1 million Zunes sold, 99 million to go

Alex Zaharov-Reutt
Tuesday, 29 May 2007 02:26

Opinion and Analysis

Let’s see, with 100 million iPods sold vs 1 million Zunes, we have a clear winner – but Microsoft’s Robbie Bach says new Zunes are on the way and they’re in it for the long haul.

A fascinating interview at the San Francisco Chronicle with Robbie Bach, president of Microsoft's Entertainment and Devices Division, responsible for both the Xbox 360 and Zune unveils an update on the future of Zune and of Microsoft’s interconnected strategy.

We learn that Microsoft has sold 1 million Zunes into the market, just beating their June target for that many units sold, and giving Microsoft what Bach says is a 10% share of the market.

That said, Microsoft must have sold quite a few Zunes recently, because February ’07 stats indicate that the iPod had a 73.7% market share, Sandisk number 2, Creative in third spot and Microsoft in fourth spot with only 2.4% of the market.

Bach told the SF Chronicle that: “We're still about nine months into having Zune in the marketplace. We're very pleased with the progress. We've sold a little over a million Zunes. In the category we're in, the hard-disk-based category, we've got about 10 percent market share. It's a good start. It's not an overwhelming start. I'm not going to pretend it's some gigantic move”.

Bach also told of a new factory being built in China which will manufacture 2nd generation hard drive Zunes as well as a new flash model. Questions about a Zune phone seemed to suggest Microsoft was happy with its existing Windows Mobile smartphones, without expressly ruling out a Zune Phone and exclaiming that the iPhone certainly was an interesting device.

Interestingly, Bach was asked about the Wi-Fi features in the Sansa Connect, which are superior to those of the Zune, and he explained that while they were keeping an eye on Sandisk’s progress, improvements to the Zune could come as easily as writing new software to support more Wi-Fi capabilities, giving hope that the Zune’s Wi-Fi could be about to get a whole lot more useful, without specifically making any such promises.

Bach was also delighted with the success of the pink and watermelon colored Zunes that have just been released, with the watermelon colored model a favorite of his children.

With the iPhone just around the corner, and the potential of 100Gb or larger widescreen iPod models that use the iPhone interface without necessarily including phone functionality, the pressure on Microsoft to release snazzy new models is rapidly building, with the pressure on to deliver more of a knockout blow with the second generation models, although no-one expects a second generation Zune to suddenly start outselling the iPod.

As with all Microsoft products, a gestation period is always needed to refine the product, work out bugs and come up with a version that seems to please most people most of the time.

It usually takes Microsoft a legendary three goes to get to the first really ‘good’ version, although so far the Xbox 360 means they’ve done it in two with games consoles.

There can be no doubt that a 2nd-gen Zune will be suitably pumped up with as many features and as much style as Microsoft can muster, but unless a miracle occurs, there look to be tens of millions of iPod sales a year to come for Apple for at least the next couple of years.

We might just have to wait for the Zune 3.0 to really see the start of something special, but until there’ll be plenty of speculation on just what Microsoft will put into the next two Zunes. We’re sure Apple will keep an eye on just what Microsoft comes up with, but we can be pretty sure that Apple’s only real comment to Microsoft, were it to make one, would actually be the same as that on the iPod Amnesty Bin at Zune headquarters: Bite me.