“If you’ve been following news reports for the past two months, you’ve most certainly heard about Microsoft’s Zune – the company’s first self-badged portable media player and most recent “iPod killer.” And you probably also know that pundits have already declared Zune dead in the water, months before its official release. Besides chiding it as a weird-looking iPod wannabe, writers have questioned whether its wireless and video functionality will even work properly, then pointed to its lack of iPod-beating features, plus Microsoft’s apparent inability to match Apple’s online media store, marketing, or cool factor,” Jeremy Horwitz writes for iLounge.
Horwitz writes, “But there are two factors the pundits have ignored: iPod retailers and developers. Strained by pricing and other pressures from Apple, these two key partners in the iPod’s growth are offering Microsoft greater support than anyone might have imagined two or three years ago. And for that reason, Zune may have a better-than-expected chance at grabbing market share in the 2006 holiday season.”
“Why would a store try to push Sandisk players on people at a time when iPods are ultra-hot? Profits. Since Sandisk aggressively controls its costs by owning and licensing out the flash memory technology it uses, there’s a significant profit margin on Sansa players, which the company passes along to retailers. These stores would rather sell more units of high-margin players than more iPods, which despite their incredible popularity carry amazingly low retailer profit margins,” Horwitz writes.
Horowitz writes, “Microsoft has already approached retailers with promises of the marketing support, profit margins and accessories the stores have been hoping for. While we have heard rumblings that Apple may be attempting to mend strained relations with these retailers, it’s unclear which products – iPods or their competitors – will receive the lion’s share of attention from these stores by the end of the year. “
Much more in the full article here.
Interesting. Will Apple make one of the same mistakes that it made with the Mac in the not-so-distant past? (Ever wonder why retailers pushed WIndows boxes over Macs back in the late 90’s: the spiff was a major factor.)