According to Gartner Inc., the mobile music market will grow strongly through 2010, to more than five times its size at the end of 2005, and reach $32 billion. Mobile operators stand to gain a lot, but face many hurdles in the race to be the main winners in this market. So how are the two main competitors on the market doing? Well, it seems iPod maintained its undeniable supremacy this year too, while Zune only enjoyed a brief period of glory, right after its launch.

It looks like iPod’s success is not only ensuring Apple’s dominance in the MP3 player market, but it also skyrockets the sales on iTunes. In the pre-Christmas period, users literally attacked Apple’s music download service, probably overwhelming the company’s servers and exceeding even the most optimistic expectations of the Cupertino-based giant. This is why most of them started complaining about long downloading intervals and receiving error messages.
 
Overall, Apple still maintains a tight grip on the MP3 players market, with 82.7 percent market share for the hard-drive iPods in the first half of December 2006, but down from the 86.8 percent registered last year. Considering both hard-drive and flash-based MP3 players, Apple holds an impressive 62.2 percent market share for its gadget, almost the same percent as in 2005 (63%).

As a comparison, Zune managed to obtain 9% market share in the first week since its launch in November, making it the second most important MP3 player, but far behind iPod. Zune’s success is diminished though when we consider that it took 9% of the hard drive MP3 player market. These numbers also do not include sales from Apple retail stores, which sell only iPod players.

Despite the heavy investments in advertising and marketing, Zune was received by consumers with indifference. A survey of 40 retailers conducted by Piper Jaffray analyst Gene Munster found only 8% of the sales people recommended Zune compared to 75% recommendation for Apple iPod, and that most of the sales people did not even know what Zune was or who made it.

In the second week Zune was the 5th most sold player, with a 2.1% market share, according to the market research firm NPD Group. The figures do not include iPods sold directly from Apple.  Overall, SanDisk was No. 2 in December with 18.4 percent of the overall market, up from 17.5 percent last year.  Zune’s sales relative to other MP3 players continue to decline, with NPD Group placing its market share at 1.9% by the second week of December 2006.

According to Gartner, Microsoft’s strategy of differentiating Zune through its ability to share songs over Wi-Fi is not particularly compelling, pointing to the fact that users can’t buy songs through their player.  Gartner says: “Microsoft’s claimed differentiation for Zune is based on applying Web 2.0 community concepts to the music experience. With the inclusion of an integrated Wi-Fi/antenna, Zune users can exchange or share songs by transferring them to each other. Whilst Gartner believes this is a good, high level strategy that is potentially market leading, it is not clear that the scenario Microsoft describes is all that compelling.

Source: Playfuls

Ignoring the ignorant iPod, Sansa and Zen users, Zune is not going down like the titanic, as the dudes at some iPod fansites had hoped for.  Microsoft has said it expects to sell one million of its new Zune music players through the first half of 2007. That figure would pale in comparison to Apple Computer Inc.’s market-leading iPod, but Microsoft contends it would be a good start.

“We think that’s actually pretty awesome,” said Bryan Lee, vice-president for Microsoft’s entertainment group. The US$250 Zune, whose 30-gigabyte hard drive can hold 7,500 songs, debuted in mid-November to mixed reviews. One unique aspect of the Zune, its ability to let users wirelessly send songs to each other, has been panned for allowing shared music to be played only three times in three days before expiring.

Lets see, 1,000,0000 sold x $250 + 10 songs per user = $260,000,000 - thats not such a bad thing…  iPod lovers and Zune bashers, we laugh in your face.

The ChannelCheckers are surveying sales staff at consumer electronics outlets and are reporting solid Zune sales, stating that Zune’s are selling about even with iPod’s. However, Zune sales at Best Buy appear to be hurt by limited quantities. Could Microsoft have understocked the Zune? We’ll see.  When I picked up my Zune on opening day, my local Best Buy didnt have any Zune’s out - they were all locked in a steel cage. When I asked one of the assoicates for one, he gave me the “what the heck are you talking about” look and had to get a supervisor… Oh boy….

We are working on our follow-up survey on iPod sales versus the new Microsoft Zune MP3 player. Our first survey revealed a strong preference for the iPod despite the buzz around the Zune. Now the zune has launched we are working on seeing what consumer preferences are as the Christmas shopping season gets underway.

Our survey questions were the following:

1. Which MP3 player do you recommend?
2. Do you sell the Microsoft Zune?
3. How well is it selling?

Our survey is not complete but the early results are interestng. First, iPod remains the dominant MP3 player, recommended by 70% of our respondents. The Zune was recommended by some who cited its Wi-fi connectivity as an attractive feature.

Worried about coughing up $14.99 a month for a Zune Pass subscription?  No sweat, BillG and his band of merrymen will be tempting Zune owners by setting up a free 14-day Zune Pass trial with each Zune sold, letting you sample the vast Zune Marketplace at your leisure without dropping a single red brick.

This is good news for new Zuners,  however, after 14 days, all those freebies will be about as good as chocolate fireguard.  Still, nice offer from the Redmond boys to get us going.

In what could be one of the more embarassing typo’s of Amazon UK (…or not), Amazon’s UK website lists Apple Computer as the make of the Microsoft Zune.  We believe this is nothing more than a typo on Amazon’s part.  Or perhaps someone on the Amazon staff having a little fun?  But you know those darn conspiracy theorists always seem to get their way.  Amazon has since updated their website with the correct information.

In keeping with the trend of undercutting rivals (Xbox vs Playstation), details have emerged showing the price of Zune at launch to be $229 - less than the newly lowered price of $249 for iPod and lower than PSP - also $249 - although thats not really comparing apples to apples (pardon the pun), the PSP is a popular device with 18-34 year olds and I see plenty of dudes on the plane listening, watching and playing with PSPs… Pity I sold mine about a year ago. I hated the memory stick and crappy, proprietary UMD disks.  Sony have no clue about userability and compatability. As for Atrac… lol, lets not go there.

Analyst Rob Enderle takes a look at the current situation involving Microsoft’s upcoming Zune and Apple’s iPod. The general idea is that once Microsoft enters the battle, it will be a 2-sided event. Much like the Xbox 360 vs. Playstation 3. Even though the Nintendo Wii is still present, most consumers talk about the Xbox 360 vs. Playstation 3 ‘war’.

This of course putting companies interested in the music and media devices war in a ‘third party’ position as Nintendo is sitting in now.

This is what Enderle had to say:
“Now is the time to experiment,” said consumer technology analyst Rob Enderle. “There is a window of opportunity. The fear is that once Zune comes out, there will be two camps: Apple and Microsoft. So now is the time to do something before Microsoft gets Zune fully cooked.”  For the full article, click here.

Is the Zune name just another crazy marketing name? Well the folks over at bloggingstocks believe they’ve found the answer.

“We were wondering how Microsoft came up with the name “Zune,” and now maybe we know? Could they have been buzzed on that beer in the fridge in Kirkland? That’s where the Mobile and Imbedded Devices Experience (MEDX) design center is located, and where, according to the Seattle Post-Intelligencer, engineers “have fun” by playing shoot-em-up with Nerf guns in their open offices, and yep, drink beer.”

For the full article, click here.