Survey Shows There May Be Hope for Microsoft's Zune After All

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Zune Has Shot at iPod Market Share, Survey Says [Reuters]

Summary: Data compiled by market researcher NPD shows Zune took 9% of the U.S. portable digital music player market in its first week of sales, knocking Apple's iPod down to 63% from 70% and replacing SanDisk for the number two spot. USA TODAY reports however, that NPD doesn't track sales for Wal-Mart, Amazon, or the Apple Store. Recent reports show iPod is dominating Amazon's best-selling music player list, with Zune nowhere to be found. Separately, a survey conducted for Reuters during Thanksgiving showed 70%-80% of respondents preferred an iPod, while 7% chose Zune. Interestingly, 35% of those choosing Zune were for upgrades, compared to 18% for iPod. A Gartner analyst comments, "What you might be seeing are upgrades coming from some iPod users but probably more so from people who purchased PlaysForSure devices." One positive signal is 80% of respondents indicated they'd be receiving their first MP3 player, and 69% said they were either 'likely or extremely likely to buy or receive an MP3 player this holiday season.'
Related links: Media coverage: USA TODAY. Commentary: Microsoft's Zzzune (The Sound Of iPods Flying Off The Shelf) • Amazon Stats: iPod Continues To Dominate MP3 Sales • Zune Is DOA -- Sansa Anyone? • Microsoft To Give Portion of Zune Sales To Universal In Attempt To Hurt Apple. Conference call transcripts: Microsoft F1Q07, Apple F4Q06, SanDisk Q3'06.
Potentially impacted stocks and ETFs: Microsoft (MSFT), Apple (AAPL), SanDisk (SNDK) • ETFs: iShares Goldman Sachs Technology Index (IGM), iShares S&P Global Technology (IXN), NASDAQ 100 Trust Shares (QQQQ), Technology Select Sector SPDR (XLK), Vanguard Information Technology (VGT)

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Comments

[Tom B:]

If they re-priced down to about $50, they might find some customers in the the third world

2006 Nov 30 09:33 AM

[carleast:]

Your blog title is pretty misleading to say the least. Wow, Microsoft came second after one week of sales. As Andrew Corn highlighted in his blog Steve Zune was only up there for a week. After two weeks it's already dead. I just feel sorry for those who bought it who will never find anyone to share songs with via wifi. Biggest mp3 flop in history!

2006 Nov 30 10:06 AM

[Steven Towns:]

I have to disagree with you on this Carl. I know there's a lot of Zune bashers out there for obvious reasons, but I was presenting the survey's findings from a market share expectations and growth perspective. Setting the guidelines of the survey aside, the respondents' responses showed that 80% of them are first-time buyers, and among those 69% indicated they'd likely (or very likely) be buyers (or gift givers). That bodes well for all market players because it is an expanding market. I do admit the 7% who said they'd choose Zune is not very promising for MSFT, but I'd still argue the potential exists for new buyers). For instance, I recently purchased my first MP3 player in about 5 years and I went with the Samsung YP-K5J. I'd never buy an iPod for myself -- don't want to be like the crowd and don't want to deal with the proprietary format. Also, in the summary above, I pulled in a report from USA Today that showed NPD's data lacked coverage of Wal-Mart, Amazon and the Apple Store. The latter two, I'm aware experienced heavy traffic and reportedly strong sales.

2006 Nov 30 10:16 AM

[Tom B:]

"don't want to be like the crowd..."

Emotional arguement. You could always buy an iPod and paint it green.

..and don't want to deal with the proprietary format"

You mean MP3? Yea, I know iTMS uses AAC, but I almost never get MY music there. I mostly listen to Podcasts and stuff from archive.org, myself. So, Zunes' DRM-laden MP3 varient doesn't strike you as proprietary? Besides, who cares? PDF is proprietary. It also does what it does (presents formatted documents) better than anything else on the market, though some kind of XML may surpass it someday, MAYBE. Flash is proprietary,too. I use that all the time.

2006 Nov 30 10:40 AM

[Steven Towns:]

There's a lot of emotion in shopping for electronics and other higher-priced goods. Not to mention all the emotion behind the marketing of these products. Anway, I am not the ideal consumer for electronics firms because I tend to buy something and get my fair use out of it (notice it was 5 years between music player purchases) and do a lot of homework before I make my purchases (not that others don't!). I walked in to Best Buy during Thanksgiving holiday and there was a promotion by Samsung offering 40% off the above players, which I would have bought anyway at retail price. I picked up two of them. They are great, exactly what I wanted, and support my three file types seamlessly: personally ripped MP3/WMA and subscription music.

2006 Nov 30 10:54 AM

[Tom B:]

"I am not the ideal consumer for electronics firms because I tend to buy something and get my fair use out of it "

Me,too.

"personally ripped MP3/WMA and subscription music" WMA? You use a proprietary format like WMA?

2006 Nov 30 11:45 AM

[SA Editor J...:]

I myself am and always have been an iPod buyer. However, I just got back from a trip to circuit city where a friendly clerk gave me a long and in-depth Zune demo. And I have to say, I was surprisingly impressed. The screen size is bigger than the iPod's and the general menu layouts actually struck me as more user friendly than the iPod. Plus there were other unique features like the ability to set your own background and the song-sharing feature. Of course, none of these things are HUGE but they do bode well for future Zune sales and incremental market share capture. Carl, how you can say the Zune is 'already dead' and 'the biggest flop in mp3 history' is beyond my understanding; I think in all fairness, it's still very early in the game.

2006 Nov 30 11:51 AM