Thursday, December 28, 2006

Zune only has 2% of the market? Who would have guessed.

Checked Dailytech and one of the current headlines is about the success of the Ipod yet again during Christmas time :

Microsoft's Zune also found space in the article, but I'm sure a lot of readers are familiar with the adage that a bad promotion is just as good as a good promotion. The idea being that even if you create a ruckus about a product through bad advertising, people who report on your bad advertising have to mention your product by name anyways, which results in people hearing about your product anyways. Rockstar Games has used this concept to great effect with Grand Theft Auto, Bully, and other games. News agencies complaining about the games have to refer to the Rockstar Developers and refer to the games by their direct names, which means that the average person watching FoxNews is going to hear about Grand Theft Auto. They may not understand, but the name is still placed out there. This is also how Jack Thompson got such prominence, if you were asking me. But I digress.

There appearently is some surprise within the Music Industry that the Zune has taken a nosedive, not that Steve Ballmers infamous Squirt terminology was helping the system. Appearently a lot of people within the Music Industry were supposing that the Zune was going to be a success. Afterall, it was selling right next to the Red Hot Xbox 360 and Nintendo Wii systems right in Gamestop. It surely is/was a better media player than Sony's MYLO and Playstation Portable system. Why would it fail?

I, for one, do not find the Zune's performance surprising at all. The Zune is basically a repackaged Toshiba Gigabeat ( ), a player that almost nobody has ever heard of, also for good reason. Now, I could be wrong about this, but I wasn't able to find a positive review about the Toshiba Gigabeat, most of the reviews I've seen lumping it along with Dell's failed Ditty.

That being said, it is plausible that the Zune could pass One Million Units shipped by June 2007. However, there is a key word in there that I think a lot of people are skipping over, and that is the word shipped . Now, we've already been in this mess before with Sony and the original Playstation, not to mention the Playstation Portable. Shipped units are not sold units. We've also had this before with the original Xbox from Microsoft as well, which used Shipped Units in the US instead of sold units to give a perceived higher sales numbers than the competing GameCube from Nintendo. While the Xbox eventually did take a substantial lead in the US, many analysts still try to use the shipped numbers instead of retail sales numbers.

The catch is that Units that are shipped from the Warehouse are not sold units. Fact is, Sony and Microsoft have a long history of embellishing sales numbers by either mis-reporting the numbers, or by changing the way the numbers are presented. I, personally, already hammered Sony on that back on Monday 23rd of January 2006 at 08:30:01 AM on Gamenikki's blog. The Sony PSP Market dissection is reprinted here :

To quote myself

The question is why? Why would Sony not expect to sell as many PSP units in 2006 as it did in 2005? We'll get to that later, but for now, lets take a look at another piece of the puzzle.

At this time there is no doubt about the domination of the PS1 and the PS2 in the gaming world. The PS1 is by far the worlds most popular console, ever, and the PS2 is by far the most popular of the current generation consoles. It was not always like that though. During the late 1990's Sony was actually known to pull many tricks in order to make the sales of the Playstation appear to be better than sales of competing consoles, such as the Nintendo 64. Sony was known for counting consoles returned for repairs and shipped back out as new consoles. Another one of the tactics used back then is that Sony would list the number of Playstation units shipped out as the number of units... um. Well, the number of units sold.

Sounds suddenly familiar doesn't it. Sony didn't sell 10 million plus PSP units, but they did ship that many. Now, what I want to ask, is what the average user going to think when they browse through press listings or blurbs on a news site. Those are such big numbers being tossed about, and the idea of a million anything to an average web page browser is indeed a lot. What exactly looks more competitive? 9 million plus handhelds sold versus 13.5 million handhelds sold, or 10 million plus handhelds versus 13.5 million handhelds
The fact is, Microsoft isn't promising that one million units will have been sold by June 2007. All they promise that one million units will have shipped from the factory. Now, if Microsoft wants to step forward and say how many Zune's they actually expect to sell to end users by December 2007, I think that number is going to be a few hundred thousand short of a million.

There are several reasons why the Zune isn't selling, the least of which being the terminology associated with the unit, the restrictions placed on sharing music, and the ugly design. The fact is, the Zune competes directly against "Plays for Sure" devices. Microsoft, as far as I see it, turned on their own sales partners and is reselling a "Plays for Sure" device without the "Plays for Sure" support. In addition, the Portable Music player field is littered with entities that have come and gone. Sony who used to dominate with the Walkman can't beat Apple. RIO, who created the market, is where now? Creative, who owns the high-quality home consumer sound market for computers, hasn't been able to dent Apple.

So why would analysts believe that Microsoft would be capable of competing where the people who created the markets failed? Money isn't everything. Microsoft may have billions, and they may have their Tax on new computer systems, but, media players aren't locked into a personal computer.

Now, i'm tempted to continue on about how Microsoft can't leverage their illegal monopoly. At this point, I'm going to direct you

I'd start here :

Although this page gives a more convenient listing of all the articles.

Btw, slight word of Warning. The writer of the Roughly Drafted Articles is very Pro-Apple, and does not really effectively cover or view Open-Source. Cited examples include that Linux isn't ready for the desktop, something that Mepis disproved back in 2003, and Ubuntu has helped enforce.

The writer also attempts to make political jokes about the US Government. As best I can figure, it does not appear that the Roughly Drafted writer actually ever took Government 101 in any high school. So, do keep a keg of salt on hand while reading through the articles there.
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