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New Zunes likely to cannibalize everything but iPod - analyst

post #1 of 56
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A new line of Zunes introduced by Microsoft earlier this week signal forward progress for Microsoft in the digital media player market but pose a larger threat to the company's own partners than Apple, according to one Wall Street analyst.

"We view these new models as decent progress by Microsoft compared to the previous Zune, which interestingly Microsoft plans to continue selling," American Technology Research analyst Shaw Wu told clients in a research note Thursday. "However, as we have long believed, we view the Zune as more of a competitive threat to its Windows Media partners including SanDisk, Sony, Samsung, LG, Verizon, Toshiba, and Philips as opposed to Apple and iPod."

According to Wu, the portable media player market is essentially divided into two "camps" -- there's the "iPod + iTunes" camp, which represents the de facto industry standard, and then there's "everyone else." And while Microsoft now has a more competitive product line than it did last week, it still has no answer to the iPhone, iPod touch, and most importantly, the top-selling new "fat boy" iPod nano, he said.

In speaking to clients, the analyst said he found it "interesting" that the Redmond, Wash.-based software giant was matching Apple penny for penny with its $249, $199, and $149 price points on the new Zunes. However, he strongly believes that the company was unable to undercut Apple due to the iPod maker's world-class supply chain which gives it access to the lowest cost components, manufacturing, and distribution.

"We believe Microsoft will need to price much more aggressively in order to stand a chance against Apple," the analyst wrote. "We believe these Zune will likely continue to see modest success due to Microsoft's vast resources and strong brand name, but likely at the expense of its Windows 'partners'."

Wu advised clients to buy shares of Apple on any pull-backs in the stock price, saying he sees upside to his $185 price target in the next 6 to 12 months.

"While we remain concerned with potential softness in US consumer spending, it appears that Apple is once again positioned to buck the trend with its compelling product line and strong international exposure," he told clients.
post #2 of 56
They have the potential to take a big bite out of Apple too. The Zune 2 seems (spec wise) to be a solid product...
post #3 of 56
Quote:
Originally Posted by Dave K. View Post

They have the potential to take a big bite out of Apple too. The Zune 2 seems (spec wise) to be a solid product...


Dream on... that's what some said about the hard-drive Zunes intro'd last year. They didn't do much. \

The problem is that the flash Zunes, like the hard-drive Zunes, are 'me too' products, giving no compelling reasons to switch from the iPod. Apple is really well-entrenched here.

Like the analyst said, they're more a threat to Microsoft's former partners in the mp3 player space, though I think SanDisk will continue to do well.

.
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post #4 of 56
Quote:
Originally Posted by Dave K. View Post

They have the potential to take a big bite out of Apple too. The Zune 2 seems (spec wise) to be a solid product...

Hardware specs makes me want one, but when we get to software design and specifications (no lossless) I realise that it isn't all that.

/Adrian
post #5 of 56
Quote:
Originally Posted by TBaggins View Post

The problem is that the flash Zunes, like the hard-drive Zunes, are 'me too' products, giving no compelling reasons to switch from the iPod. Apple is really well-entrenched here.

Precisely. Microsoft should be trying to beat Apple on the markets they have yet to overtake (i.e., the phone space -- may be too late here already -- and the living room with the 360 and Media Center).

At best, these Zunes are "just as good" as iPods. However, if they continue to knock out such utterly baffling "features" as "wireless syncing -- if you are plugged into the wall or docked", they will continue to be looked upon as poor copies, with a distinct lack of iPod ease.
post #6 of 56
Quote:
Originally Posted by RidleyGriff View Post

.
At best, these Zunes are "just as good" as iPods.

They're not even that. Thicker, and with a d-pad instead of the iPod's clickwheel (or in the case of the iPodTouch, a MultiTouch UI). And the Zune Store vs iTS? MS's software vs iTunes?? Please.

The Zune would have to be significantly BETTER than the iPod to be a threat, and it's not even as good. Therefore... fizzle.

If they're lucky, they may be able to beat up on someone like Creative or iRiver, maybe.

...
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post #7 of 56
Quote:
Originally Posted by RidleyGriff View Post

Precisely. Microsoft should be trying to beat Apple on the markets they have yet to overtake (i.e., the phone space -- may be too late here already -- and the living room with the 360 and Media Center).

At best, these Zunes are "just as good" as iPods. However, if they continue to knock out such utterly baffling "features" as "wireless syncing -- if you are plugged into the wall or docked", they will continue to be looked upon as poor copies, with a distinct lack of iPod ease.

This isn't like coming out with a new OS. It's never too late for hardware, or software products, in most catagories.

According to the last numbers I saw, Apple's percentage in the mobile player space had slipped.

If MS can overcome some of its rivals, it will have a stronger hand, which will make it seem more viable to buyers. That will help it. The question is—how much?

Apple is doing some pretty good things, but not all that they can.

MS is having all of its machines use WiFi. Apple should have all of their machines, except for the Shuffle, do the same.

Apple comes out with good features, but lags in other areas. It's odd.

They should also spur independent game development, but they refuse to. Too bad there as well. That could boost sales by quite a bit, taking some away from the DS and PSP.
post #8 of 56
I still maintain that if Microsoft was able to sell Zunes for $50 less than their Apple counterparts that this game would be much more interesting.

I see Joe Shmoe Dad going out to Best Buy this holiday season and asking the sales person which is better, iPod or Zune. Upon hearing, "They're about the same, really," Dad would buy a Zune over an iPod if Zune was $50 less. Now, Dad will just pick up an iPod because that's what little Cindy asked for and they cost the same as a Zune.

Point Apple.
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post #9 of 56
Quote:
Originally Posted by TBaggins View Post

Dream on... that's what some said about the hard-drive Zunes intro'd last year. They didn't do much. \

.

That is what SONY said with the XBOX. Last time I check the XBOX 360 crushed the PS3.

Microsoft can compete with Apple still. If you don't believe that you are foolish.

Zune 2 is not going to crush iPods, but it may take a small dent out of the iPod eco-systems.

Dave
post #10 of 56
Quote:
Originally Posted by Dave K. View Post

That is what SONY said with the XBOX. Last time I check the XBOX 360 crushed the PS3.

And the 360 is what, some $200 cheaper than the PS3? Considering Sony priced themselves out of the market and the PS3 arrived a year behind, I don't think that's a valid comparison.
post #11 of 56
Don't forget that most people have no digital player at all.

Also, don't forget that there are a lot of people out there that WON'T buy an iPod because they won't buy an Apple product. I've met two people with Zune's, and that was the primary reason they bought one. That may not seem like much, but the fact is that Apple does not own the entire market. There's a reason for for that other than the lack of a tuner.

I also speak to my daughters friends, and some of them think that the iPods break to easily, and are convinced that the Zune (the older one for now) won't. True or not, there is that thinking.

I try to explain that all of these small devices are constantly being sat upon and dropped, and so eventually they will break. But, they are teenagers, and sometimes logic eludes them when they are convinced by other friends of their own age.
post #12 of 56
Quote:
Originally Posted by Dave K. View Post

That is what SONY said with the XBOX. Last time I check the XBOX 360 crushed the PS3.

Microsoft can compete with Apple still. If you don't believe that you are foolish.

Zune 2 is not going to crush iPods, but it may take a small dent out of the iPod eco-systems.

Dave

MS has always subsidized the XBox, and has run up billions in losses. Most of that time, Sony has made heady profits on the PS2. The PS3 is so expensive to produce, that they couldn't compete with MS on price (let alone the very cheap to produce WII), even thopugh they subsidize its price. It also came out almost a year after the 360. That is still costing Sony in game development.

Sony will be coming out with a $399 model, and likely dropping the price on the 80GB model to $499, so we will see.

But, from Ballmer's statements about why the Zune did not enter the European marketplace, MS is subsidizing the Zune as well, at least, the original model. If they didn't, it likely would have disappeared.

Sandisk is the big competitor, and it will be interesting to see how these new Zune's will affect their sales.
post #13 of 56
the new zune is a vast improvement on the old one..but they just dont have the software to back it up...I downloaded the Zune media player on my windows machine for fun and spent about 20minutes trying to create a playlist and completely gave up trying to add new songs to it. Call me stupid its probably easy to do these things but 90% of people out there wont have a clue like me, people who dont use computers alot will hate the zune. Itunes layout is simple and easy to use with its own ipod section once you've plugged in your ipod something zune media player again lacks, and the itunes store is again easy to navigate around and is a good source for music videos and the like.
post #14 of 56
It doesn't matter if I like the features or even the way they look, I can't buy one ... I use a Mac.

Microsoft is only interested in one thing, keeping people anchored to Windows.
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post #15 of 56
I think what happens to the Zune 30+80 basically doesn't matter. The volumes are small, the iPod is close, etc.

In the flash category, any particular reason Sansa would not beat Zune? It plays music. It can act as a USB memory stick and you can have it play files loaded in it from Finder. It's cheaper (16GB for $200). Ooh it's got recording now!
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post #16 of 56
Quote:
Originally Posted by Dave K. View Post

They have the potential to take a big bite out of Apple too. The Zune 2 seems (spec wise) to be a solid product...

Except for battery life, screen size on the flash unit, thickness, etc. And who knows about interface and trackpad, not to mention their itunes substitute?

Nothing is going to beat iPod unless it actually *beats* iPod, on features, price, or preferably both. The only advantage anyone will likely care about is the bigger screen on the HD model, and people in that price range will be looking at the touch and iPhone as well. I think it really says something that MS is only able to match prices instead of beating iPod prices, especially since we know they have been willing to lose money on products to gain market share.

Wifi is a great feature if you're using it for internet, but just for syncing, especially if the zune implementation is as crippled as has been reported, is a waste of the hardware.

Quote:
Originally Posted by Dave K. View Post

That is what SONY said with the XBOX. Last time I check the XBOX 360 crushed the PS3.

Microsoft can compete with Apple still. If you don't believe that you are foolish.

Zune 2 is not going to crush iPods, but it may take a small dent out of the iPod eco-systems.

Let's see. Xbox gained Halo, a killer app that sold consoles, by buying bungie. Zune can't do the same by buying a record company. Xbox was sold at a BIG loss, the same can't be done with Zune since there's no game sales to subsidize the loss. And don't forget that Sony completely botched the PS3 release and basically handed a ton of sales to MS.

It's certainly possible for someone like MS to take away the market from iPod. It's just not going to happen with the current generations from each company.
post #17 of 56
I think it's also important to distinguish between "taking away some market share" and "posing any kind of real challenge".

Of course MS will sell some Zunes. Of course, some of them will be bought by the congenitally anti-Apple. Some people may decide that WiFi is a must have feature.

But in numbers sufficient to mean anything? I don't see it.

The new Zunes are OK. The WiFi thing is OK (hard to say without seeing the implementation) but isn't a game changer. Beyond that, there's nothing there to win over iPod users, or to turn the heads of newbies, beyond random taste.

One thing I never see mentioned is the way the design and marketing of the Zune is so aggressively "this is what our marketing people told us teenagers like", whereas the iPod lineup feels much more "everybody welcome".

How many iPods are sold to people over 25, do you think? How appealing is the Zune pitch to people over 25? Colors straight from the shelves of Old Navy, desperate flaunting of "social networking" buzz, ad campaigns with that high-contrast, flash-bulb "youth in mid-party" style.... it all has that slightly claustrophobic, smoking in the alley vibe.

The whole Zune enterprise just reeks of calculated demographic whoring, compared to the iPod, which reeks of "we made the coolest MP3 players we could, then hired a good ad firm to sell the hell out of them."

The marketing people look to be all over the Zune from the ground up, which is the fundamental difference between MS and Apple.
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post #18 of 56
The article said that Microsoft will continue to sell the original Zune. My guess is they have a large stockpile of unsold merchandise they need to unload. The old Zune will be discontinued when they eventually run out, which may be... um, er, never?
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post #19 of 56
Quote:
Originally Posted by RayCon View Post

The article said that Microsoft will continue to sell the original Zune. My guess is they have a large stockpile of unsold merchandise they need to unload. The old Zune will be discontinued when they eventually run out, which may be... um, er, never?

Um, maybe they can put them in as prizes in cereal boxes

Just a thought...
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post #20 of 56
Quote:
Originally Posted by Lisamacnewton View Post

Um, maybe they can put them in as prizes in cereal boxes

Just a thought...

Nah, they're better off selling them all to this guy at a 90% discount. He can rip out the guts and turn them into a sellable product in the retail space.
post #21 of 56
Quote:
Originally Posted by mjtomlin View Post

It doesn't matter if I like the features or even the way they look, I can't buy one ... I use a Mac.

Microsoft is only interested in one thing, keeping people anchored to Windows.


Please, Apple is also trying to do the same thing. Get people to buy iPods and iPhones in the hope they buy into the Mac-ecosystem.
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post #22 of 56
Quote:
Originally Posted by Eduardo View Post

Please, Apple is also trying to do the same thing. Get people to buy iPods and iPhones in the hope they buy into the Mac-ecosystem.

But you can use an ipod or iphone on a PC or a Mac...
But when people get a taste of Mac's "taste"... they just might switch.
Get a taste of Microsoft's "taste" and you'll need mouthwash. That's why they try to MAKE you stay.
post #23 of 56
Quote:
Originally Posted by Eduardo View Post

Please, Apple is also trying to do the same thing. Get people to buy iPods and iPhones in the hope they buy into the Mac-ecosystem.

There's quite a bit of difference between offering explicit cross platform support while "hop(ing) they buy into the Mac ecosystem" and not offering any Mac support at all.
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post #24 of 56
Some people here are giving the Zune FAAAR to much credit. It fucking FLOPPED! 1 million in a year - that's including the Christmas season. Forget the hardware specs - the machines don't work, syncing problems, Support is virtually non-existant, and the name "Zune" has been dragged through the mud and is at the wrong end of more jokes than I can count. It's over, it's done. The only reason it gets all this attention is because people love watching Microsoft make asses of themselves.
post #25 of 56
microsoft should throw in the towel their day has past..except the gaming platform...their products suck monkey balls..they can't even seem to copy good anymore...
post #26 of 56
Quote:
Originally Posted by Dave K. View Post

That is what SONY said with the XBOX. Last time I check the XBOX 360 crushed the PS3.

Might wanna check again. The Wii is the one who's actually doing the crushing in sales, of both the PS3 AND the Xbox360. \

Additionally, Sony basically shot themselves in the face with a lot of poor decisions. Apple is unlikely to do same.

Finally, be aware of the fact that the Xbox franchise only sells decently in the US. In Europe, they don't do as well, and in Japan, you can't hardly even give the things away:

http://www.joystiq.com/2006/12/12/ps...japan-already/

.
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post #27 of 56
The Zune 2 is a competitor, the iPod is a trendsetter, and 'more importantly' it's part of modern culture. You can't simply take that away unless your product is leaps and bounds better than the iPod. Oh, and despite what's on the spec sheet, looks are important. iPods are simply better in almost every way.
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post #28 of 56
I guess the Zune fans are just gonna have to learn the same way they did last time... by seeing the sales figures. \

Its not gonna be pretty when they realize sometime after the holidays that their vaunted offensive did little to anyone 'cept MS's former partners.

Speaking of which, will companies be more wary of partnering with MS, after having seen them utterly backstab the likes of Creative, iRiver, SanDisk, etc.?

.
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post #29 of 56
Quote:
Originally Posted by RidleyGriff View Post

Precisely. Microsoft should be trying to beat Apple on the markets they have yet to overtake (i.e., the phone space -- may be too late here already -- and the living room with the 360 and Media Center).

At best, these Zunes are "just as good" as iPods. However, if they continue to knock out such utterly baffling "features" as "wireless syncing -- if you are plugged into the wall or docked", they will continue to be looked upon as poor copies, with a distinct lack of iPod ease.

Microsoft isn't interested in producing their own phone, IMO. They want to push Windows OS for mobile devices -- just like Microsoft doesn't sell their own PCs.
post #30 of 56
Quote:
Originally Posted by CosmoNut View Post

I still maintain that if Microsoft was able to sell Zunes for $50 less than their Apple counterparts that this game would be much more interesting.

I see Joe Shmoe Dad going out to Best Buy this holiday season and asking the sales person which is better, iPod or Zune. Upon hearing, "They're about the same, really," Dad would buy a Zune over an iPod if Zune was $50 less. Now, Dad will just pick up an iPod because that's what little Cindy asked for and they cost the same as a Zune.

Point Apple.

This could never happen. Apple's iPod volume is so much bigger than Microsoft's so the cost of parts and manufacturing per iPod is less, so at the same price point, Apple as a bigger profit margin. If Microsoft were to become truly aggressive with their pricing, Apple COULD easily cut their prices. That is not to say they WOULD, but the most certainly COULD in a heartbeat.

The main problem with the Zune is marketing. The only people who want a Zune over an iPod are computer nerds who would actually spend the time to stack 'em up against each other. And even when you stack them up, they are pretty comparable in Hardware, pretty comparable in features (although Zune does have a few nice features iPod's don't), but the iPod is superior in third-party devices and integration, software/computer interface, user device interface, and design.
post #31 of 56
Quote:
Originally Posted by Ireland View Post

The Zune 2 is a competitor, the iPod is a trendsetter, and 'more importantly' it's part of modern culture. You can't simply take that away unless your product is leaps and bounds better than the iPod. Oh, and despite what's on the spec sheet, looks are important. iPods are simply better in almost every way.

Zune 2 isn't the 'competitor' more the 'pretender'

In fact most MS products are 'pretenders' (there must be one that isn't)

They placate people who won't see past Microsoft and the only reason it will sell is because of AmazonMP3. Did anyone else notice that while we were looking at AmazonMP3 as an iTunes competitor it's also a real nail in the coffin for Plays4sure stores - good to get people off MS DRM lock-in not that the need much convincing.

Didn't mean to go off topic but isn't forcing one retailer (iTunes) to package a product less-marketably while allowing another (Amazon) free reign illegal in the fair-trading-practice world we live in?

McD
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post #32 of 56
Quote:
Originally Posted by icfireball View Post

Microsoft isn't interested in producing their own phone, IMO. They want to push Windows OS for mobile devices -- just like Microsoft doesn't sell their own PCs.

But d'you think that people will get it?... Just as iPhone is to Windows-based smartphones and iPod is to Windows Media-based Players so Mac is to Windows-based computers?

McD
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post #33 of 56
In the non-Japanese Asian market, Apple (and to a far lesser degree Microsoft) are trendy yet small niche players in the MP3 player market .... funny considering the devices themselves are assembled in Taiwan / Mainland China.

Price point competitiveness here is just far lower here I guess ... odd though 'cus you see tons of fancy pricey phones here ... but far less pricey MP3 players. The contrast between a New York and Taipei subway ride is striking in the ratio of white iPod earbuds you see.
post #34 of 56
wow, Zune to cannibalize everything but Ipods? Are you kidding me.. ZUNE can definitely eat iPod also. I don't see why you stick up for Apple so much. It will eat iPods, and you definitely have no proof that it can't. Learn to discriminate apple please
post #35 of 56
Quote:
Originally Posted by extremeskater View Post

The Wii come in at a totally different price point for a different market compared to the PS3 and Xbox.

The iPod will continue to dominate the mp3 market until MS comes up with an interface for windows that is easier to use than iTunes or form some reason their player has a feature that catches on.

The simple fact is people don't put that much though into this whole mp3 player deal, iPods are out there so its easy to get one. Its not that fact that is so much better its just been around alot longer.

I love how the faithful make such a big deal about iPod market shares but when you bring up the fact that Apple has failed to gain market share on any of their other products all of a sudden market share doesn't matter, people start to pull out the old bmw vs ford BS.

You're talking about a 200.00 product these days that not something people put alot of though into.

It's not that confusing: Apple can be and clearly is a profitable, thriving company, even when its total world market share is low (so in that sense "market share doesn't matter"), and having a dominate position in the MP3 player and music download business is great for the platform (in which case "market share matters").

Selling 10 times as many computers would be great for the platform as well, but unlikely to happen, given the entrenched incumbancy of Windows. Selling lots and lots of iPhones and iPods is happening, and gives Apple a playing field without the historical baggage of Windows hegemony, which is great for mindshare and profits.

See? Not mutually exclusive at all.
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post #36 of 56
Quote:
Originally Posted by thebeat View Post

wow, Zune to cannibalize everything but Ipods? Are you kidding me.. ZUNE can definitely eat iPod also. I don't see why you stick up for Apple so much. It will eat iPods, and you definitely have no proof that it can't. Learn to discriminate apple please

I'm assuming that just as you were bringing that post home, with a final few well chosen words, you were struck down by sudden illness-- which is why it makes no sense.
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post #37 of 56
Quote:
Originally Posted by extremeskater View Post

The Wii come in at a totally different price point for a different market compared to the PS3 and Xbox.

Not really. Wii is $249, Xbox Core is $279.

Quote:
The iPod will continue to dominate the mp3 market until MS comes up with an interface for windows that is easier to use than iTunes or form some reason their player has a feature that catches on.

Good luck with that. MS's history is not one of being better than Apple at ease-of-use.

Quote:
The simple fact is people don't put that much though into this whole mp3 player deal, iPods are out there so its easy to get one. Its not that fact that is so much better its just been around alot longer.

It's both, really. They've been out longer AND they're better. MS is playing catch-up here, but whose fault is that?

Quote:
I love how the faithful make such a big deal about iPod market shares but when you bring up the fact that Apple has failed to gain market share on any of their other products all of a sudden market share doesn't matter, people start to pull out the old bmw vs ford BS.

Actually, Macs have been gaining in marketshare over the past several quarters. I think it'll be a very long time before it's a big deal, though.
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post #38 of 56
Quote:
Originally Posted by extremeskater View Post

I like using apple products but lets stay in reality.

Do you really? Go get one of those pea green Zunes. You'll be much happier since they won't have all those "dirver" issues that the iPods have.
post #39 of 56
Quote:
Originally Posted by details View Post

Do you really? Go get one of those pea green Zunes. You'll be much happier since they won't have all those "dirver" issues that the iPods have.

Really.

Man, there's a lot of people wasting their time on these boards these days, patiently explaining to all us delusional Apple users just how mediocre and unexceptional our platform of choice is, and why there's really no reason at all to choose an Apple product over any other, and that thinking otherwise is obviously the product of a delusion.

There should be a medical name for the mental state that drives people to spend all their time hanging out with people that they fundamentally disagree with, just so that they can chide them over and over and over again.

It's like they can't stand the idea that somewhere, those stupid Apple heads are getting away with their mindless boostersim, and by God someone needs to call them out. A lot.

It just seems like such a dreary way to live.
They spoke of the sayings and doings of their commander, the grand duke, and told stories of his kindness and irascibility.
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They spoke of the sayings and doings of their commander, the grand duke, and told stories of his kindness and irascibility.
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post #40 of 56
Quote:
Originally Posted by extremeskater View Post

Just once I would love for someone to comment on the specs of a new apple product before they comment on how imporant the color is on it.

Well, if carrying around something that looks like vomit or baby crap in a shiny glass bottle floats your boat...
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