The Fool Still Doubts The Zune

[David Tucker]

http://www.fool.com/investing/value...ng-so-zune.aspx

“Walk away from the Zune, Microsoft. There are only two scenarios in which I can see this as a battle worth fighting: one, if this is the platform that will be used to take on your video-game console rivals in the portable handheld market; or two, if it will bring something new to the wireless communications space. If the Zune is going to evolve into the next DS or PSP, blessed with a ton more storage capacity, great. If this is going to be a cell phone, in a brazen attempt to take on the iPhone, at least you have a strong enough mobile-operating-system pedigree to have a shot.”

I’m sure that Rick Munarriz over at The Motley Fool generally knows what he’s talking about (and with a middle name like “Aristotle” I would hope so!) but I’m going to have to respectfully disagree with him here. For one thing, he compares Zune sales to Sansa sales in his article. That’s like comparing Vaio sales to an eMachine. Not really the same class of device. Sandisk crashed the market with low end players when it came in. Microsoft is taking a long term approach with quality.

His other argument was that Apple’s iPod sales stalled; therefore, Microsoft missed the boat because the market isn’t growing. I have to wonder how exactly that analysis works out. If Apple sold 10 million players in Q1 and 10 million players in Q2, it sounds to me like the market grew by about 10 million people. Unless he really thinks those were all the same people! I’d say this is still a booming market. There are a lot of people who don’t own MP3 players still and this market will continue to grow and evolve. Microsoft doesn’t need to go anywhere and I don’t think they plan to.

[David Tucker]

http://www.fool.com/investing/value...ng-so-zune.aspx

“Walk away from the Zune, Microsoft. There are only two scenarios in which I can see this as a battle worth fighting: one, if this is the platform that will be used to take on your video-game console rivals in the portable handheld market; or two, if it will bring something new to the wireless communications space. If the Zune is going to evolve into the next DS or PSP, blessed with a ton more storage capacity, great. If this is going to be a cell phone, in a brazen attempt to take on the iPhone, at least you have a strong enough mobile-operating-system pedigree to have a shot.”

I’m sure that Rick Munarriz over at The Motley Fool generally knows what he’s talking about (and with a middle name like “Aristotle” I would hope so!) but I’m going to have to respectfully disagree with him here. For one thing, he compares Zune sales to Sansa sales in his article. That’s like comparing Vaio sales to an eMachine. Not really the same class of device. Sandisk crashed the market with low end players when it came in. Microsoft is taking a long term approach with quality.

His other argument was that Apple’s iPod sales stalled; therefore, Microsoft missed the boat because the market isn’t growing. I have to wonder how exactly that analysis works out. If Apple sold 10 million players in Q1 and 10 million players in Q2, it sounds to me like the market grew by about 10 million people. Unless he really thinks those were all the same people! I’d say this is still a booming market. There are a lot of people who don’t own MP3 players still and this market will continue to grow and evolve. Microsoft doesn’t need to go anywhere and I don’t think they plan to.

[txa1265]

Your analysis is completely right, and it is amazing how many smart people are talking stupid about this. Stalled *sales growth* and stalled *sales* are two VERY different things.

[inteller]

I think you are REALLY discounting the Sansa. Zune is better "quality"? Let's talk about that quality for a sec. The Sansa supports Asian character sets.....Zune? Yeah right. I also noticed the Sansa supports wi-fi now....so much for that feather in Microsoft's hat. Thirdly, you can buy a Sansa in just about any country you want AND be able to put music on it (Canada...oh wait no music store!)

Microsoft has proven to me that Zune is really just a bunch of marketing hacks with no ability to execute on technical vision. You can talk about "social" all you want but its really just a big vision that is unattainable because they lack the programming knowhow to make it happen.

[Jason Dunn]

Originally Posted by inteller

I think you are REALLY discounting the Sansa. Zune is better "quality"? Let's talk about that quality for a sec. The Sansa supports Asian character sets.....Zune? Yeah right.

I have a Sansa Clip, and while it's a fine little device and does what it was meant to do, there's really nothing particularly impressive about it - and I sure as heck don't like using Windows Media Player 11 to load it up (it felt backward compared to the Zune software). Asian character sets don't matter to me, but if that's critical to you, then it's good that SanDisk has you covered.

Originally Posted by inteller

Microsoft has proven to me that Zune is really just a bunch of marketing hacks with no ability to execute on technical vision. You can talk about "social" all you want but its really just a big vision that is unattainable because they lack the programming knowhow to make it happen.

I'm curious then - what other MP3 player on the market today has anything like the Zune social/cards/sharing stuff? Have you seen the 2.5 update yet? It's quite impressive with the updates for the social aspects.

[Janak Parekh]

Originally Posted by Jason Dunn

I have a Sansa Clip, and while it's a fine little device and does what it was meant to do, there's really nothing particularly impressive about it - and I sure as heck don't like using Windows Media Player 11 to load it up (it felt backward compared to the Zune software). Asian character sets don't matter to me, but if that's critical to you, then it's good that SanDisk has you covered.

How about the Sansa Connect? That still seems to be the only device on the market that bothers to use its integrated WiFi in any useful way. Even Apple only has the a-la-carte store over WiFi, and the Zune, well... the WiFi sync was nice, but when are they going to truly take advantage of their existing subscription system?

--janak

[David Tucker]

I still think WiFi for use of anything outside your home is pretty limited in its usefulness (ie...a store)

99% of the time I'm not anywhere that I could get any use from that.

[Jason Dunn]

Originally Posted by David Tucker

I still think WiFi for use of anything outside your home is pretty limited in its usefulness (ie...a store)

Yeah, I agree. I like that the SanDisk people have pushed into some interesting territory with the Sansa, but I haven't seen anything on it that makes me go "Wow, I totally need that!". Maybe when we have WiMax everywhere and devices can use it we'll see more "wide area" scenarios made possible.

[Janak Parekh]

Originally Posted by David Tucker

I still think WiFi for use of anything outside your home is pretty limited in its usefulness (ie...a store)

Well, I disagree with you. I have blanket WiFi access at work, and had blanket WiFi at my university. The latter is a nontrivial market.

(Plus there's plenty of open WiFi networks around here. University aside, my perception may be colored by NYC, a far more pedestrian (and dense) environment.)

--janak

[Stinger]

Originally Posted by David Tucker

His other argument was that Apple’s iPod sales stalled; therefore, Microsoft missed the boat because the market isn’t growing. I have to wonder how exactly that analysis works out. If Apple sold 10 million players in Q1 and 10 million players in Q2, it sounds to me like the market grew by about 10 million people.

I think the truth is somewhere in the middle. Who here is still using the first mp3 player they ever bought? From anecdotal evidence, I'd say that the average iPod user upgrades their iPod every two years. There's a lot of replacement players in that figure of 10 million, even if they're not all replacement devices.

There's certainly reason to suggest that the market is saturated in western markets.

[David Tucker]

Oh, yeah, don't take that to mean I think this is the same market it was a few years ago. When sales growth slows its much harder to break in, which is where we're at now. But I think that there's still a lot of new customers in there. I can't go by MY personal use of MP3 players since its not the norm. In 3 years I've gone through 3 MP3 players (iRiver T10, Zune 30 and currently my Zune 80)

But most of my friends who have their MP3 players have had them a while. My friends with Nanos that I can think of have had them 2 or 3 years. I know people with iPods that have had them longer than 3 years. People with non iPod players have all had them a while.