Heavily Discounted Zune Outpacing iPod Sales

firegate writes "Yahoo Tech is reporting that the Microsoft Zune, having been heavily discounted for the holiday season, 'is currently Amazon's top-selling music player, beating out the new iPod Nano and the 80GB iPod on the 'Bestsellers in Electronics' list.' An Associated Press report even indicates that the Zune's newfound popularity has left it in short supply, sold out in many locations. Is this a sign that a true competitor, from Microsoft no less, has finally broken into the Apple-dominated MP3 player market? And will this spell more success for Windows-media based music subscription services like Napster?"

No

[b0lt]

It just shows that Microsoft can afford to lose money to gain market share. They can't keep selling it at a loss and hope to eventually make a profit, since Microsoft's online music store isn't as comprehensive as iTunes.

Operative Words are.....

[Anonymous Coward]

Heavily Discounted

Will it still sell when the price goes back up?

[loftwyr]

Will Microsoft be able to sell it through another outlet? What will be done with all the Generation One Zunes still on shelves? What percentage of these Gen 2 Zunes are being purchased by hapless parents who will see them returned by ungrateful children?

For the answer to this and many more questions, wait for December 26!

Success for Windows-media Based Subscriptions?

[TomHandy]

How would this spell success for Windows-media based subscription services, since the Zune doesn't support PlaysForSure?

predatory pricing

[m2943]

I think that sort of thing is called "predatory pricing": pricing something below cost in order to drive a competitor out of business. It's frowned upon in a free market, in particular when a company uses one monopoly to support predatory pricing in a different market.

Of course, given that Apple itself dominates the MP3 player market so much, I'm not sure whether to laugh or cry...

Re:No

[garcia]

They can't keep selling it at a loss and hope to eventually make a profit, since Microsoft's online music store isn't as comprehensive as iTunes.

I'm apparently confused. I was under the apparent misconception that both units played MP3s and neither required a music store to operate the device. Silly me -- all this time I thought you could use any MP3 on these devices. Don't know where I got that from.

Aside from your comment about the music store, from what I've seen of the Zune (I don't own either an iPod or a Zune) it works just fine for a media player. Yeah, the color schemes are lame and they certainly don't have the marketing team that Apple does for their units, but money talks.

As long as it plays music and fit in your pocket, cheap people (who happen to outnumber those interested in being hip) will flock to it. In addition, for you to claim that MSFT will somehow not be able to continue this mode of operation for a very long time, you're nuts.

Re:No

[evel aka matt]

His point wasn't that it sucked, his point was that MS can't sell it at a loss if he thinks that music store sales will make up the missing profit. He proposes that the Zune music store is lacking.

You HAVE to be kidding

[WindBourne]

They could give it away for free to everybody who runs windows and it would not effect their bottom line. In fact, they could give one to everybody (I would guess that they would not give it to google or Linux users). At that point, how many music companies would NOT sell through MS?

Re:Competiton is good

[TomHandy]

Apple wants to lock you into FairPlay? Then how does their move to iTunes Plus DRM-free tracks (with EMI, as well as being offered with a number of indie labels now) jibe with that? Apple has extended DRM-free track offerings to the other labels as well, but they haven't bought into it yet (because they want to try and build up competitors like Amazon.com's DRM-free MP3 store). But seriously, what is your evidence that Apple WANTS to continue locking people in via FairPlay? I can't see anything that indicates that.

They're using the X Box sales model for the Zune

[oDDmON oUT]

Unfortunately for them, there is no way to recoup money on the loss leader Zune as there is on the X Box (i.e. games sales and subscription play services).

This isn't the first time though, that Microsoft has gone with a one-size-fits-all strategy.

It won't be the last either.

No way! Get outta town!

[Fear the Clam]

People will buy ghetto versions of desirable objects if they become sufficiently cheap? My Coby CD [amazon.com] player and I are shocked, shocked.

Old Saying

[Spazmania]

There's an old salesman's saying:

It takes no particular talent to sell a dollar for fifty cents.

Amazon Sales Rank == tea leaves

[bbzzdd]

Amazon Sales Rank in no way represents reality. Just last week many members the HD-DVD rah-rah camp prematurely declared victory for software sales based on Amazon rankings showing HD-DVD titles outselling Blu-Ray by a large margin. In reality Nielsen VideoScan came back to show Blu-Ray taking the week 73:27.

For the entire month of July the PS3 was in the top three of the Video Game category at Amazon, seemingly outselling even the Wii most of the month. The Xbox 360 was barely in the top 20 for the month. When the smoke cleared the Wii outsold the PS3 by over 300% and the 360 beat it by 11k units.

Amazon Sales Rank is useless for comparing product sales.

Re:Competiton is good

[crankyspice]

Although Apple seem to have a halo on Slashdot, they are every bit as nasty as Microsoft in this department. Apple want to lock you in to the Fairplay every bit as much as Microsoft wants to lock you in to Windows Media DRM.

ORLY? "Convincing [the big music companies] to license their music to Apple and others DRM-free will create a truly interoperable music marketplace. Apple will embrace this wholeheartedly." http://www.apple.com/hotnews/thoughtsonmusic/ [apple.com]

Microsoft selling at a loss

[Locutus]

I wonder how many billions Microsoft plans to lose on this turkey? Billions lost over the life span of WindowsCE has purchased them a strong hold of the PDA market but is giving them problems in the SmartPhone market with Nokia's Symbian and Linux stalling that effort.

Anyways, it isn't a surprise that Microsoft is dumping billions into this product and suckers are picking it up. It's not like they don't have the cash to dump on this and we all know there are millions of suckers willing to pick up a Microsoft product because it's cheap.

The only thing of interest here is how many billions Microsoft is willing to lose to gain market share against Apple. They've crossed over the $10 billion mark to kill Palm about 4 years ago. But it's a laugh when the press talks about WinCE, PocketPC, Windows Moble, etc being a good product line for Microsoft. So if you're a MSFT investor, Zune will be a massive loser too. IMO.

LoB

Re:Suddenly, a blog is old media

[alanQuatermain]

Okay, here's something interesting:

• On the MP3 Players [amazon.com] list, the iPod is doing really well.
• On the Flash-based [amazon.com] sub-list, the Sansa holds the top spot.
• On the HDD-based [amazon.com] sub-list, the Zune holds the top spot.

Now go back and look at that first list, and take note of the iPods in the top few places. Done that? Okay, your mission, should you choose to accept it, is to locate those same models on either of the other two lists.

No luck? Okay, just find *any* of the current generation of iPods (iPod Classic, iPod touch, iPod shuffle (clip version), iPod nano w/video) on the two narrowed lists. In fact, I don't see the new Zunes on those lists either, when it's apparently at #9 (at time of posting) on the general list. Nothing in the top 12 places on the general list appears in either of the other two.

So, it turns out there's a pretty simple explanation for this:
Amazon hasn't tagged the latest generations of iPods or Zunes as either HDD- or flash-based.
As a result, they just don't show in those sub-lists. And since the price-dropped 1st Gen. Zune is proving more popular than last-season's iPods, it appears above them on all lists of which they are a member, including the general list (it's at #15 right now-- the 30Gb Brown one). It just happens to place behind all the current models from both manufacturers.

-Q

Re:No

[Yath]

they would be in violation of antitrust legislation if they used an artificially low price to cut into the competition

At which point the Justice Department would swoop in and beg Microsoft for a spanking, I'm sure.

Re:No

[Anonymous Coward]

A lot of people I know really don't think much of the iPod. Who cares about the UI, all most people do is click "Play" once and then put it in their pocket. Also the way your iPod nicely deletes your entire music library when you sync it with another person's PC doesn't go down well. It makes it impossible to get a few songs from your mates which is a major benefit of having a large music library, unless of course you have spent $12,000 or so to buy the 800 CDs you need to fill that space which is unlikely for most people I imagine.

Re:The Zune-for-Christmas Death Plot

[Joe Jay Bee]

What a nasty world we live in where a kid will go into a sulk because they only got a "wrongly" branded $100+ MP3 player on Christmas morning.

Re:No

[Torvaun]

Actually, they can be as anti-competitive as they want until they start beating the iPod. Antitrust legislation keeps monopolies from artificially keeping competitors out.

Re:No

[gnasher719]

What makes you think they are selling at a loss? Are you aware that iPod nano's are speculated to cost less than 50$ each to manufacture?

You are confusing the speculations about "bill of parts" with "cost to manufacture". Not the same thing. And once you've manufactured it, it costs a bit of money to get it from a factory in China into the hands of a customer.

no one buys their iPods from Amazon

[2ms]

These stats have little meaning for one giant (I would think obvious) reason -- people don't buy their iPods from Amazon. I bet 90% of iPods are sold at either apple.com or Apple stores. Zunes are sold 3rd party.

Re:No

[secolactico]

Are you guys implying that Zune is so crappy that people won't want it even for free?

I've never used a Zune and only used iPods on a couple of occasions (don't own either). But if somebody gave me a Zune for christmas, I woudn't turn it down. I mean, it costs me nothing. At worst, it won't be the crappiest gift I've received. Hell, if it plays my MP3s, I will enjoy it.

Or will it somehow report all of my non-DRM music tracks to the RIAA?

Re:No

[ashridah]

Except that the zune goes one step better, and won't delete music off the device unless you specifically request it, ever, even if you DO change sync systems. I've changed it a few times already on my one without any problems.

The zune might be a generation behind, but it's definitely got a few minor advantages. I can't say I'm too interested in the market place stuff tho, and the social aspect isn't really why I'm using a player. (when I put the headphones on, it means "rack off, i'm being *anti*social, damnit"

ash

Re:The Zune-for-Christmas Death Plot

[Opportunist]

Second moral of the story: Don't forget to include the receipt in the gift, so they can return it without embarrassing you or them by informing you that you shouldn't buy stuff you know crap about.

If You Give It Away...

[Nom du Keyboard]

If you give it away,
they will come.

Re:No

[Mode_Locrian]

There are three kinds of lies: lies, damned lies, and statistics. Nice work uncovering that info.

Re:Excellent research!

[Bender Unit 22]

The same trick are done on washing machines etc, in Scandinavia. They all have slightly different product numbers.
I discovered it because I was looking for a new one and was googleling for some info on a AEG machine, which turned up very little.

Re:No [Expletive] (!!)

[GeffDE]

The Zune does take spots 1, 2, and 4. However, the most recent generation of iPods is conspicuously absent...the iPod in space three is the previous generation. Where is the iPod Classic? So the Zune is getting spots 1, 2, and 4 on that specific page because there is a lack of current generation iPods. The same is true of the PDMP bestseller list: the iPods listed are the previous generation. If you notice on the first screen you get to navigating from Amazon's homepage to the MP3 & Media Players, the iPods are their own category. The conspicuous lack of any current generation iPods showing up in any of the 3 subcategories of MP3 (flash-based, hard drive-based and PDMPs) may be because Amazon has listed them as iPods, and not as flash-based etc.

Also, how many people do you think get their iPods from Apple vs. Amazon? Does Microsoft even sell the Zune directly (answer: no)? So regarding on the sales from Amazon is kinda ludicrous...

Regardless of Microsoft's involvement of it, anyone using these data to claim that the Zune is outpacing the iPod sales has had their reality cable become unplugged...

Re:When it comes to MS, antitrust is all encompasi

[cloakable]

So is the Zune supported by Microsoft on non-Windows operating systems?

If not, what OS does Microsoft reccomend you use to get music onto the Zune?

There's your tie-in to a monopoly product.