Zune crashing out of the market

MS didn't do that well in their quarterly filing, and a closer look shows that the Zune seems to be heading for the long list of MS market mishaps.

CNet said:

Tucked away in Microsoft's quarterly filing with the Securities and Exchange Commission, however, was a startling figure.

"Zune platform revenue decreased $100 million, or 54 percent, reflecting a decrease in device sales," Microsoft said. That's quite a drop

Do I still want one? Mmmm ... no.

It seems increasingly unlikely that the Zune will officially supported and sold in any other country, and I have a feeling that in a few months time, MS will treat Zune owners to one of their famous 'the product was an interesting experiment; we learned a lot' speeches.

I still want one but must admit I am worried about the future of the device.  I do feel though that Microsoft have limited the Zune appeal and profit line by not taking it into other territories (UK, Japan, Iceland etc) and once again doing a ultimate vista vanishing act of promising to do great things with the device but never really keeping that promise (that said, keeping the V1 features in line with V2 was an awesome move).

I think there is a lot that can be done to save the Zune but it's gonna depend on if they're as willing to take as big a gamble on the Zune as they did with the Xbox.  At the moment my brain says they will but my heart feels it will be shelved within the year.

Well for a time as a company we tossed about the idea of developing some applications for employing these devices in our data collection projects. Their form factor is compelling and the ability to develop in c# targeting them is also compelling.

But the lack of multi touch kept us away in favor of the IPhone instead and now I can see that we likely made the correct decision (For once, as a peek in my office will attest I often jump on something just as it goes away.... )

Oh well even a broken clock is right sometimes....

I really don't think judging the sales of a device during a recession is really fair.  Everything is tanking right now and everyone is cutting out luxury items.  I read somewhere (trying to find the article) that even though Zune sales were down that music sales were still up.  Music sales are typically where all the money generation comes from.

JeremyJ said:

I really don't think judging the sales of a device during a recession is really fair.  Everything is tanking right now and everyone is cutting out luxury items.  I read somewhere (trying to find the article) that even though Zune sales were down that music sales were still up.  Music sales are typically where all the money generation comes from.

I can see what you're saying, but in this case, it is entirely fair. The near  collapse of sales is not just down to recession, especially when you consider that Apple is in the same recession, and actually managed to increase sales of the iPod line.

I think the writing is on the wall, pretty much.

Ray7 said:

JeremyJ said:

*snip*

I can see what you're saying, but in this case, it is entirely fair. The near  collapse of sales is not just down to recession, especially when you consider that Apple is in the same recession, and actually managed to increase sales of the iPod line.

I think the writing is on the wall, pretty much.

The iPod had a huge head start and had consistant sales whereas the Zune was building momentum.  It is a lot easier to maintain momentum than to continue to accelerate.  They were in two completely different market positions so I still feel that it is an unfair comparison. 

It is similar to comparing the sales of Tesla with that of Toyota.  Whose sales do you think will be hurt the worst in a recession?

JeremyJ said:

Ray7 said:

*snip*

The iPod had a huge head start and had consistant sales whereas the Zune was building momentum.  It is a lot easier to maintain momentum than to continue to accelerate.  They were in two completely different market positions so I still feel that it is an unfair comparison. 

It is similar to comparing the sales of Tesla with that of Toyota.  Whose sales do you think will be hurt the worst in a recession?

Actually, I'd hazard Toyota's.

Toyota's car buyers are your regular joes who are most affected by the recession, whereas Tesla's stereotypical customers are affluent dotcom millionaires.

Also, Tesla takes preorders years in advance, so they should be doing alright for the next year or so.

W3bbo said:

JeremyJ said:

*snip*

Actually, I'd hazard Toyota's.

Toyota's car buyers are your regular joes who are most affected by the recession, whereas Tesla's stereotypical customers are affluent dotcom millionaires.

Also, Tesla takes preorders years in advance, so they should be doing alright for the next year or so.

The main problem with Zune is not whether its a great device or not, it is a very good device.  The problem being is that its tied to Windows.  I love my Zune but I more often go to my Walkman because I can load music from my Linux and Mac boxes, where the Zune I have to be in Windows.  If Microsoft was to support the Mac and just make the zune where it mounts on OpenSolaris and Linux as an external hard drive to where I can load music and video from my Linux and Mac boxes I would use it more.  But coupled with the fact I rarely boot a Windows instance anymore means less time I use the Zune.  I do use it on flights and long trips because battery life is exceptional.

rjdohnert said:

W3bbo said:

*snip*

The main problem with Zune is not whether its a great device or not, it is a very good device.  The problem being is that its tied to Windows.  I love my Zune but I more often go to my Walkman because I can load music from my Linux and Mac boxes, where the Zune I have to be in Windows.  If Microsoft was to support the Mac and just make the zune where it mounts on OpenSolaris and Linux as an external hard drive to where I can load music and video from my Linux and Mac boxes I would use it more.  But coupled with the fact I rarely boot a Windows instance anymore means less time I use the Zune.  I do use it on flights and long trips because battery life is exceptional.

Personally, I think the Zune's problem is that there are a lot of devices out there that either do more for the same money, or do the same for less money. And are availabe worldwide.

Although the same could be said about the iPod.

rjdohnert said:

W3bbo said:

*snip*

The main problem with Zune is not whether its a great device or not, it is a very good device.  The problem being is that its tied to Windows.  I love my Zune but I more often go to my Walkman because I can load music from my Linux and Mac boxes, where the Zune I have to be in Windows.  If Microsoft was to support the Mac and just make the zune where it mounts on OpenSolaris and Linux as an external hard drive to where I can load music and video from my Linux and Mac boxes I would use it more.  But coupled with the fact I rarely boot a Windows instance anymore means less time I use the Zune.  I do use it on flights and long trips because battery life is exceptional.

So you're saying that the Zune's main problem is that is designed to work with 90% of the world's desktop computers?

Somehow, I think not.

I would like to see gross margin numbers and net/gross profit before I completely dismiss the Zune tbh. They probably have a lower gross margin the iPod Classic because the Zune has more complicated circuitry (and thus more expensive to make), and Apple probably is in a better situation to negotiate better wholesale prices from retailers and hardware makers. But I am still interested on how much money (if any?) Microsoft makes per Zune sold.

Ray7 said:

rjdohnert said:

*snip*

So you're saying that the Zune's main problem is that is designed to work with 90% of the world's desktop computers?

Somehow, I think not.

Well at best it means 10% of sales are lost, which is not trivial. On top of that they may lose the "I use Windows now, but I am looking into Apple/Linux eventually" market.

Anyway Microsoft went of our their way (Zune uses obfuscated/encrypted communication protocol, instead of Microsoft's own MTP standard) to make it very difficult to impossible to work the device anywhere but Windows, and anything but the Zune software for that matter, so I think "Windows-only-by-force" was part of their business strategy. Why? I can't tell you this. Maybe they thought more people will stick with Windows just for the Zune.

I have a Sansa mp3 player.  It costs a lot less than the Zune or iPod and works great.  When i pug it into my computer it is recognized as a disk drive and then I just drag files from my computer onto the device.  This is how all devices should work..  As for the popularity of the iPod, I can't explain it.  Apple has some strange control over people that makes them want to pay more for devices that do less.

In fairness Apple's devices are often exceptionally well designed. They lead the market in interfaces and "user experience."

I haven't used the Zune but last time I did use one of Microsoft's mobile OS's it was a terrible Windows clone and even getting a damn application to close was a headache. If the Zune used anything even remotely close to Windows CE or MCE's interface then it is badly designed.

ManipUni said:

In fairness Apple's devices are often exceptionally well designed. They lead the market in interfaces and "user experience."

I haven't used the Zune but last time I did use one of Microsoft's mobile OS's it was a terrible Windows clone and even getting a damn application to close was a headache. If the Zune used anything even remotely close to Windows CE or MCE's interface then it is badly designed.

I've tried a Zune once. It was okay, but not perfect. On its own it's good, but when compared next to the iPod it's got a lot of room to improve:

• It's too thick
• The control pad doesn't feel as 'natural' as the clickwheel
• The UI isn't as fluid or smooth as the iPod, it's as if it's clocked at 30fps

Oh, and consider this: the Zune has supported game and app development since the second version was released, yet the Cocoa Touch API was only released to the public a few months ago, now which platform has the larger customer base and thus incentive to write programs for it?

Heywood_J said:

I have a Sansa mp3 player.  It costs a lot less than the Zune or iPod and works great.  When i pug it into my computer it is recognized as a disk drive and then I just drag files from my computer onto the device.  This is how all devices should work..  As for the popularity of the iPod, I can't explain it.  Apple has some strange control over people that makes them want to pay more for devices that do less.

The iPod's user experience is arguable. I found my sister's particularly unintuitive, although admittedly I was looking for features that didn't exist. My phone is a better MP3 player than an iPod.

And please don't get me started on iTunes…

Cupiditas said:

Heywood_J said:

*snip*

The iPod's user experience is arguable. I found my sister's particularly unintuitive, although admittedly I was looking for features that didn't exist. My phone is a better MP3 player than an iPod.

And please don't get me started on iTunes…

I hope they do not stop the zune in the near future. The software is getting better and better, I love the now playing screen with the high reolution picutures its great and the have added at least of few of the artists I listen to often. The social integration with 360 friends list is great and when my current Ipod dies I want to get a Zune.

My friends brother just switched and its a really nice device,  I mean my ipod does not even have a radio tuner now the zune has radio tuner and song tagging. The new Zune Pass along with the fact many of the songs are DRM free only sweetens the deal.

As I understand, it was always understood by Microsoft that getting into the market would be phyrric, just like it was with the XBox.

Either way, I think it would be a bad decision to get out of the market now. Zune is just beginning to recieve a lot of interest, I've heard anecdotes of some younger people saying they would rather get a Zune than an iPod, and I agree. Microsoft has to also worry about competing with the iPhone now, though.