By 11/27, the most popular model of the Zune, the black version, was at No. 76 while 7 of the Top 10 products were digital media players. The Top 10 players included six Apple iPods including the 30-gigabyte iPod which is identically priced as the comparable Zune at $249. Also on the Top 10 list was one MP3 player from SanDisk.
After its launch, Zune sales "met expectations" according to Microsoft. The real issue may be matching the amount and ease of use and re-use of media from the iTunes store. The gap is wide. Or is it that the Zune is noticeably heavier and has a shorter battery life? Its screen is bigger and it has a cool wireless feature but to date, it has not garnered the hip quotient to match the sleekness and consumer embrace that the iPod has achieved.
Let's look at what matters -- the data. One only needs to glance at a three month indexed stock chart comparing the two firms:
Zune is not material to overall revenue for MSFT. My thesis: it will continue not to be, and the performance gap the chart depicts and doesn't require our quantitative skills to ascertain, will continue.
Disclosure: Clear Asset Management is long Apple Computer Inc. (NASDAQ:AAPL) in the Clear Large Cap Growth portfolio.