Sources: Microsoft ramps Zune, sales goal set in millions

[AppleInsider]

AppleInsider has learned that despite ongoing software interface testing, Microsoft Corp. this month began manufacturing its much-anticipated Zune digital media players overseas.

People familiar with Microsoft's portable media strategy say the company commissioned the release of the 30GB, Wi-Fi-enabled media player to manufacturing partner Toshiba several weeks ago.

The Redmond, Wash.-based software giant has since been slowly ramping production with hopes of selling 3 million of the $299 players by the close of the holiday shopping season, those same people said.

For Microsoft, that means selling at least a million of the players each month beginning in October. That's a little less than one fourth the number of iPods Apple Computer is expected sell during the same time period. Though the majority of the players Apple is expected to sell will feature flash memory-based storage, not hard disk storage like that employed by Zune.

Still, it's unclear in what month Zune will be introduced into the market and go on sale. A spokesperson for Microsoft called recent Web rumors of a mid-November launch "rumors and speculation," but otherwise declined to comment on any other aspects of this report.

Come year's end, there's likely to be a large discrepancy between the number of Zunes Microsoft will have shipped and those that were actually purchased by customers. That's because insiders say the company plans to literally stuff its retail and distribution channels with more units than it actually anticipates selling.

The risk of stagnant post-holiday Zune inventory -- due to channel stuffing -- is not a primary concern for Microsoft, sources say. The company has already gone on record in saying that Zune will initially be a profitless venture and that it plans to spends hundreds of millions in marketing dollars chasing Apple's iPod dominance over the next several years.

In an initial attempt to set Zune apart from the iPod, Microsoft is betting big on the inclusion of wireless capabilities. FCC filings uncovered last week confirm that Zune users will be able to share media content wirelessly with one another and create wireless "DJ" streams that other users can tune into.

But already, analysts are waving caution at Microsoft's decision to build a wireless chip into the player, out of concern that it will take a hefty toll on battery performance.

Click here for more Zune photos

"While we find Wi-Fi a nice feature, we believe that Wi-Fi power requirements are still quite steep and so we are skeptical that battery life will be strong on Zune," American Technology Research analyst Shaw Wu told his Apple investors in a research note on Wednesday.

Wu said his analysis of Microsoft's wireless implementation indicates a Zune with Wi-Fi enabled will only sustain between 3 and 6 hours of battery life compared to 10 to 14 hours achieved by a typical iPod.

Wu was similarly unimpressed by the player's user interface, raising objections to what he called a "fake click-wheel that does not scroll nor is touch pressure sensitive making navigation difficult, particularly for users with large music, video, and photo libraries."

For similar reasons, the majority of Wall Street analysts polled by AppleInsider said they are expecting Microsoft's initial Zune manufacturing ramp to tap out at several hundred thousand units, rather than several million.

But those views are strongly opposed by insiders who have been briefed on the device. They believe Zune stands to be a strong competitor to the iPod and that Microsoft is preparing for a war to the finish this holiday shopping season.

According to those insiders, its only a matter of weeks before Microsoft's Zune faces off against Apple's must-have gadget of the year -- expected to be a chic new version of the iPod nano, clad in colorful metallic enclosures and featuring increased storage capacity.

[ View this article at AppleInsider.com ]

[Tag Me Back]

--First post---

Does anyone know what price this things gonna start at? That'll probably be the biggest determining factor as to how many are sold... Large screen + Wireless.. they're a bonus over the ipod offerings too, so if the price points are similar, expect a lot of these to be sold.

[davebarnes]

Apple sells approximately 4M iPods per month.
75% are Nanos and Shuffles.
Apple sell 1M hard-disk-based iPods per month.

Microsoft is going to EQUAL Apple's sales right out of the gate?

Someone is smoking dope.

<sarcarsm>
Apple, of course, won't introduce any new iPods in Q4 to create excitement.
Apple won't get tons of free publicity related to iPods.
Apple won't introduce a new iPod with "better" features.
Apple won't announce new video deals at the iTMStore.
</sarcasm>

,dave

Sources: "January 18, 2006 (IDG News Service) -- With sales of its iPod music players continuing to grow at a breakneck pace, Apple Computer Inc. today reported the highest revenue and earnings results in its history. The company said it shipped more than 14 million iPods during its first quarter of fiscal 2006. " http://www.computerworld.com/softwar...om=story_picks
"Apple shipped 1.327 million Macs and 8.111 million iPods for the quarter [Q3FY2006] — a 12 percent growth in Macs, and 32 percent growth in iPods, compared to the same quarter a year ago. Apple said the growth in iPod sales has been consistent with its expectations." http://www.macworld.com/news/2006/07...?lsrc=mwtoprss

[Eduardo]

Agreed. It will be interesting to see how Microsoft's entrance into the MP3 will fare, both for Microsoft, Apple, and the rest of the MP3 player-manufactors.

By the what's the big deal being "the first poster in a thread", what is this 1994?

[Bageljoey]

Originally Posted by Tag Me Back

--First post--- [Holy guacamoli!]

Does anyone know what price this things gonna start at? That'll probably be the biggest determining factor as to how many are sold...

"Microsoft appears to be targeting the high-end space with its $300 pricing, 30GB microdrive storage, Wi-Fi capability, and FM tuner,"
(According to the Wu in the other article posted on AI today.)

I can't believe that MS will build millions of these just to stuff retail channels. I mean they do plenty of bone head things, but... with tech products you just don't do that. Apple's new models may blow the specs off the Zune or it just may be that nobody will want it even if Apple doesn't make a move...
I guess only MS can risk throwing money away like that...

[gordy]

Damn, why won't these companies just license Apple's technology and put a click-wheel in their crap. At least then they could compete.

[aegisdesign]

Originally Posted by gordy

Damn, why won't these companies just license Apple's technology and put a click-wheel in their crap. At least then they could compete.

That presumes Apple want to licence their technology to their competitors.

[JTBLQ]

Originally Posted by davebarnes

Apple sells 4M iPods per month.
75% are Nanos and Shuffles.
Apple sell 1M hard-disk-based iPods per month.

Microsoft is going to EQUAL Apple's sales right out of the gate?

Someone is smoking dope.

<sarcarsm>
Apple, of course, won't introduce any new iPods in Q4 to create excitement.
Apple won't get tons of free publicity related to iPods.
Apple won't introduce a new iPod with "better" features.
Apple won't announce new video deals at the iTMStore.
</sarcasm>

,dave

Someone in Redmond is smoking pills.

[Chucker]

We'll see how it pans out.

[melgross]

Originally Posted by Eduardo

Agreed. It will be interesting to see how Microsoft's entrance into the MP3 will fare, both for Microsoft, Apple, and the rest of the MP3 player-manufactors.

By the what's the big deal being "the first poster in a thread", what is this 1994?

Nah. there are a number of sites where "first post" is a fun thing that people joke about. But we rarely do that here.

Still, if someone has fun with it...

[orange whip]

tenth post!!!!

ten times cooler than noo-mer-o uno

[aegisdesign]

Originally Posted by orange whip

tenth post!!!!

ten times cooler than noo-mer-o uno

Yeah, but this post goes up to 11.

[orange whip]

Originally Posted by orange whip

tenth post!!!!

ten times cooler than noo-mer-o uno

sorry...


It looks as though MS are simply mimicking the general form factor of the iPod so that there is an association to the iPod, and that equals quality, ease of function etc.

They then differentiate the device to give it a percieved edge regardless of whether that differentiation is usefull or not.

Then they flog the thing for less than cost and make it look like its a genuine hit

Then the masses buy them like sheep (But this may take many years and lots of M$)

[orange whip]

Originally Posted by aegisdesign

Yeah, but this post goes up to 11.

you bugga

I'll take 13!!

[kenaustus]

So, basically MS is going to have close to a billion dollars (at retail) thrown into the market (or warehouses) by the end of the holiday shopping. Actually they will probably have more than that as they will need to have product in the pipeline at all times if they want to hit the magic million mark.

Then add all the components making their way to the factory for Jan/Feb deliveries and MS has really put the family jewels on the chopping block.

In terms of pricing, I look for discounts to hit by the 3rd week of October and some very cheap prices starting about December 10th.

[melgross]

Originally Posted by orange whip

tenth post!!!!

ten times cooler than noo-mer-o uno

Sorry, but that was my post you're claiming. Try again.

[melgross]

Originally Posted by orange whip

you bugga

I'll take 13!!

Timing is everything.

Give up. you're too slow.

[dacloo]

don't underestimate Microsoft's marketing strategies. The Zune may suck, but if well advertised, they may slowly get decent market share. They have enough money to do it at their own pace.

Take a look at the Xbox and how fast they have become one of the "big three" (Sony and Nintendo being the other two :-))

[zedrac]

Originally Posted by AppleInsider

According to those insiders, its only a matter of weeks before Microsoft's Zune faces off against Apple's must-have gadget of the year -- expected to be a chic new version of the iPod nano, clad in colorful metallic enclosures and featuring increased storage capacity.

[ View this article at AppleInsider.com ]

Why would the Zune face off against an iPod nano? 30gb against 4, possibly 8gb? The nano will be a fraction of the size of the Zune, both physically and in storage capacity. They're aimed at different markets.

[orange whip]

Originally Posted by melgross

Timing is everything.

Give up. you're too slow.

its not easy being an antipodean and keeping up with you lot.... I generally read all this stuff after you've all gone to bed!



it is good to see the occasional bouts of inane puerility accepted for what they are.... inane puerility.

[aegisdesign]

Originally Posted by melgross

Timing is everything.

Give up. you're too slow.

And you can't count.

If the first post was #2 since the article was #1, your post was the ninth.

Now, can we move on to Who's Dad is bigger than my Dad ?

[Pascal007]

Originally Posted by aegisdesign

Now, can we move on to Who's Dad is bigger than my Dad ?

I don't need any dad to compete : mine is bigger than yours anyway !

[chris v]

There are a certain number (large number, that is) of people for whom mediocrity is "good enough" so long as it's $10.00 cheaper than excellence. Microsoft continues to do quite well in that market, so I would suspect the thing will sell if they're at all cheaper than the iPod. Otherwise, I can't imagine what their strategy might be.

It'll be interesting to see how Apple counters feature-wise with the next generation.

[JeffDM]

What we can say is that the next three months will be pretty interesting. There's an Apple press conference at the end of September, which I think a nano update is highly likely, though it could be anything. In late October there might be a 5th anniversary iPod conference. Zune will probably be introduced any time from now until a week before the US Thanksgiving holiday.

I hope that this Zune won't just take a cheap 4:3 screen and tilt it on its side. A lot of phones and players have that, and it's annoying. Those screens have different contrasts at different angles, it's fine at 4:3, but tilted to 3:4 the dark colors start looking very loopy because each eye gets different brightnesses.

[Kolchak]

"despite ongoing software interface testing"

This doesn't bode well. Of course, knowing Microsoft, even if it was fully tested, the interface would be crappy and hard to navigate, judging from WinXP and its Control Panel or the new Office interface, which is already being lambasted. And since every mp3 player essentially does the same thing, the interface is all that matters.

[DeaPeaJay]

Originally Posted by orange whip

its not easy being an antipodean and keeping up with you lot.... I generally read all this stuff after you've all gone to bed!



it is good to see the occasional bouts of inane puerility accepted for what they are.... inane puerility.

inane puerility goes well with a device like "Zune".

[wilco]

Originally Posted by davebarnes

Apple sells 4M iPods per month.
75% are Nanos and Shuffles.
Apple sell 1M hard-disk-based iPods per month.

Microsoft is going to EQUAL Apple's sales right out of the gate?

Someone is smoking dope.

<sarcarsm>
Apple, of course, won't introduce any new iPods in Q4 to create excitement.
Apple won't get tons of free publicity related to iPods.
Apple won't introduce a new iPod with "better" features.
Apple won't announce new video deals at the iTMStore.
</sarcasm>

,dave

Do you really want to include your phone number in your signature?

[Booga]

While the Zune looks like crap and isn't any cheaper than the iPod, it's awfully hard to compete against a company willing to take losses into the indeterminant future. See XBox, where essentially Microsoft bought their way into the market by selling everything at a loss (the business unit has yet to see a single quarter of black ink, as far as I'm aware.) If your competitor is willing to forego all profits, they can compete regardless of how bad their product is.

In essence, with Microsoft shoveling Office and Windows profits into these new ventures, they are attempting to leverage their OS monopoly into other fields, which is technically illegal. However, my guess is the Justice Department may get around to noticing in a decade or so.

[macslut]

Booga, I totally agree with you.

Also, what MS seems to be doing is swamping the distribution channels with Zunes such that everywhere you look you'll see them...not just for sale, but being shown in featured areas with big displays. Unlike other nonPod vendors, MS has the $$$ to keep the channels flooded for a *really* long time. In many instances this will also result in extreme discounts.

The battery life issue may be getting as much hype as the wifi feature itself. If, as is likely, the wifi can be turned off, then that will be the usage advertised in the battery life. It's also likely to be the most common case.

[melgross]

Originally Posted by aegisdesign

And you can't count.

If the first post was #2 since the article was #1, your post was the ninth.

Now, can we move on to Who's Dad is bigger than my Dad ?

Hmm. That's true. I didn't look to see that the article is counted as a post.

[Charko]

If Apple want to pull the rug out from under MS, all they have to do is to license iTunes to the others - but not to MS.
Any loss in the sales of iPods - if any - would more than be made up for by license fees.

[Charko]

.... and of course the extra sales from iTunes Store.

[minderbinder]

Originally Posted by Tag Me Back

Does anyone know what price this things gonna start at? That'll probably be the biggest determining factor as to how many are sold... Large screen + Wireless.. they're a bonus over the ipod offerings too, so if the price points are similar, expect a lot of these to be sold.

You really don't think Apple won't release an updated iPod as soon as Zune ships? This turd barely keeps up with ipods that are shipping now.

Originally Posted by dacloo

don't underestimate Microsoft's marketing strategies. The Zune may suck, but if well advertised, they may slowly get decent market share. They have enough money to do it at their own pace.

Take a look at the Xbox and how fast they have become one of the "big three" (Sony and Nintendo being the other two :-))

I don't think advertising can overcome bad reviews, bad word of mouth and bad press ("Zune a flop"). They can keep selling them at a loss, but that doesn't mean they'll ever catch on, especially once they have the stigma of being a failed product.

Consoles aren't a good comparison, every few years they have to start over with a brand new console. With mp3 players, new models are incremental and completely compatible with the models they replace. Plus MS was able to leverage first party content, not an option with media players.

[JeffDM]

Originally Posted by minderbinder

I don't think advertising can overcome bad reviews, bad word of mouth and bad press ("Zune a flop"). They can keep selling them at a loss, but that doesn't mean they'll ever catch on, especially once they have the stigma of being a failed product.

Consoles aren't a good comparison, every few years they have to start over with a brand new console. With mp3 players, new models are incremental and completely compatible with the models they replace. Plus MS was able to leverage first party content, not an option with media players.

I think people said the same for Windows CE, now, in the form of Windows Mobile, it's the dominant PDA and Smart Phone OS.

[admactanium]

Originally Posted by dacloo

don't underestimate Microsoft's marketing strategies. The Zune may suck, but if well advertised, they may slowly get decent market share. They have enough money to do it at their own pace.

Take a look at the Xbox and how fast they have become one of the "big three" (Sony and Nintendo being the other two :-))

you overestimate the power of advertising. i actually worked on microsoft's advertising creating many major campaigns for them. advertising isn't going to save this turd of a product. if anything, it might hasten its death. as david ogilvy once said, "nothing kills a bad product faster than great advertising." not that i consider ms's advertising to be great.

[melgross]

Originally Posted by JeffDM

I think people said the same for Windows CE, now, in the form of Windows Mobile, it's the dominant PDA and Smart Phone OS.

That's sad but true.

We all should know what they say about MS's products:

The third upgrade is "good enough". Just like the Irish say: "Three is a charm".

THe battery may be big enough to overcome the life problem. That could be why it is so thick.

By the way, has anyone yet seen this?

http://www.extremetech.com/article2/...2010855,00.asp

[Tazznb]

Originally Posted by AppleInsider

AppleInsider has learned that despite ongoing software interface testing, Microsoft Corp. this month began manufacturing its much-anticipated Zune digital media players overseas.

People familiar with Microsoft's portable media strategy say the company commissioned the release of the 30GB, Wi-Fi-enabled media player to manufacturing partner Toshiba several weeks ago.

The Redmond, Wash.-based software giant has since been slowly ramping production with hopes of selling 3 million of the $299 players by the close of the holiday shopping season, those same people said.

For Microsoft, that means selling at least a million of the players each month beginning in October. That's a little less than one fourth the number of iPods Apple Computer is expected sell during the same time period. Though the majority of the players Apple is expected to sell will feature flash memory-based storage, not hard disk storage like that employed by Zune.

Still, it's unclear in what month Zune will be introduced into the market and go on sale. A spokesperson for Microsoft called recent Web rumors of a mid-November launch "rumors and speculation," but otherwise declined to comment on any other aspects of this report.

Come year's end, there's likely to be a large discrepancy between the number of Zunes Microsoft will have shipped and those that were actually purchased by customers. That's because insiders say the company plans to literally stuff its retail and distribution channels with more units than it actually anticipates selling.

The risk of stagnant post-holiday Zune inventory -- due to channel stuffing -- is not a primary concern for Microsoft, sources say. The company has already gone on record in saying that Zune will initially be a profitless venture and that it plans to spends hundreds of millions in marketing dollars chasing Apple's iPod dominance over the next several years.

In an initial attempt to set Zune apart from the iPod, Microsoft is betting big on the inclusion of wireless capabilities. FCC filings uncovered last week confirm that Zune users will be able to share media content wirelessly with one another and create wireless "DJ" streams that other users can tune into.

But already, analysts are waving caution at Microsoft's decision to build a wireless chip into the player, out of concern that it will take a hefty toll on battery performance.

Click here for more Zune photos

"While we find Wi-Fi a nice feature, we believe that Wi-Fi power requirements are still quite steep and so we are skeptical that battery life will be strong on Zune," American Technology Research analyst Shaw Wu told his Apple investors in a research note on Wednesday.

Wu said his analysis of Microsoft's wireless implementation indicates a Zune with Wi-Fi enabled will only sustain between 3 and 6 hours of battery life compared to 10 to 14 hours achieved by a typical iPod.

Wu was similarly unimpressed by the player's user interface, raising objections to what he called a "fake click-wheel that does not scroll nor is touch pressure sensitive making navigation difficult, particularly for users with large music, video, and photo libraries."

For similar reasons, the majority of Wall Street analysts polled by AppleInsider said they are expecting Microsoft's initial Zune manufacturing ramp to tap out at several hundred thousand units, rather than several million.

But those views are strongly opposed by insiders who have been briefed on the device. They believe Zune stands to be a strong competitor to the iPod and that Microsoft is preparing for a war to the finish this holiday shopping season.

According to those insiders, its only a matter of weeks before Microsoft's Zune faces off against Apple's must-have gadget of the year -- expected to be a chic new version of the iPod nano, clad in colorful metallic enclosures and featuring increased storage capacity.

[ View this article at AppleInsider.com ]

Sources: Microsoft ramps Zune, sales goal set in millions...
Seems erroneous. They are probably planning giving them away in the millions via bundling / free offers / trickery etc, for marker penetration, but not sales.....

[SpamSandwich]

Originally Posted by melgross

By the way, has anyone yet seen this?

http://www.extremetech.com/article2/...2010855,00.asp

Yes, they had a link on digg.com. It's kind of cool, but lacking an iTunes store concept for media, the average buyer in America won't be bothered with it. Strictly for nerds.

[melgross]

Originally Posted by SpamSandwich

Yes, they had a link on digg.com. It's kind of cool, but lacking an iTunes store concept for media, the average buyer in America won't be bothered with it. Strictly for nerds.

Maybe, maybe not.

It does have a large DVD quality 720 x 480 screen. The same thing that has been demanded here by many people.

If Apple does do this movie download service, what rez will it be released at? If it's lower than DVD quality, very few will be interested at the supposed pricings of $14.99 and $9.99 for older films.

If it IS DVD quality, then the "new" iPod will need to accommodate that. Just how small a screen can be accepted at that rez? Not very. Will people be satisfied with a smaller screen at, say, 480 x 320? That would make a widescreen movie display at 480 by 217 (2.20/10).

The height of that film, for the display size conjectured for the supposed 6G, would be about 1" high. Not very viewable.

Movies will always be a hump to watch on a very small screen.

The Creative is coming in at $400, that's pretty good.

I'm wondering what Apple is thinking, and why it's taking so long.

[melgross]

We can also look at these. Perhaps the style, and sizes, will appeal more.

http://www.dailytech.com/article.aspx?newsid=3860