Sources: Microsoft ramps Zune, sales goal set in millions
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.
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.
Comments
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.
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
By the what's the big deal being "the first poster in a thread", what is this 1994?
--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...
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.
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.
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...
ten times cooler than noo-mer-o uno
tenth post!!!!
ten times cooler than noo-mer-o uno
Yeah, but this post goes up to 11.
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$)
Yeah, but this post goes up to 11.
you bugga
I'll take 13!!
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.
tenth post!!!!
ten times cooler than noo-mer-o uno
Sorry, but that was my post you're claiming. Try again.
you bugga
I'll take 13!!
Timing is everything.
Give up. you're too slow.
Take a look at the Xbox and how fast they have become one of the "big three" (Sony and Nintendo being the other two :-))
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.
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.
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 ?