Can Zune Compete With iPod?

by: Compete October 16, 2008 | about stocks: AAPL / MSFT    
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Compete

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MP3 players will be on consumers’ shopping lists this holiday season, but can anyone compete with Apple’s family of iPods?

There are many MP3 players on the market, but if any device could be a viable alternative to the iPod, the Zune seems to be a likely candidate. Free from the iTunes DRM on music, it also boasts a built-in FM radio tuner and a set of music-discovery and sharing attributes that could capture consumer interest.

Still, it looks like the Zune has some catching up to do, at least judging by traffic to manufacturers’ sites.

Note: “All iPods” includes the iPod Shuffle, iPod Nano, and the iPod Touch
  • iPods on Apple’s site got at least 2x as much traffic as Zune.net each month over the past year
  • The difference in traffic between the sites has been decreasing overall
  • iPods got a bigger holiday lift in December 2007 than the Zune in terms of absolute numbers. Although Zune traffic more than doubled, iPod traffic increased by just over 80% that month

So, will there be more Zunes under the tree this year? Quite possibly. But iPods will likely maintain the edge for a two reasons.

First, there’s price. If shoppers are watching their budgets this season, they’ll likely go for low price or better value, and iPods arguably provide both. The lowest-end Zune is a 4GB model priced at $129.99, while for just twenty dollars more you can get an iPod Nano with double the storage. The Zune lineup also lacks a smaller-capacity player similar to the more gift-able iPod shuffle, which has only 1-2 GB of storage and no screen, but starts at $49.

Second, and perhaps more importantly, there is the power of the installed network of iPods. The Zune’s social-music features are a key differentiator, but as a recent review pointed out, they don’t work well if your friends don’t have the device. Getting the Zune in more consumers’ hands is made more difficult by the fact that the iPod is a sub-brand of an iconic brand and part of a suite of compatible products that project the same image. Zune, as a brand, is not in the same league—at least, not yet.

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This article has 15 comments:

  •  
    Oct 16 02:03 PM
    No.
    Reply | Link to Comment
  •  
    Oct 16 02:46 PM
    Wow, I haven't had to say this in a while, but you're an idiot. Your statement, "free from the iTunes DRM on music", just doesn't make any sense. You can load the same DRM free music on to an ipod as a Zune!! You don't need to use itunes to buy your music and itunes has DRM free music.

    And why compare internet traffic to the respective sites; it doesn't say ANYTHING about sales. A completely useless statistic.
    Reply | Link to Comment
  •  
    Oct 16 02:50 PM
    Deeply confused and compromised article and not worth publishing by SA. Any fool could write this stuff because it says nothing. The sun will rise tomorrow - it may be bright, it may be blinding. So, what is new?
    Reply | Link to Comment
  •  
    Oct 16 03:00 PM
    I heard from someone before that Microsoft invested some of their cash in Apple shares. That says something.
    Reply | Link to Comment
  •  
    Oct 16 03:13 PM
    Simple answer to the title question: NO.
    Reply | Link to Comment
  •  
    Oct 16 04:35 PM
    Uh, jeezus, hasn't that question been asked, AND ANSWERED, a long, long time ago? WTF!!?, who plucked this old story out of the garbage bin that no one bothered to empty for the last 2 years?
    Reply | Link to Comment
  •  
    Oct 16 04:47 PM
    OH but MSFT has this new Campain going on!!!! What a drivel article....

    Is anyone honestly going to be swayed by this really lame marketing campaign? Seriously, this reeks of desperation from Redmond. I'm beginning to wonder if, in fact, anyone cares that Microsoft's recent major product campaigns -- perhaps with the lone exception of the XBox -- have all been major flops. Put another way, Microsoft doesn't matter anymore.

    Exhibit B: the Zune. Also in 2006 (November to be specific) Redmond launched the Zune, Microsoft's answer to the iPod. As of May 2008, the company had sold 2 million of the little guys. The company likely retains its single-digit market share in the portable digital music player sector. As MacUser's David Dahlquist put it at the time:

    Apple, in the meantime, has sold 10.6 million iPods in its latest quarter. If one does the math, that means that Apple has moved more than five times the amount of MP3 players in the last quarter than Microsoft has moved in the last year and a half. Coffee break's over, boys; time to learn how to innovate.

    Last month, Microsoft decided that it could improve on the first generation by releasing new versions of the players along with new software to go with it. The New York Times' David Pogue wrote:

    The new Zunes haven't changed at all except in color: blue, pink, red or black for the Nano-like model (4 to 16 gigs, $130 to $200 ) and black for the 120-gigabyte model ($250). But next to the sleek, shiny iPods, Zunes still look like dark, Soviet-made bricks.

    .

    Earlier this year, the Zune Guy (he got a tattoo with the Zune logo!) went iPod, and the major American electronics retailer GameStop decided to stop selling them entirely. Among my gadget-toting friends, I've only seen one in the wild. And I've seen more iPods than I can count.


    OH butthe Zune is gona make a COME FROM BEHIND VICTORY!!!

    iJah420 says PPPPPPUUUUUUUKKKKKEEEE... on MSFT
    Reply | Link to Comment
  •  
    Oct 17 06:32 AM
    iPod is a music player which customers like to record and keep their favorable music. iPod touch allow softwares to play radio stations music is a very good function.
    Why built a FM tuner like Zune with recorder? Zune expect customers to spend time listen to Radio or plain music?
    Reply | Link to Comment
  •  
    Oct 17 08:39 AM
    yeah really.. besides it's already been established that the zune never will compte with the iPod
    how many times do we need to read this ?? every once in a while someone comes up with this stuff
    Reply | Link to Comment
  •  
    Oct 17 08:42 AM
    "Free from the iTunes DRM on music"
    that is total and absolute BS .

    The same music DRM free music that you load onto your Zune can be loaded onto the iPod..
    Reply | Link to Comment
  •  
    Oct 17 09:22 AM
    Funny, just yesterday I had checked up on the Zune on Amazon.com's electronics bestseller list.

    The result at the time of my check: there was a Zune at #14 on the list, followed by another around #47:
    www.microsplot.com/blo...

    Which is pretty much the same sad status as two years ago:
    www.microsplot.com/exp...

    As you'd expect, the top numbers are heavily dominated by iPods.

    Of course, the above makes for one tiny data point, and Amazon rankings can jump wildly, so don't make too much of it! But in any case, there it is.
    Reply | Link to Comment
  •  
    Oct 17 10:23 AM
    i'm trying to type this while laughing. really... this makes no sense at all. not only are there a zillion ipods out there, but there's also the iphone, 10 million of them in a brief time, that are also ipods!! and..you can download a radio app for free.
    but now the zune comes in colors. gee... if only that made it a good product. Gates picked the right time to get charity minded and leave...between vista and zune, it's hard to pick the biggest loser.
    Reply | Link to Comment
  •  
    Oct 17 06:40 PM
    "Zune, the new BoB"
    Reply | Link to Comment
  •  
    Oct 17 08:54 PM
    Zune also has its own DRM called "Plays For Sure".

    All iPods play DRM free music as well as the CD's that you rip and import to iTunes; you can buy DRM music from any competitors sites like Amazon, and load on the iPod. iTunes sells DRM free music, as well as movies, TV shows, podcasts, games, audiobooks, etc.

    This article is uninformed tripe.
    Reply | Link to Comment
  •  
    Oct 21 12:39 PM
    I have had three ipods. They are a piece of crap as they break very easily. I wish there is another alternative on the over 80gb category. The reason I won't buy the Zune is because it does not have an equalizer and I also bought some songs from Itunes that are protected. I know that I can burn those to a cd a convert them to mp3's again, but that too much work.
    Reply | Link to Comment
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