“Microsoft Corp. will likely lose money on its new music player, Zune, against Apple Computer Inc.’s ‘industry-leading iPod profitability,’ an American Technology Research analyst said Friday,” Barbara Ortutay reports for The Associated Press. “Analyst Shaw Wu said a perhaps unintended side effect of the software company’s entry into the portable music player market will be competition with its own licensing partners — even putting smaller ones out of business.”
“Wu said while it remains to be seen whether the Zune, with its similar pricing, bulkier form and ‘inferior battery life,’ will take share from Apple and its loyal customers, it will likely at least see modest success thanks to Microsoft’s vast resources and strong brand name,” Ortutay reports. “This success, however, may be at the expense of Windows “partners,” especially companies like Sony, Samsung, Toshiba and Creative Technology Ltd., and others that sell hard drive-based players.”
Ortutay reports that Microsoft’s “entry into the portable music player market, Wu said, will likely lead to a ‘civil war’ with its own partners. As the market now stands, customers either buy iPods or something else, regardless of brand name. For now, the non-iPod market is very fragmented, with 15 to 20 players. Some of those, especially smaller ones such as iRiver or France’s Archos, will probably exit the market — like Dell and RealNetworks did — or go out of business. ‘Ironically, it will hurt them more than it will hurt Apple,’ Wu said.
Ortutay reports,, “He reiterated a ‘Buy’ rating and a $91 target price on Apple.”
Full article here.
[Thanks to MacDailyNews Reader “Joe Architect” for the heads up.]
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“Analyst: Zune could lead to ‘civil war’ between Microsoft and Windows Media partners”
Yes, and the armies will be divided by the Jackie Mason/Donna Dixon line.
I disagree – I think that MS will hurt the medium size players – Creative and Sony – more than the smaller iRiver.
Why?
Because people buying a niche player are probably buying on price or a specific feature. The Zune can easily replace the Creative offering because the Creative offering is basically the same as Zune without the Microsoft brand – which for whatever reason some people actually prefer.
Let the bloodletting begin for Zune…
Sony isn’t a Windows Media Partner.
Real hasn’t exited the market. As a matter of fact Real has just entered the market in partnership with Creative.
Hummm what is that I’m feeling up my butt? is it MS?
How did the Zune become the 21st best selling electronic item on Amazon’s website already?
That’s not good. I wonder who would want one that badly before seeing it in person?
Take whatever ground you can get… the easy pickings first. Then deal with the big player.
Undecided iPod buyer holds iPod in store:
“Hmm, costs less that ZUne, longer battery life, looks great, works with free iTunes and iTStore on Mac and PC, huge user base and platform infrastructure, innovative design, well.. Heh, WTF! It doesn’t even come in BROWN?!? Sheeesh!
Undecided iPod buyer puts down iPod, grabs brown Zune and heads to register.
Apple Fan,
That’s good considering they have NOT been released yet and won’t until November.
DUH!
San Disk, Napster, Creative and Real are really mad.
Right now Bill Gates is doing what made him rich in the first place, stealing!
Yep, the BROWN is the killer feature …
Zune is #7 on Amazon.
@Roberto
How can Zune be #7 on Amazon’s best-seller list for MP3 players?
Well, let’s see….#6 is a SanDisk player.
#8 is the discontinued 60 GB iPod.
SanDisk is the 2nd best-selling player after the iPod. SanDisk as a whole has less than 10% marketshare. The Sansa e250 player that’s at #6 would be some fraction of that. Let’s be generous and say the Sansa e250 represent half of SanDisk palyer sales, which would give it a marketshare of 5%.
So Zune is somewhere between 5% and 0%. It might be selling just a few units more than an iPod that has been discontinued 3 weeks ago and still come in at #7.
Basically, we’re probably talking nothing more than a few thousand units bought by rabid MS fanboys since Amazon probably isn’t carrying that much leftover stock of the 60GB iPod now. That would result in one Zune user every 10,000 square miles or so. Big whoopee.
The $91 target price is laughable. But this is an institutional thing with investment firms. They are afraid of being sued by those taking their advice if they guess too high. And most of the analysts are simply too stupid to see what is coming.
Apple is a very special case with prospects that can not be captured by the normal metrics. It takes a deep understanding of the business, including the competition and the realization of the extremely high quality of leadership, management and engineering at Apple. After the October Jobs’ quarterly chit-chat with the analysts, I doubt that any investment firm will have less than triple digit targets – and the numbers they chose will still be way too low.
“. . . grabs brown Zune and heads to register.”
And that will be the catch phrase from now on for interns and nurses worldwide processing defecation samples.
Great job!
Zune. We’re number two. But we’ll still preload candid photos of Steve Ballmer laughing his ass off because stupid people made him super rich .
Nearly all non-Apple digital music players support WMA but not AAC. I say good riddance to them for supporting a proprietary Microsoft format that sounds worse than the alternative.
” Microsoft has gone on record to say it plans to spend hundreds of millions of dollars toward marketing the Zune in the next few years in an effort to catch the iPod’s success.
The company has also ack..”
Great Gods Below, does this mean hideous Zune TV ads and suchlike?
“Dude, yer gettin’ a ZUNE!!” – – “ZUNEsforSure” – –
“Where do you want to Zune today?”
Sweaty OnStage Ballmer sez: “Four words: I LOVE THIS MP3 PLAYER!”
I pray every night and every morning, just after brushing and flossing, that MS Zune flops with a floptacular flopping noise heard ’round the world.
Methinks that Dell’s player is history and Sony’s marvelous BEano is long since toast; err, Note to Microsoft : try buying a CLUE for a change.
thanks Ampar – you’re a cool frood (ref: hitchhiker’s guide)
Can’t wait to see the iZunes store.
I guess the opening day they will be discounted all ‘Brown’ artists: James Brown, Clifford Brown, Chuck Brown……
Brownies at the entry? And I don’t mean a Zune mini, OK?
“…customers either buy iPods or something else…”
logic at its finest.
It’s not really about iPods, it’s all about the DRM. The DRM that begins to dominates the marketplace will become even more ubicuious (e.i., computers, pods, movies, tunes, set-top boxes, radios etc.) and will religate the loser, their software and all their devices obsolete and into decline.
Like the brower wars a certian software company will use vast sums of their ill-gotten-gains and monoply power to drive it’s competor out of business and regain control of the marketplace. Let’s hope Apple remains nimble enough to out innovate this competitor. I do believe Apple has been at this crossroad before and this time fully understands their opponent and the underhanded tactics that they will most surely employee.
So, it’s not about iPods, it’s all about the DRM.
I say this every time one of these articles is posted, because y’all never remember: Jobs invited Gates into the Mp3 player market. The water’s fine! Remember, guys? Apple knows what they’re doing. Microsoft’s old ways won’t work anymore.