Microsoft's Zune crashes as iPod sales grow
Microsoft's Zune hit the ground even harder in its third holiday quarter. After two years of annual sales that barely reached the million unit mark, the company reported a major new drop in device sales for the winter quarter.
Microsoft's latest 10-Q filing stated that "Zune platform revenue decreased $100 million or 54% reflecting a decrease in device sales." The music player's sharp decline in revenues helped erase 60% of the company's earnings in its Entertainment and Devices Division, which includes the Xbox gaming platform.
Apple's iPod business, once feared to be at a dead end with satiated demand, hit a new quarterly unit record with sales of 22.7 million units. That's just 3% higher than the company's sales in the year ago quarter, but demonstrates a demand for innovative products even in the midst of difficult economic times.
Apple's record iPod sales don't include the iPhone, which Apple has referred to as its "best iPod yet." With iPhone sales, Apple sold over 27 million mobile devices last quarter, and over 208 million in total since it began selling the iPod.
Key to Apple's success has been its efforts to remain differentiated with unique features while also staying familiar and easy to use with the company's iTunes software. Microsoft's Zune debuted with some unique features, but the company's software churned as MTV pulled its URGE store from Windows Media Player, forcing the company to ship an entirely new, unfamiliar, and not quite functional Zune 2.0 desktop app.
Last year, Microsoft released a new software update but no significant new hardware refresh, leaving the tarnished brand without anything new to sell just as Apple continued to redefine its iPod line with a revamped, Internet browsing iPod touch. A rumored Zune partnership with Nokia also failed to materialize.
Apple's strength in digital media sales within iTunes also helped to keep the iPod in the leadership position among music players, holding on to 71% market share. Growth in iPod touch sales was particularly fueled by its new designation as a handheld gaming platform, leveraging the support the iPhone Apps Store has received from developers.
Microsoft's latest 10-Q filing stated that "Zune platform revenue decreased $100 million or 54% reflecting a decrease in device sales." The music player's sharp decline in revenues helped erase 60% of the company's earnings in its Entertainment and Devices Division, which includes the Xbox gaming platform.
Apple's iPod business, once feared to be at a dead end with satiated demand, hit a new quarterly unit record with sales of 22.7 million units. That's just 3% higher than the company's sales in the year ago quarter, but demonstrates a demand for innovative products even in the midst of difficult economic times.
Apple's record iPod sales don't include the iPhone, which Apple has referred to as its "best iPod yet." With iPhone sales, Apple sold over 27 million mobile devices last quarter, and over 208 million in total since it began selling the iPod.
Key to Apple's success has been its efforts to remain differentiated with unique features while also staying familiar and easy to use with the company's iTunes software. Microsoft's Zune debuted with some unique features, but the company's software churned as MTV pulled its URGE store from Windows Media Player, forcing the company to ship an entirely new, unfamiliar, and not quite functional Zune 2.0 desktop app.
Last year, Microsoft released a new software update but no significant new hardware refresh, leaving the tarnished brand without anything new to sell just as Apple continued to redefine its iPod line with a revamped, Internet browsing iPod touch. A rumored Zune partnership with Nokia also failed to materialize.
Apple's strength in digital media sales within iTunes also helped to keep the iPod in the leadership position among music players, holding on to 71% market share. Growth in iPod touch sales was particularly fueled by its new designation as a handheld gaming platform, leveraging the support the iPhone Apps Store has received from developers.
Comments
http://www.appleinsider.com/articles...une_phone.html
Ack. Its so predictable its not even fun to watch anymore.
Better get Windows 7 out the door pretty quick boys or its going to get mighty cold up there in Redmond this year.
maybe a zune-table and you can carry it in your car or play pingpong on it.
You mean kinda like this
http://www.youtube.com/watch?v=AZO8sfmpKIQ
has to be upsetting for people working in the Zune division.
Otherwise, yeah, those numbers don't really seem to hold up just looking around the gym or any public area.
That's just 3% higher than the company's sales in the year ago quarter, but demonstrates a demand for innovative products even in the midst of difficult economic times.
[ View this article at AppleInsider.com ]
I would hardley say the ipod is innovative anymore. Maybe in 2003 or 2004. It is 2009 though the ipod is still just an ipod. There are hundreds of music players that do the exact same thing and or more. Sales don't reflect quality. We all know that already. Sales reflect popularity. And now that itunes is DRM free. Well..
I'm not surprised at this because the "ecosystem" for iPods is so gigantic that in terms of third-party accessories, nothing even comes close to matching its success (I believe Apple owns over 7 out of 10 portable music players sold worldwide). Apple got there first with the iTunes Music Store, and its patented "click wheel" interface ensures that they will continue to be easy to use for its non-touchscreen models.
Indeed, an entirely new discussion show format--podcasts--arrived because Apple created this ability with the iPod's podcast support.
Because Apple has such a command marketshare, they will continue to dominate the market for portable media players even in today's down economy. I'm surprised that a third-party developer did not create a program that would function akin to an iTunes but supports all non-iPod players so can do the highly-integrated media management for a Creative, Samsung, SanDisk SANSA, Sony, etc. player like iTunes does with an iPod.
Frankly, it's irresponsible for MS to continue to throw money at the Zune, especially in light of their recent announced layoffs. They need to get back to their core competencies (is that an oxymoron in this context?) and fire Ballmer to pull them out of their funk.
I agree..Microsoft should just stop with the Zune. Its never in a million years going to catch the iPod. Even if they released a Zune Touch type device they will need something else thats an absolute killer product to go along side it (i.e. iTunes Store). Problem is, everyone is in the paradigm of buying iPods and media off the iTunes Store it will take something really significant to break the paradigm. The iPhone is starting to get in the same paradigm with the iTunes Apps Store. Once it really takes off...they will be hard to beat. Its just a matter of if they can take off like they did with the iPod. But they are 2 different markets where Apple has lots of stiff competition. So it won't as easy.
Microsoft needs to get back to just developing software for now. Stick to what they can excel at. Currently the company just seems to be a mess. It has very poor leadership. It appears as if it has no direction. Its putting out piss poor products. It just needs to stop, rethink its ideas, put people in proper places and develop some kickass products. They have the money, they have the talent (or potential to get the talent). They just need better leadership. Money isn't going to get them out of everything...
IMoney isn't going to get them out of everything...
They're only in it for the money.
If I were able to bill Ballmer the Enbalmer all the time lost because of his Office suite bugs
(aka entire days of works), I'd be richer than he.
I predict Mi$oft will end like the Edison trust in the 40-ies.
Study Edison's history, and you'll see my point.
I would hardley say the ipod is innovative anymore. Maybe in 2003 or 2004. It is 2009 though the ipod is still just an ipod. There are hundreds of music players that do the exact same thing and or more. Sales don't reflect quality. We all know that already. Sales reflect popularity. And now that itunes is DRM free. Well..
Even when the iPod was first released, there were already other mp3 players on the market. So, by your standards, it was not innovative even then. Innovation is not just about features you can put down in a spec. sheet. The iPod's UI, including the clickwheel, and iTunes integration is still much better than anything else available. Also, in terms of Bytes of storage per volume of device, I think it is also superior to most of the other cheap players. And of course in the aesthetics department there are only a few other players that can hold a candle to the iPod.
I am surprised that iPod has only 71% of the market. I just don't see 29% of people listening to music on something other than an iPod. I teach in a community college and the students I see are virtually all using an iPod for music. At my gym over the last year or so I see the occasional portable CD player, one Zune, a couple of Walkmen, and the odd "other" once in a blue moon. Nowhere near a third of the market. Where are all these people not using iPods? Third world perhaps?
It's 70%+ in the G8-type countries. I doubt your gym is an adequate cross-section of your region. The only time I've seen worldwide figures was something like Apple selling roughly 25% of the total sold, which is still a fantastic proportion.
I would hardley say the ipod is innovative anymore. Maybe in 2003 or 2004. It is 2009 though the ipod is still just an ipod. There are hundreds of music players that do the exact same thing and or more. Sales don't reflect quality. We all know that already. Sales reflect popularity. And now that itunes is DRM free. Well..
innovative design!!! Looks count for a lot. not to mention how much better iTunes is compared to MS Mareketplace
I think each announcement we see is a different angle of the same singular event.
I would bet Microsoft is clearing Zune inventory (as evidenced by no hardware refresh). Once depleted, they will announce they have discontinued all Zune projects due to low customer demand, and have let their Zune team go.
Well, seeing most of the layoffs are expected from the entertainment & hardware division, and the Xbox 360 is doing very well right now, I'd expect a majority of those layoffs to be coming from the Zune, followed by Windows Mobile.
I think each announcement we see is a different angle of the same singular event.
I would bet Microsoft is clearing Zune inventory (as evidenced by no hardware refresh). Once depleted, they will announce they have discontinued all Zune projects due to low customer demand, and have let their Zune team go.
Yep. They will have to wait to see what they can try to copy from Apple next. I wonder if they ever though of employing creative people? Nah, what am I thinking, why change tactics after 25 years eh?
I would bet a fair amount of the remaining 29% are ipod knock-offs. There are so many out there that look really similar to older ipod models in particular.
Otherwise, yeah, those numbers don't really seem to hold up just looking around the gym or any public area.
In Fiji (and prob. many other countries) iPods are taxed as 'luxury items' so they're v. expensive (I'm talking F$500+ for a 8 GB Nano, whereas I got mine back in Oz for A$240). You a number of the older Shuffles and more of the el cheapo knock-offs... but not many more, I think people would prefer to own a real iPod if they could afford one.