Overly cautious Microsoft spurs first-ever Zune shortage

[AppleInsider]

Microsoft's cautious and surprisingly non-aggressive approach to the digital media player market has somehow resulted in a shortage of the company's new 80GB Zune player this holiday shopping season, reports iSuppli.

In a report Wednesday, the market intelligence firm said the well-reviewed model has been in short supply or backordered at many popular retailers like Amazon.com.

Creating some confusion, iSuppli noted, are media reports that have suggested that the Zune is outselling Apple iPods on Amazon.com, but the reality of the situation is those reports are referring to a sales spike for the older, deeply discounted Zune 30 model.

"The question is whether the 80GB Zune shortage is the result of high demand, short supply or some combination of both,” said senior consumer electronics analyst Chris Crotty.

Crotty added that, "Given the widespread criticism of the first Zune model, it is likely Microsoft erred on the side of caution when placing initial orders for the new Zunes, which include the Hard-Disk-Drive (HDD) based 80GB Zune as well as the flash-memory-based 4GB and 8GB Zune."

iSuppli in its report went on to suggest that Microsoft is moving tentatively in the portable media player (PMP) market because the company is treading some unfamiliar territory with the Zune.

"The first unfamiliar aspect for Microsoft is that the Zune uses a proprietary, closed operating system that differs from the open approach of the company’s flagship Windows software," the firm said. "Second, Microsoft is not the market leader in PMPs, an unusual situation for a company accustomed to dominating the areas in which it competes."

Still, Microsoft may feel a lot of self-imposed and media pressure to position the Zune as an “iPod killer.” To that point, iSuppli noted, the new 80GB Zune competes directly with the new iPod Classic and the new iPod touch.

And while the firm's channel checks indicate strong demand for the iPod touch, it calls the model "somewhat of a contradiction" because Apple added a video-centric display to the device even though it only has limited storage capacity for video content.

"That disconnect raises the question of why Apple did not launch an HDD-based iPod touch. Apple may have expected flash memory prices to drop more quickly. When that did not happen, Apple may not have had time to develop an HDD-based iPod touch," iSuppli said. "The question now is whether Apple will continue to wait for flash prices to fall, or if the company will add a HDD-equipped iPod touch during the coming months."

At the same time, the firm suggests that the current Zune shortage is unlikely an indicator of things to come, as Apple still maintains its long-term competitive advantages of ever-increasing cost for switching among its customer base. That is, the longer a consumer owns an iPod, the more content that consumer purchases from the iTunes site.

"To move to a non-iPod player, the customer would need to repurchase the content or reformat through a cumbersome process that degrades quality -- and breaks the law," iSuppli said. "With its closed Zune system, Microsoft is trying to replicate these switching costs within its customer base, but the company may be starting too late."

As of press time, Apple's iPods dominated the first 9 slots on Amazon's best seller list, with Microsoft's black 80GB Zune snagging the 10th spot.

[ View this article at AppleInsider.com ]

[SpinDrift]

You mean they have sold them both already?

[samurai1999]

Anyone know if they sell the second generation Zunes (4G, 8G, 80G) at a loss - like they did with the 1st generation?
- or have they managed to work out how to make & sell hardware at a profit yet?!

[Wally]

Originally Posted by SpinDrift

You mean they have sold them both already?

[plus]

I think iSuppli should confine their comments to actual supply/CoGS measurements & reporting, and refrain from comments on market dynamics about which they clearly are quite clueless!

Originally Posted by AppleInsider

"The first unfamiliar aspect for Microsoft is that the Zune uses a proprietary, closed operating system that differs from the open approach of the company’s flagship Windows software," the firm said.

Microsoft's open approach?

"Second, Microsoft is not the market leader in PMPs, an unusual situation for a company accustomed to dominating the areas in which it competes."

Actually, this is exactly backwards. Microsoft is NEVER the market leader in an area in which it actually competes (i.e., one in which there is fair competition instead of an illegally obtained and maintained monopoly). When actually forced to compete, they always fail! (Well, ok - in a select few cases (MS Money & Xbox360, for instance), they manage to be one of several players, and merely loose money. )

"To move to a non-iPod player, the customer would need to repurchase the content or reformat through a cumbersome process that degrades quality -- and breaks the law," iSuppli said.

Breaks the law?!? Excuse me? Transcoding purchased material from iTunes is explicitly supported by Apple. If it doesn't violate Apple's license/terms of use, how can it be breaking any law?

[melgross]

There are some really odd number floating around out there.

Read this article from the Inq, remember, that it's either a typo (what else could it be?), or someone's been drinking too much coffee:

http://www.theinquirer.net/gb/inquir...e-short-supply

I tried to reply to the article pointing this out, but for some reason, as it's never happened before, each time I typed the security word, it wasn't recognized.

EDIT: I just tried again, and it went through, now we'll see if the mod posts it.

[suhail]

the shortage might be a marketing stunt to help raise awareness of the Zune and imply that it's the new hot thing in the market.

[samurai1999]

Originally Posted by melgross

There are some really odd number floating around out there.

Read this article from the Inq, remember, that it's either a typo (what else could it be?), or someone's been drinking too much coffee:

http://www.theinquirer.net/gb/inquir...e-short-supply

I tried to reply to the article pointing this out, but for some reason, as it's never happened before, each time I typed the security word, it wasn't recognized.

EDIT: I just tried again, and it went through, now we'll see if the mod posts it.

"
"Overall, Microsoft has been surprisingly non aggressive in its approach to the PMP/MP3 player market," he said. Isuppli is predicting that it will ship 211.5 million units and revenues of $19.5 billion this year.
"

I think they mean the total market size & value - not what MS will sell!

[anantksundaram]

There is now a sizable 'anything-but-Apple' contingent out there that provides a strong customer base for Zune. (Indeed, it could soon become a matter of reverse snobbery to own a non-Apple PMP.)

MSFT is a doggedly persistent company, and Apple would be unwise to not take them seriously as potential long-term competition.

[Hobbes]

Good lord, iSuppli is obsessed with the idea of HDD-based iPod Touch.

We don't even know if OS X Mobile is designed to *work* with HDDs. It may very well expect flash memory for its speed and power consumption (would not surprise me).

Seems obvious to me that HDD-based iPods are on their way out. As the price of flash memory falls, the capacity of the Touch will increase. By next year there will likely be a 64GB Touch model available.

[melgross]

Originally Posted by samurai1999

"
"Overall, Microsoft has been surprisingly non aggressive in its approach to the PMP/MP3 player market," he said. Isuppli is predicting that it will ship 211.5 million units and revenues of $19.5 billion this year.
"

I think they mean the total market size & value - not what MS will sell!

I though of that as well, but it's not how it was written.

"Overall, Microsoft has been surprisingly non aggressive in its approach to the PMP/MP3 player market," he said. Isuppli is predicting that it will ship 211.5 million units and revenues of $19.5 billion this year.

Does that look as though they meant the entire market?

It's one reason why I said there is likely a typo, but still, it's what they wrote.

[melgross]

Originally Posted by Hobbes

Good lord, iSuppli is obsessed with the idea of HDD-based iPod Touch.

We don't even know if OS X Mobile is designed to *work* with HDDs. It may very well expect flash memory for its speed and power consumption (would not surprise me).

Seems obvious to me that HDD-based iPods are on their way out. As the price of flash memory falls, the capacity of the Touch will increase. By next year there will likely be a 64GB Touch model available.

A lot of people here were also obsessed with an HDD equipped iTouch.

[samurai1999]

Originally Posted by melgross

I though of that as well, but it's not how it was written.



Does that look as though they meant the entire market?

It's one reason why I said there is likely a typo, but still, it's what they wrote.

It's just the least number of facts to change to get it to make sense!
- sometimes you have to make up your own facts with the Inquirer (and why not - they do!)

[tuneman07]

Originally Posted by suhail

the shortage might be a marketing stunt to help raise awareness of the Zune and imply that it's the new hot thing in the market.

Yea I think you hit the nail on the head there. Companies have always done that around the holidays ( You don't think they could have made enough tickle me Elmo's?)

My brother bought a Zune when they first came out, a full month before Vista even was available to the public- It was awesome until he realized you needed Vista or else you could do absolutely nothing with the Zune. We didn't even have a PC at the time which could run Vista not to mention you couldn't buy it yet. Needless to say it really opened my eyes a bit to Microsoft practices.

[melgross]

Originally Posted by samurai1999

It's just the least number of facts to change to get it to make sense!
- sometimes you have to make up your own facts with the Inquirer (and why not - they do!)

Well, they're quoting a statement from iSupply.

Many articles from the Inq are annoying, meant to annoy in that British schoolboy sense of humor.

But, they also do have a fair number of good, solid, technical articles, including those about Apple.

[GQB]

Originally Posted by anantksundaram

There is now a sizable 'anything-but-Apple' contingent out there that provides a strong customer base for Zune. (Indeed, it could soon become a matter of reverse snobbery to own a non-Apple PMP.)

MSFT is a doggedly persistent company, and Apple would be unwise to not take them seriously as potential long-term competition.

Funny... the only place I've heard 'anything but Apple' talk is from trolls on Apple rumor sites.
On the other hand, there's a very large 'anything but MS' contingent in the wild.

I have yet to see a Zune in the wild.

[Not Unlike Myself]

Originally Posted by SpinDrift

You mean they have sold them both already?

Yes, but I'm returning them since they didn't put my engraving on them. They were supposed to say "I wish I was an iPod"

[samurai1999]

Originally Posted by melgross

Well, they're quoting a statement from iSupply.

Many articles from the Inq are annoying, meant to annoy in that British schoolboy sense of humor.

But, they also do have a fair number of good, solid, technical articles, including those about Apple.

I really like The Inq - many articles are really good, and they throw in some humour

- but the bit they got wrong isn't a quote - it's a mis-para-phrase....

[OriginalMacRat]

After Christmas most of those Zunes will be returned because the parents thought they were iPods and they made their kids cry on Christmas morning.

[fraklinc]

Most people brought them thinking that they could download all their music in the 14 days during the free trial and keep the music, lol, not knowing that the minute you cancel the membership M$$ Nukes your entire music Library

[Wiggin]

Just how many times in one article can iSuppli show their ignorance?

"the new 80GB Zune competes directly with the new iPod Classic and the new iPod touch"
- In what way does the Zune compete with the touch? Talk about totally different beasts!

"disconnect raises the question of why Apple did not launch an HDD-based iPod touch"
- As Hobbes already pointed out, power requirements and responsiveness. Add to that weight, thickness, and Apple's general desire to eliminate hard drives in iPods.

"if the company will add a HDD-equipped iPod touch during the coming months"
- No, or at least so unlikely that any analyst who had a clue would know better.

"the customer would need to repurchase the content or reformat through a cumbersome process that degrades quality"
- Considering that the vast majority of music on iPods does NOT come from iTunes, both of those issues are moot. I only need to repurchase or reformat a very small percentage of my music. Yes, re-ripping CDs can be time consuming (except mine are already ripped as Apple Lossless, so converting to MP3 is a few clicks and an overnight batch job), but does not result in a loss of quality. Any music obtained elsewhere (not CDs or iTunes) is probably already in a universally supported format such as MP3s.

"and breaks the law"
- Only if the RIAA wins it's stupid, currently pending, lawsuit that claims ripping my own CDs is illegal. If I legally obtained my music, I can legally convert it.

[teckstud]

Laugh and make fun of Microsoft all you want but the NYTimes actually gave the 2nd generation Zune a great review last month from respected reviewer David Pogue. Of course nothing beats the iPod. However, not even Sony has ever produced nor had as good a review for an MP3 device and they have been in the portable business for decades. There are many people who simpy refuse to buy Apple iPods and have been waiting for this. I am not one of them, mind you.

[melgross]

Originally Posted by Wiggin

Just how many times in one article can iSuppli show their ignorance?

"the new 80GB Zune competes directly with the new iPod Classic and the new iPod touch"
- In what way does the Zune compete with the touch? Talk about totally different beasts!

"disconnect raises the question of why Apple did not launch an HDD-based iPod touch"
- As Hobbes already pointed out, power requirements and responsiveness. Add to that weight, thickness, and Apple's general desire to eliminate hard drives in iPods.

"if the company will add a HDD-equipped iPod touch during the coming months"
- No, or at least so unlikely that any analyst who had a clue would know better.

"the customer would need to repurchase the content or reformat through a cumbersome process that degrades quality"
- Considering that the vast majority of music on iPods does NOT come from iTunes, both of those issues are moot. I only need to repurchase or reformat a very small percentage of my music. Yes, re-ripping CDs can be time consuming (except mine are already ripped as Apple Lossless, so converting to MP3 is a few clicks and an overnight batch job), but does not result in a loss of quality. Any music obtained elsewhere (not CDs or iTunes) is probably already in a universally supported format such as MP3s.

"and breaks the law"
- Only if the RIAA wins it's stupid, currently pending, lawsuit that claims ripping my own CDs is illegal. If I legally obtained my music, I can legally convert it.

I have to say here that several reviewers liked the 80Gb Zune more than the 80 GB Classic, saying that it was more fun to use.

You can't dispute that, because it was opinion. Opinions over usability are always valid for the person making them, even if others may not agree.

[Gustav]

Originally Posted by GQB

Funny... the only place I've heard 'anything but Apple' talk is from trolls on Apple rumor sites.
On the other hand, there's a very large 'anything but MS' contingent in the wild.

You need to read more sites then. There is a very large anything-but-Apple crowd with respect to music players. There will always be anti-establishment people that will not buy something just because it is the most popular. They mistakenly believe that they are "thinking for themselves" and call others sheep.

In my opinion, rejecting something because it is popular is just as sheepish as accepting it for the same reason. Think for yourself and buy what fits your needs - who cares what others think?

[minderbinder]

Originally Posted by anantksundaram

There is now a sizable 'anything-but-Apple' contingent out there that provides a strong customer base for Zune. (Indeed, it could soon become a matter of reverse snobbery to own a non-Apple PMP.)

Is it sizable? Is that size shown by numbers?

So how many zunes have been sold? This article doesn't mention any specific amounts of zunes getting sold (nor do I see numbers when people post about how well zunes are selling).

So what are the real numbers? How many, and what percent of the market?

[JeffDM]

Originally Posted by Hobbes

Good lord, iSuppli is obsessed with the idea of HDD-based iPod Touch.

We don't even know if OS X Mobile is designed to *work* with HDDs. It may very well expect flash memory for its speed and power consumption (would not surprise me).

I'm sure it would work. It can slow some things down, but I don't think too badly. I know some people complain about the speed of Cover Flow on the Classics but I didn't think it's a problem.

Seems obvious to me that HDD-based iPods are on their way out. As the price of flash memory falls, the capacity of the Touch will increase. By next year there will likely be a 64GB Touch model available.

Apple's pattern so far is to double every year at most. I'd say 64GB isn't likey until mid to late 2009.

[anantksundaram]

Originally Posted by minderbinder

Is it sizable? Is that size shown by numbers?

So how many zunes have been sold? This article doesn't mention any specific amounts of zunes getting sold (nor do I see numbers when people post about how well zunes are selling).

So what are the real numbers? How many, and what percent of the market?

I don't have any numbers.

The beauty of it is, 'sizable' can mean anything!

PS: I do think that it could be a looming issue for Apple a couple of years down the road..... but I also think that Apple will be ahead of the game.

[quinney]

Originally Posted by Gustav

You need to read more sites then. There is a very large anything-but-Apple crowd with respect to music players. There will always be anti-establishment people that will not buy something just because it is the most popular. They mistakenly believe that they are "thinking for themselves" and call others sheep.

In my opinion, rejecting something because it is popular is just as sheepish as accepting it for the same reason. Think for yourself and buy what fits your needs - who cares what others think?

Buying a microsoft product is anti-establishment?

[teckstud]

Originally Posted by quinney

Buying a microsoft product is anti-establishment?

Yes- as when it comes to buying portables as the dude stated.
It's like buying iWork instead of Office!
Seriously, does anyone know of any company that uses Numbers'08 instead of Excel?

[Wiggin]

Originally Posted by melgross

I have to say here that several reviewers liked the 80Gb Zune more than the 80 GB Classic, saying that it was more fun to use.

You can't dispute that, because it was opinion. Opinions over usability are always valid for the person making them, even if others may not agree.

Perhaps you should read my post a little more closely. I'm not saying you can't compare the Zune to an iPod classic. I clearly stated that saying the Zune competes with the touch is not a good statement. They aren't in the same capacity, screen, interface, or functionality classes. Capacity and screen size (and arguably functionality) are clearly quantifiable measures, not opinion.

And I'm not surprised reviewers like the Zune better than the classic. The iPod classic is a step back in every regard, except capacity, from the 5th Gen iPod w/video. Luckily, Apple's online store still has the 5th Gen in stock at a discount price (in the clearance section). I just picked one up.

[Wally]

Originally Posted by Not Unlike Myself

Yes, but I'm returning them since they didn't put my engraving on them. They were supposed to say "I wish I was an iPod"

Excellent follow-up to an already great post....

P.S. What the hell is with AI's background popups??!!! Also, has anyone else noticed the crazy errors in their console from AI ads?

[Libb]

Originally Posted by tuneman07

My brother bought a Zune when they first came out, a full month before Vista even was available to the public- It was awesome until he realized you needed Vista or else you could do absolutely nothing with the Zune. We didn't even have a PC at the time which could run Vista not to mention you couldn't buy it yet. Needless to say it really opened my eyes a bit to Microsoft practices.

Not true - in fact, for a while (until a couple weeks before Jan. 30, Vista's consumer launch), the Zune software was incompatible with Vista - you had to use XP. So you're either lying or exaggerating.

This whole article's tone towards the Zune is sickeningly biased, even if it is expected given this site's target audience. I own both an iPod video 30GB and a Zune 30. The Zune blows the iPod out of the water in features and usability. The twist UI is so brilliant, I was surprised Apple didn't think of it. The whole interface is beautifully animated and efficient, and it works great. The new desktop software makes iTunes look like a copy of Access. Add in the Wi-Fi sharing and sync and the subscription music support (something Jobs is an idiot for not offering in the iPod, it's what finally enticed me into getting the Zune), and the Zune is light-years ahead of the iPod Classic, and until Apple finally realizes people need more than 16GB, the iPod touch.

[StuBeck]

Originally Posted by tuneman07

Yea I think you hit the nail on the head there. Companies have always done that around the holidays ( You don't think they could have made enough tickle me Elmo's?)

My brother bought a Zune when they first came out, a full month before Vista even was available to the public- It was awesome until he realized you needed Vista or else you could do absolutely nothing with the Zune. We didn't even have a PC at the time which could run Vista not to mention you couldn't buy it yet. Needless to say it really opened my eyes a bit to Microsoft practices.

Thats not true at all. The zune software worked fine on launch with XP. If you remember, it actualy didn't work with Vista until Vista was released officially.

I own a Zune and love it. If they sold them here and it worked in OS X, I would have bought an 80GB version. With the new release of software they fixed my biggest issue with it, the software you use to upgrade it, its just a pain in the butt booting into Vista everytime I want to change the music, so I just bought a 2nd gen ipod nano off ebay for the 95% of the time when I'm in OS X.

[melgross]

Originally Posted by Wiggin

Perhaps you should read my post a little more closely. I'm not saying you can't compare the Zune to an iPod classic. I clearly stated that saying the Zune competes with the touch is not a good statement. They aren't in the same capacity, screen, interface, or functionality classes. Capacity and screen size (and arguably functionality) are clearly quantifiable measures, not opinion.

And I'm not surprised reviewers like the Zune better than the classic. The iPod classic is a step back in every regard, except capacity, from the 5th Gen iPod w/video. Luckily, Apple's online store still has the 5th Gen in stock at a discount price (in the clearance section). I just picked one up.

I understand. But the Zune is hardly ever compared to the Touch. I've only seen reviews that compare it to the Classic. They may mention the Touch in passing, but that's not their device of comparison.

Well, then you agree.

[mrtotes]

Originally Posted by GQB

Funny... the only place I've heard 'anything but Apple' talk is from trolls on Apple rumor sites.
On the other hand, there's a very large 'anything but MS' contingent in the wild.

I have yet to see a Zune in the wild.

http://www.anythingbutipod.com/

[tuneman07]

The Zune said right on the side of the box under requirements "Vista" and it didn't work with XP so I am not sure what the deal was. We did some Google searches and found a lot of people complaining about the same thing so for some reason it didn't work with Vista. Not trying to lie or exaggerate and I would call the Zune equal to the Ipod really.

[melgross]

Originally Posted by tuneman07

The Zune said right on the side of the box under requirements "Vista" and it didn't work with XP so I am not sure what the deal was. We did some Google searches and found a lot of people complaining about the same thing so for some reason it didn't work with Vista. Not trying to lie or exaggerate and I would call the Zune equal to the Ipod really.

It did work with XP. It didn't work with Vista.

This is not all that hard to find out, if you really want to. Just go and look some early articles and reviews of the first Zune product.

And no, I'm not going to do your work for you.

[buddha]

I think the 80GB Zune is comparable to the 80GB iPod and they are both decent devices at this point. If you want tons of storage the obvious option is the 160GB iPod, however. And the iPod Touch shouldn't be compared with any Zune model honestly. The storage may be at an immature stage but we'll have 32GB this coming year.