Why Speculating on Zune’s success is The Wrong Question

kinnon —  October 28, 2006 — 1 Comment


There’s been lots of speculation on the potential success of Zune – how big of the iPod dominated MP3 market will it take.

But the iPod doesn’t dominate the MP3 market, as Tomi Ahonen wrote me and I posted here. If they sell 25 million iPods this year, then they will have 14% of the market – and that sales number is doubtful. Zune will be lucky to grab 20% of Apple’s market – but my graphic shows them with about half the market size – about 7% of the MP3 player market. Realistically, Microsoft will be lucky to get a few percent of this market. Which is why speculating on Zune’s success is asking the wrong question.

I created the graphic to help you “visual learners” understand the battle for this market has long been lost by Apple. Unless of course, their iPhone becomes dominant. But I have my doubts.

UPDATE: I came across this report in Yahoo News, titled “Apple’s iPod Still King of the MP3 Market“, from last week.

The popular Apple device, which accounts for more than three quarters of portable music players sold, shows no signs of losing momentum, having conditioned users to expect and buy regular upgrades, JupiterResearch said. Strong design and ease of use is also helping to keep sales strong.

Quite simply, they are wrong. They’ve bought the Apple hype and regurgitate it like their singing from the Jobs hymn book. The writer goes on to state, “In 2009, the number of mobile phones that can play digital music is expected to surpass the number of music devices.” Here’s a note from the future, bud, it happened way back in 2005.

Just a note: The phone shown to represent all musicphones is the one I use, the Sony Ericsson W810i. Check out their new W850i. Sony Ericsson sold 19.8 million phones in the last quarter – and 15 million Walkman phones in the last year. Sony only has 8% of the mobile phone market. Nokia has 70+% of the mobilephone market -and sold 45 million musicphones in 2005.

Another Note: One of the things I love about using the Walkman Phone in the car as the music player is what happens when I get a call – the music stops, the phone rings, I answer (by clicking the Mic button on the output cable), talk, hangup and the music begins again. No fumbling for the iPod to pause it – and then grabbing the phone. And talking to people through the MDX’s Bose system is quite wonderful.

And one final note: Lest you missed this. I am both an Apple fan and an iPod fan. There are four iPods in this home, a 20Gb 4G, a 4GB mini, a 4GB Nano and a Video iPod. We listen to most of our music in this house with our Bose SoundDock and any one of the iPods in it. (k.d. lang is singing Leonard Cohen’s Hallelujah as I type this.)

That being said, Rylan, the Video iPod and Nano owner (he got the Nano with his MacBook) just told me he wants a new phone for Christmas – a music phone, so he won’t have to carry his iPod and his phone around with him. (As Rylan goes, so goes the world?)

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A television editor, writer & director since 1978. A Christian since 1982. More than a little frustrated with the Church in the West since late in the last millennium.

One response to Why Speculating on Zune’s success is The Wrong Question

  1. Personally, I agree with Rylan. Just add the functions of a PDA as well, and it’s an all-in-one! I’d go for that!

    Thanks for the graphic, Bill. The logic of this arguement is impossible to beat – but something to remember may be that marketing is rarely logical – it’s based on hype. Problem is, I’d never heard of Zune until you mentioned it.

    Does that mean I’m not in touch, or that you are miles ahead of the rest of us?


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