the zune. My hunch is that the brand is forever sullied. I think all of the negativity directed at the zune is a sign that public sentiment towards microsoft is very low, if not hostile.
Posted by jeffgtr60 (35 comments )
Reply Link Flag
Hardly anything to boast about coming from MS
Disney (never knew they had a DAP) is tied with Microsoft at 5th place in market share.
<a class="jive-link-external" href="http://www.bloomberg.com/apps/news?pid=newsarchive&#38;sid=a4mxDq8JK89U" target="_newWindow">http://www.bloomberg.com/apps/news?pid=newsarchive&#38;sid=a4mxDq8JK89U</a>

Ballmer said:
".......There's a guy who's got a lot of share, and we're coming later in the day...So we have our work cut out."

Least he could do is mention Apple by their name, seeing that they copied Apple's blueprint with this Zune. Their PlayForSome strategy apperently did not work so they went back, studied Apple's game plan (really not much to study - satisfy to consumer) and implement the same game plane. To think, just a few months ago they were saying Apple's closed system will fail, consumers wanted more choice etc ect. Then they release their own closed propriority system, that's more restricted than the iPod+iTunes.

Let's not forget that with every Zune sold, universal gets a cut because we are potential criminals. What did you say, you don't steal music? Universal and Microsoft say otherwise, you criminals.
Posted by daveworld (123 comments )
Reply Link Flag
Losing to Win.
We all know the XBox division absorbed a loss for the first several years of production, sure this was covered in other areas of sales overall, but ultimately that's what it takes to break into a unfamiliar market. They survived on Halo for a while, but have since broken even ground and now are in the black while Sony is playing catch up.

Now the second generation, 360, is cleaning up. Users can't get enough of it and are complaining about not enough games for it (this is a good thing for MS, as it means they're systems are being played). That will come in due time, and it'll be neck and neck with the PS3 (if they ever get their sh*t together).

The Zune is on a similar path. MS is basically saying that our power will keep us in the game here. They're not taking on Apple but yet taking on sales in the portable music arena (which is what most fail to understand). They aim to cut out some similar competitors to gain market share and build a name for themselves; while adding sales and foot traffic.

Will you see the same sales as iPod? Not initially, hell, not for some time but they'll get there.

I look forward to the future of this XBox 360 meets zune meets Media Center land (albeit Linux). It'll happen, just watch the slow but perpetual market share growth turn into sales, downloads, links and overall users.
Posted by brilo (24 comments )
Reply Link Flag
re: Losing to Win
Not having enough games and relying on HALO to survive works for a game system, but what is the HALO for Zune?

Answer: nothing.

Music is music and people will buy their tunes where they get the best price, best selection and the least DRM blockage and the easiest purchasing method.

Period.

There is no HALO for a music player.

The target IS Apple as there really is no other major player out there, given Apple's massive market share.

Microsoft ALWAYS goes for market dominance and nothing less will EVER satisfy their business model. That means that they have Apple in their crosshairs. Unfortunately, Zune and their sales program FOR it, simply does not have the range, penetration or the impact to do much damage in the short run.

Whether Microsoft will keep it on the market for the long run is debatable.

But given Microsoft's profit-driven past, if this critter doesn't show serious market potential in the first year, I doubt that it will be around for very long.

Only time will tell.
Posted by mstrhypno (49 comments )
Link Flag
...or just plain losing (*shrug*)
[i]"Users can't get enough of it and are complaining about not
enough games for it (this is a good thing for MS, as it means
they're systems are being played)."[/i]

...and that explains why Burger King is giving away xbox games
w/ a meal purchase, right? (Notice how Sony and Nintendo don't
have to resort to that?)

Incidentally, you mention Halo. Unless a mega-huge band
(ferinstance, [i]Tool[/i],) announces that their next album will
only be released in Zune-only format for download (heh - fat
chance of that ever happening), There is no 'Halo' for Zune.

The rest is marketing blather. Judging by what's getting bought
now, during the biggest time of the year for buying such things,
Zune is sitting firmly in hind-teat position, and fading fast. If
they don't do any better by Christmas (or soon thereafter w/ the
gift card sales), they're screwed this year, and the stain will last
clear into the next two years, barring any miracles in Redmond.

A quick peek at Amazon's ongoing top-100 seller list shows
only one Zune in the pile... the black one, at #67. Meanwhile,
iPods are holding most of the top five slots, and a healthy
majority of the top 20... and that's not just music players, either
-- we're talking cameras and all other electronics equipment
that Amazon sells. On the brick-and-mortar side, Circuit City is
telling the same story with their top-sellers.

Music players are too different from other electronics... there is
no slow climb anymore.

Five years ago, MSFT might've had a chance. Now, they're
looking to share the same fate as the Dell DJ.

/P
Posted by Penguinisto (5042 comments )
Link Flag
It's kinda funny actually . . .
Let's see - The Zune "Debuted" in mid-November and there was
much "Pre-Debute" hype - aka "The iPod Killer".
After the "Debute", Zune seemed to drop out of the radar.

I just did a CNet News search and the last news stories reported
here on the Zune were:
"Gates: Ushering in Zune, spiffing up Office - November 16,
2006".
Preceded by:
"Zune moving at slow tempo - November 14, 2006".
(Those stories came out around &lt;hmmmm&gt; Mid-November
wouldn't you say?)

3 weeks later Zune resufaces on CNet with a total puff piece
headlined:
"Microsoft: Zune sales to top 1 million by June"
Which should of course have read "Microsoft 'expects' Zune sales
to top 1 million by July (or the 'end of' June)" since the word
'expects' was actually included in the 1st sentence of the article
as well as refering to 'the end of June'.

That was just the byline and the 1st sentence.
The fluff doesn't stop there though. Skipping past how "Mr. M$
P.R. Dude" touts thier first days initial sales "ranked &lt;Zune&gt;
near the top of Amazon.com's electronics sales chart.".
Somehow, according to "Mr. M$ P.R. Dude", Zune "now holds
about a 2 percent market share." ? ? ?

I must have missed something there. Could he have meant that,
in that 2 day period, the Zune sold about 2% of the 30GB
players? Does that really equate to them holding about 2%
market share? I think not.

It's amazing what you can do with numbers sometimes. Let's
skip ahead in the article a bit &#38; I'll show you what numbers can
do.

Meet Ms. Kevorkian, an IDC analyst (visions of Jack, aka Dr.
Death, spring to mind). "She expects Microsoft to have sold
about a half-million of the devices by the end of December. As a
point of comparison, research firm IDC forecasts that there will
be 21.5 million hard drive-based music players sold this year,
the vast majority from Apple Computer."

OK, let's look at the numbers of hard drive-based music
playersfor 2006.
21.5 Million sold.
0.5 Million are Zunes.
21 Million are Others
0.5/21=0.0238% (actual market share of HDMPalyers sold)

Then even if you stopped taking statisics at the end of Dec. for
all Other HDMplayers and gave the Zune thier 1 Million
'predicted' by the end of June you end up with:
1 Million Zunes
21 Million Others
1/21=0.0476% (actual market share of HDMPalyers sold)

A VERY far cry from what MS claims would give them "a 10% to
15% share of the market for music players with 30GB or more of
storage". Even when they try to quantify "30GB or more", the
numbers just don't add up.

None of this even takes into account that all of these numbers
leave out every Music Player under 30GB which, by the way, are
the vast majority of them. This means that the Zunes "actual"
market share in "all" MP3 Players will probably reach somewhere
well below 0.001% by the end of June.

The one image that comes to my mind is that, by the end of
June, there might be about a million very lonely people walking
around with brown brick-like Zunes desperately searching for
someone else with a brown brick in thier hands to share thier
music with.
Posted by K.P.C. (227 comments )
Reply Link Flag
GPS for ZUNIES
ZunieTunes MP3 should have a GPS tracking device built in to help you find another Zunie within a hundred mile radius that you can "squirt one".

Good luck finding other Zunies...Their best feature is a battery monster &#38; totally not going to be used very much.

Dumb idea BaldyBot.
Posted by Llib Setag (951 comments )
Reply Link Flag
MSFT Will Be Eaten Alive By the Record Companies
The Zune thing, based on the most paranoid DRM scheme imaginable (payoff to the record labels) and burdened with a thousand tie-in schemes (MSFT lock-in as marketing ga-ga) is about as customer hostile as a car with no breaks that ignites randomly and runs on overpriced, watered-down gas sold by one company - which I guess is a fair analogy to Microsoft Windows.

Sure, great. Microsoft can loan money to orphanages in Africa to buy Zunes and get a million 'sold' by the middle of next year.

What does that do to the fact that most all the reviews for Zune on Amazon (not written by MSFT employees) say the device is the most calamitously malformed consumer electronics product ever assembled? How does that address the fact that every reviewer not directly employed or paid by Microsoft (there's a story to be written about MSFT's astroturfing sites) regards the Zune as a bundle of pathetic attempts to abuse the customer for every last dime and place them more in the thrall of the big media companies than even the old record labels could have ever imagined in their most diabolical dreams?

MSFT won the operating system market by manipulating the manufacturers and getting them to agree to preferentially treat Windows - (the boot loader issue that many old technologists asked Justice to investigate as the most potent and egregious restraint-of-trade behavior exhibited by MSFT and its unindicted coconspirators) - as the default operating system on most all assembled and shippped PCs. (Justice went for the simpler tale - Netscape, the abused billionaire's toy, was supposedly locked out of the Windows desktop. Sniff. It was so horrible, your honor. . . so very horrible. . .)

Culturally, MSFT disdains of actual end users. They are completely beside the point in MSFT's universe. The PC ships with our stuff on it and they have to use it, end of story. Let one tell the boss they want to run Berkeley Unix. Good luck, clownface.

What MSFT will be left doing is throwing more royalties and levy payments to the labels in order to give them the precedents they need to attack Apple for the same fees and break Apple's business model. Again, the user, the technology and the experience are completely out of the picture. MSFT figures once they can bankrupt Apple's business model, they can shovel anything into the void, absorb the losses for years and drive Apple out of the business. The lawyers in Redmond are no doubt laughing themselves sick all over their Porches for dreaming up this scheme. . .

Predictable.

But Microsoft can't force the labels and consumer electronics companies to both accept a technology suite that bottlenecks the hardware and the distribution of content through MSFT technologies the way that the they managed with the operating systems they license to the manufacturers and, oh yeah, the end users.

Consumers can and do go to a lot of different sources for music and there is little that MSFT can do to change that in the downloadable music space except by buying Apple, Real, MP3.com, Emusic, Napster, Buymusic, AudioLunchbox and eClassical. Even if Justice let them buy a new monopoly they'd still be left to deal with the consumer electronics manufacturers who (like Sony and Philips) have their feet in both hardware and content camps and, of course, the record labels, probably the only industry on earth that can claim to have more diabolically ruthless characters than MSFT.

MSFT wins by creating chokepoints and exploiting them to control markets. The downloadable music scene is just too slippery an environment for MSFT to get a foothold and it's populated by monsters that would make the creature in the Alien movies look like Sister Bertrille.

MSFT, however, will not be able to game the labels they way they ultimately screwed over the PC manufacturers (who now complain all profit in the PC goes to MSFT) smaller companies they 'partnered' with (Latest victims: PlaysForSure partners. PlaysForSure? Wow, the lawyers must have lost another expensive lunch after coming up with that name, knowing they'd abandon it - 'Duh! Don'tPlayNow!' - when they were ready to roll their own player) and the competitors (Digital Research, Lotus Development) that they attacked with market-distorting tactics. (The IBM case - which included Lotus products IBM acquired in the claims - was settled last year.)

MSFT enjoys their badboy reputation because the company is chockablock with hyperentitled, imagination-free, chair-throwing screaming child men like Ballmer but not in their most caffeine fueled, post-hoops hallucinatory fugue have they ever imagined the kind of monster they are playing with now. The labels will simply decapitate MSFT with punitively expensive litigation if MSFT gives them the opportunity. After all, the media industry is really one big litigation strategy masquerading as a business model. Before it's all over, it will look like The Flying Nun meets Alien.

Couldn't have happened to nicer guys.
Posted by Sumatra-Bosch (526 comments )
Reply Link Flag
Thank You - A mouthful but well said
..........
Posted by daveworld (123 comments )
Link Flag
I use BSD Unix
Well, On Mac OS X :- )

I will never again buy a PC, what a piece of SH@#!

I got my G5 Power Mac almost 9 months ago now, and I love
it, no crashes, no freezses, it just works, like in the commercial.

I used to buy PC all the time, not anymore.

Laters : - )
Posted by rmiecznik (224 comments )
Link Flag
 

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