“After two years in the music player business, Zune only has a 2 percent market share,” Saul Hansell reports for The New York Times.
“When the Microsoft delegation arrived last year to unveil the second generation of players, Chris Stephenson, Zune’s marketing head, said the company’s low market share in its first year was because it had only offered a hard-drive model at the high end of the market. With the addition of less expensive flash players, starting at $149. Mr. Stephenson said the company hoped to vault to No. 2 in the market, leaping past SanDisk,” Hansell reports.
“‘Fifteen percent [market share] would be great for us,’ he said,” Hansell reports.
Hansell reports, “SanDisk still sells four times more music players than Microsoft does.”
When Adam Sohn, the head of public relations for Microsoft’s Zune division, demoed the “new” Zunes models, Hansell reports, “I didn’t see anything in the third generation of Zunes that is going to shake up the market. Like Apple, it added capacity at its existing price points. It’s got a little trick to let you identify songs you hear listening to the FM radio and buy them from Zune’s music store.”
MacDailyNews Take: Wonder where they got that idea?
• Sony unveils four ‘Xplod’ Apple iPod-compatible car stereos with Apple iTunes Tagging – August 28, 2008
• Clear Channel Radio now broadcasting over 340 HD stations compatible with Apple iTunes Tagging – April 08, 2008
• Apple iTunes Tagging explained – March 13, 2008
• Bloomberg News columnist William Pesek: Why doesn’t Apple just buy Sony (or Nintendo?) – February 18, 2008
• Apple Stores to sell Polk Audio iPod, iTunes Tagging for HD Radio products throughout U.S. – February 04, 2008
• Sony unveils Made for iPod shelf systems, car stereos, HD Radio with iTunes Tagging – January 08, 2008
• Apple to push HD Radio boomboxes with iPod docks and iTunes tagging at Macworld Expo – December 28, 2007
• High hopes for Apple iTunes tagging for HD Radio – November 05, 2007
• How does tagging for Apple iTunes work? – October 10, 2007
• Clear Channel teams with Apple on iTunes tagging for HD Digital Radio – October 03, 2007
• Polk intros I-Sonic Entertainment System 2 with Apple iTunes Tagging – September 07, 2007
• Apple, iBiquity Digital, major radio broadcasters announce iTunes tagging for HD Radio – September 06, 2007
Hansell continues, “Two years after introducing the only really groundbreaking feature on the Zune — its WiFi access — Microsoft finally will let users buy songs directly on the device using the WiFi. (Yes, Apple, which has had WiFi devices since the iPhone and iPod Touch, added wireless purchases last year.)”
Hansell reports that Sohn “admitted that the new $229 starting price point for the iPod touch, which has a larger screen yet, was going to cause some trouble in that corner of Zune’s tiny market.”
“Unlike Apple, Microsoft has a big division devoted to advertising. The WiFi connections on all the Zune players would be ideal to stream ad-supported video and maybe music,” Hansell reports. “We’re working on it, Mr. Sohn told me.”
MacDailyNews Take: There’s a selling point. 
Hansell continues, “Meanwhile, Apple continues to weave its way deeper and deeper into the music, video and now telephone business. And it has a shot at defining the next platform for handheld computing as well.”
Full article here.
[Thanks to MacDailyNews Reader “HMCIV” for the heads up.]
How do you kill something that was stillborn? Unless they think it’s funnest to make it deader.
“…And it has a shot at defining the next platform for handheld computing as well.”
I’d say Apple has already begun that definition, and is expanding it with every new version of the iPhone and iPhone OS!!
He’s a day late and a dollar short!!
“Zune’s marketing head, said the company’s low market share in its first year was because it had only offered a hard-drive model at the high end of the market.”
It’s like a mentally challenged mechanic looking at a completely destroyed and mangled car. He points to a flat tire and says,
“Here’s your problem.”
Ads huh? No way. No how.
At the very next iPod Announcement were Steve covers the iPod market numbers he should lump the Microsoft’s Zune in with Other’s if it’s still around. So, there would be iPod, Others and SanDisk. This would so piss-off Ballmer that he’d have a blowout and need all new Office Furniture.
@Nick Fury –
Wow – one of the greatest comments ever. I can see it in my minds eye…
The only thing that makes it worse is Balmer listening to the mechanic and saying is that all? Just the tire? Well – lets get that fixed – we’ll be back on the track in no time. We should be able to pull to 2nd place for sure…
(Imagine chubby Balmer stuffed into a nascar suit urging his mechanic to finish with the tire while everyone else races past…)
“And it [Apple] has a shot at defining the next platform for handheld computing as well.”
rahrens is right. The iPhone and iPod Touch *are* that next platform, and they’re already here. With 3,000 applications and growing. How many apps did the PC or Windows have only months after rollout?
@nick
good one.
the zune might have stood a chance at beating sandisk if it was run by… lemurs, instead of ms.
“Unlike Apple, Microsoft has a big division devoted to advertising. The WiFi connections on all the Zune players would be ideal to stream ad-supported video and maybe music,” Hansell reports. “We’re working on it, Mr. Sohn told me.”
Sounds like a barrel. This sounds like the subscription service in regards to it being considered only from the potential profit IF people use it, rather than considering how willing consumers will be to tolerate ads. Sure, it would be a great revenue stream. Too bad it will cause consumers to have even less incentive to buy a Zune.
Please MS, don’t kill the Zune. Keep it so it can bleed more of your money with its 2% market share. The more failed products you are trying the support the better.
Keep up the good work Ballmer. We love your style.
Thanks, DreamTheEndless and Peruchito. I’ve had the misfortune of dealing with a couple of mechanics like that (but not quite the hyperbole of the example I gave)!
M$ could probably get 15% market share if they bought both Creative and Sandisk.
“lemurs, instead of ms”
Good point. And yet they are both quite adept at flinging poo.
That’s Hansell. He’s so hot right now.
Lisa:
“Gas fight!”
The problem for Microsoft is, if their share remains at 2%, the bleeding on the Zunes they sell will be insignificant to their bottom line. They only lose a few hundred dollars for every Zune sold. Now, if they were to really shoot up to No. 3 (or even 2), then they would start bleeding money more seriously, assuming that their profit losses per unit remain stable and robust…
Don’t knife it! it will squirt everywhere!
It would be even more funny if MS started giving Zunes away and they STILL couldn’t gain market share.
They still make Zunes?
Shit. Okay, I’ll be back in 6 more months.
What’s the chance of M$ buying beleaguered Dell so M$ has a place to sell vista?
“The WiFi connections on all the Zune players would be ideal to stream ad-supported video and maybe music.”
Gee Whiz, you mean, like one of those little portable TVs or an FM radio? That’s really 21st century!
I can’t believe MDN got the title wrong!
Its time for Microsoft to flush the Zune!
Just bought an iPod Touch for my daughter using MDN’s ad. Are you happy now MDN?
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but if they kill the Zune, what becomes of Zune Tang?
“but if they kill the Zune, what becomes of Zune Tang?”
He moves to Poon, buys some blue eyeshadow and a few frilly dresses and starts a new life as a cross-dressing call girl.
There’s a happy ending for everyone.