“Microsoft Corp. said on Thursday its new Zune music player will be sold at a price matching Apple Computer Inc.’s market-leading iPod and, as a result, lose money this holiday season,” Reuters reports.
“Microsoft’s 30-gigabyte Zune will retail for $249.99 — 99 cents higher than the iPod with the same amount of storage — when it goes on sale November 14. Songs available for download at the Zune Marketplace service will cost about 99 cents a song, on par with prices at Apple’s iTunes, Microsoft said,” Reuters reports. “The world’s largest software maker faces an uphill climb in trying to topple the popular iPod after conceding a five-year head start to Apple’s media player.”
MacDailyNews Take: Microsoft didn’t concede a thing. They tried PlaysForSure and got their collective ass handed to them by Apple.
Reuters continues, “Microsoft said it needed to put a comparable price on Zune, even if it meant that the company will suffer a loss from the device’s sales this holiday season.”
“The rectangular Zune media player has a round click wheel and is similar in appearance to the iPod, though slightly bulkier and has a larger 3-inch screen,” Reuters reports.
MacDailyNews Note: Zune “features” a fake click wheel that is really just a four-way rocker switch that’s presumably intended to follow the usual Microsoft strategy of trying to delude the buying public with products that are reminiscent of Apple innovations.
Reuters continues, “The music player is the first step in creating a new brand of portable devices, according to Microsoft officials, who also said a Zune phone is in the works… Microsoft said it will initially sell only music — and no video — at the Zune Marketplace. The company said it was negotiating with major record companies and labels.”
Full article here.
Related articles:
How Microsoft’s Zune can kill Apple’s iPod – September 21, 2006
Microsoft’s Zune insanity – September 21, 2006
The Microsoft Zune 1.0 dud – September 20, 2006
Microsoft’s underwhelming Zune a ‘viral DRM’ device – September 18, 2006
SanDisk teams with RealNetworks against new common foe: Microsoft Zune – September 18, 2006
Creative does Apple’s dirty work by immediately attacking Microsoft’s Zune – September 17, 2006
Motley Fool’s Jayson: Microsoft’s ‘just plain ugly’ Zune a meager offering, not an iPod killer – September 15, 2006
What’s in a name? ‘Zune’ a French-Canadian euphemism for penis or vagina – September 15, 2006
Crave at CNET: ‘Microsoft Zune, all the excitement that brown can bring’ – September 15, 2006
Microsoft’s Zune underwhelms – September 15, 2006
Enderle: Microsoft Zune ‘a design mistake’ – September 15, 2006
Microsoft hypocrisy exposed with Zune: What ever happened to ‘choice?’ – September 14, 2006
Analyst: Microsoft Zune with fake scroll wheel ‘hardly an Apple iPod killer’ – September 14, 2006
Analyst: Microsoft Zune won’t spoil Apple’s biggest iPod Christmas ever – September 14, 2006
Microsoft unveils Zune 30GB player, Zune Marketplace; declines to disclose prices – September 14, 2006
Analyst: Microsoft’s Zune an ‘underwhelming’ repackaged Toshiba Gigabeat; no threat to Apple iPod – August 30, 2006
Microsoft confirms brick-like Zune to be made by Toshiba – August 25, 2006
Microsoft Zune is chunky brick made by Toshiba – August 25, 2006
Microsoft to spend hundreds of millions, several years on Zune trying to catch Apple iPod+iTunes – July 27, 2006
Zune: Apple cannot lose. Microsoft cannot win. – July 26, 2006
Computerworld review: ‘Apple’s new iPods are better than ever’ – September 27, 2006
PC Magazine’s 19th Annual Readers’ Choice Awards for MP3 players: Apple iPod line – September 25, 2006
USA Today reviews new Apple iPod nanos, updated iPods, iTunes 7 (each earns 4 stars out of 4) – September 21, 2006
Time Magazine’s Gadget of the Week: Apple iPod 80GB – September 21, 2006
CNET Editor’s Choice: Apple fifth-gen updated iPod – ‘best, most attractive iPod to date’ – September 20, 2006
Disney’s remarkable 1st week iTunes movies sales should have studios clambering aboard Apple train – September 20, 2006
Disney sells 125,000 movie downloads via Apple’s iTunes Store in first week – September 19, 2006
PC Magazine review: iTunes 7 ‘Apple’s best effort yet’ (4 stars out of 5) – September 15, 2006
CNET Editor’s Pick: Apple’s new 2G iPod nano – ‘sure to be top choice among wide range of users’ – September 14, 2006
Apple debuts new iPod in 30GB and 80GB with Hollywood movies, games and new lower price – September 12, 2006
Apple intros new iPod nano with new aluminum design in five colors and 24-hour battery life – September 12, 2006
Apple unveils new iPod shuffle: world’s smallest digital music player – September 12, 2006
Apple debuts iTunes 7 – September 12, 2006
Zuned to fail
I don’t understand why they didn’t try to undercut the iPod’s price even if it meant losing money.
iPod = $249
Zune = $249
When the price is equal, you shop on features and there is just no accounting for the Zune.
So they will lose money on the hardware, and as Apple has proven with iTunes, they will barely break even on the 99 cents song model, and as all the other subscription services have proven, they will lose money on subscriptions.. So even if they gain some marketshsare, what’s the point? Ego?
PHIRST FOAST! what! No COMMENTS on a Zune?
The Redmond, Washington-based software giant has said it plans to invest hundreds of millions of dollars to develop and market the Zune, and acknowledged the investment may take years to bear fruit.
Please note that the words “lose” and “invest” are mutually interchangeable for the purposes of this article.
Bizarrely, my MW is “economic”. The world is a spooky place.
Serious question: Why can Apple maintain a 30%-40% profit margin on a $249 iPod and Microsoft can’t?
Goliath, it’s pretty simple – Apple sells so many iPods that the volume justifies cheaper components from manufacturers. Why does Wal Mart offer cheaper pricing? Same thing.
All this will do is give the millions of Apple haters something else to buy. It won’t make any sense except on an emotional level for many people.
Goliath,
I’m relatively certain that Apple doesn’t make 30% on an iPod, as I believe the figure is closer to 20-25%.
And the answer may have something to do with not including superfluous technology that nobody really wants.
People will quickly find out that it is definitely a faux click wheel. Not to mention that this thing won’t get squat for battery life with the mostly useless Wi-Fi feature eating up all that power. This sucker is absolutely going to be stillborn….
Not sure if I should take a Wii or go for a Zune…???
As clearly stated, even at 249.99 they are taking a loss. To undercut it further was probably not an option.
Herein lies a large factor as to why Zune will fail: who’s going to want to hitch their wagon to a product that is sold at a loss and thus has a cloudy future when the iPod makes Apple obscene amounts of money and is in no danger of being discontinued any time soon?
MS is hoping a lot of people signs up for subscriptions, because that’s the only avenue for them to make any money going this route.
So then Microsoft is betting on the notion that they will soon be matching Apple’s volume and will begin to turn a profit on the hardware? I suppose it’s possible, but unlikely.
Goliath: economies of scale.
When you buy 10 million of a thing, you get a better per-unit price for it than if you buy 1 million. (Same idea as warehouse stores like BJ’s, Sam’s Club, and Costco. Same reason Wal-Mart can sell things for cheaper than the competition – WalMart buys millions of widgets, while the competition buys hundreds of thousands.)
When you contract with a company to assemble your device, you get a better deal if you can commit to 8 to 10 million units per quarter than if you can commit to 1 million per quarter.
You spend the same amount of money designing the thing; but the cost is spread out over 10 million units rather than 1 million.
It’s not clear that Microsoft will lose money on each individual Zune player sold. It is baffling, though, that they expect to sell it at the same price point as an iPod and expect enough people to buy it to make a significant dent in Apple’s iPod market share.
I expect another “blood on the click wheel” story in the not-too-distant future.
Serious answer: Because Apple has at least 5 years of experience in the digital music marketplace and learned from their trial and errors with their manufacturers.
Since Apple built the marketshare to around 60% to 70%(depend on who you read from) using the $299 iPod benchmark. They can afford to cut the price down while ancipicating M$ wannabee copycat device entering the market on that price point. Apple is playing M$ like Lucy is pulling the football away in the last second to Charlie Brown.
The truly amusing thing about this Piece of Crap is that when it does finally ship, the 6G ViPod will ship within days . . . making the Zune DOA and the laughing stock of the electronics industry.
I weep (read that “pray”) for the death of the GTL (Great Thunder Lizard) in Redmond.
You also have to remember that Microsoft doesn’t have the R&D costs. They’ve left that up to Toshiba by re-packaging their product. Microsoft will probably not be putting much money into the music service either. They’ll just hire programmers to reverse engineer the iTunes store.
Stockholm Syndrome , anyone?
<i>”The truly amusing thing about this Piece of Crap is that when it does finally ship, the 6G ViPod will ship within days <i>
I’m not so sure about that. I think if Apple had a 6gen player close to being ready, they would’ve made certain it shipped before the holiday season. The fact that the iPod was just updated with minor changes may mean that we won’t see the 6th gen before next year. I can’t see Apple releasing a new generation in the middle of the year anymore because they have some hefty sales numbers to top for the holiday quarter… 14 million to be exact.
@G-Spank
“All this will do is give the millions of Apple haters something else to buy…”
Yeah, and then they will be even more pissed at Apple for FORCING them into buying a Zune. They’re just externalizing their self hatred, figure that one out!
Microsoft, is heading to be, if it isn’t already, the most hated business in the world.
On the one hand people are being robbed by identity thieves because of MS software, then they plan to charge ridiculous prices for Vista which is just a candified and more interfering (they call it secure) version of XP, and then they go and throw away more millions on something as hopeless as the Zune.
Gobal boycott of MS I say!
Anyone see an ad campaign of brown colored silhouettes coming?
MW ‘expect’as in expect more copying.
Besides economy of scale, MS has to pay Toshiba for the devices at their markup. Apple only pays the OEM (Foxconn, etc.) at a much lower rate. My guess is 20-35% margin on the iPods while Toshiba is probably charging MS $240-280 for the Zune.
Serious question (2): So you buy a Zune, other than songs you already have, where online do you purchase music for this thing? Does MS already have a service up and running?
If yes, could someone please point it out – (I know a link may not work, as you need specific software to access,) – because I am not aware of MS’s music store.
Thanks
I heard on the last PowerUser.tv podcast that when you rip a CD onto your Zune, MS will phone home and add their DRM to it. This ‘feature’ alone is enough to kill it since apparently 95% of our iPod songs are from CDs.
Here’s a Mac-user who actually wishes I DID have a Zune to play with. I don’t know if I’d like it, but the downside (IMO) to using the Mac is that there isn’t a PMP that works well with it other than the iPod.
My friends and I share music all the time and they already stated that they are purchasing a Zune for that main reason.
Again, this is just my opinion, but we Mac-users need an alternative to the iPod – just so that we could have the option, if we want it. Why in the heck are there no other PMPs that work with Macs anyhow?