MS Zune floats upsidedown on top of MP3 player aquarium
Zune’s Boss Steps Down. Is the iPod Killer…Dying?
Bryan Lee, the head of the Zune project for Entertainment and Devices Division at Microsoft, is leaving the company “to focus on the next chapter in his life,” but analysts claim it’s something fishy about his departure.
A spokeswoman for the Redmond behemoth declared that the corporate vice-president at the EDD is stepping down “to pursue personal interests.” Zune is Microsoft’s digital portable media player and is also associated with the online music store (an iTunes rival). The portable MP3 player was released to the U.S. market with a 30 GB model for US$249.99 on November 14, 2006.
The EDD planned a $100 million advertising campaign for Zune, with “music the way it wants to be” as a major theme. Microsoft has enrolled approximately 300 “Zune masters” to advertise the device on American college campuses. They receive free merchandise, including a Zune; in return, they are expected to promote the item and run Zune-related events.
But apparently this was not enough. The Zune (previously called “the famous iPod-killer”) didn’t scratch the surface of the iPod.
Overall, Apple still maintains a tight grip on the MP3 players market, with 82.7 percent market share for the hard-drive iPods in the first half of December 2006, but down from the 86.8 percent registered last year. Considering both hard-drive and flash-based MP3 players, Apple holds an impressive 62.2 percent market share for its gadget, almost the same percent as in 2005 (63%).
As a comparison, Zune managed to obtain 9% market share in the first week since its launch in November, making it the second most important MP3 player, but far behind iPod. Zune’s success is diminished though when we consider that it took 9% of the hard drive MP3 player market. These numbers also do not include sales from Apple retail stores, which sell only iPod players.
Despite the heavy investments in advertising and marketing, Zune was received by consumers with indifference. A survey of 40 retailers conducted by Piper Jaffray analyst Gene Munster found only 8% of the sales people recommended Zune last year compared to 75% recommendation for Apple iPod, and that most of the sales people did not even know what Zune was or who made it.
“This is clearly a sign of trouble in Zune-land,” said Van Baker, industry analyst at Gartner Inc., citing sales results for the Zune device. “It had an acceptable launch week, but then it immediately slowed down.”
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