I have written a number of posts about the so called iPod killer, the Zune Player and it’s debut on the market. As of today, the Zune Player is a failure:

From Roughly Drafted:

1. •Apple 72.7%

2. •Sandisk 8.9%

3. •Microsoft 3.2%

4. •Creative Labs 2.9%

5. •Samsung 2.0%

 Once again, NPD’s numbers only cover retailers that supply it with data, which excludes Apple, Costco, online sales, and mail order outlets.Based on NPD’s numbers and my math, it would appear Microsoft sold $7.2 million in Zunes in January via retail outlets, which at $250 each would be just short of 29,000 units, making its Dr Evil goal of “one million Zunes!” by June 2007 a bit of a joke.

Although RoughlyDrafted is partisan, the analysis does stack up. With retail margins of 30% puts the unit numbers between 29,000 at the low end, and 44,000 at the high end (depending on the whole sale or retail cost). The numbers that NPD uses are most of the major outlets, but they do exclude Costco, Walmart and Apple Stores.

As the wireless zapping thing turned out to be a gimmick, and that it relied on your friends not having iPods, there is no compelling reason to purchase the Zune over the iPod. It offers no benefits that cannot be found in the iPod and in many cases they are inferior to the iTunes/iPod combination.

The truth is that without a major market disruptor, Microsoft taking on the market for MP3 players and effectively competing with Apple is impossible. This is just like the battle with Windows Live Search vs Google Search, without a major shift in how and why people search, Microsoft (and for that matter Yahoo) will remain far behind in market share.

Although markets are constantly changing and evolving there are a few immutable laws that they are governed by. The first understanding is that markets are accumulated or aggregated consumer (read people) behavior that result in a metric, that is revenue or units sold.

The first being the law of motion and equilibrium, that is consumer behavior tends to be habit and does not shift radically over time unless their is a jolt from a shift in externalities that result in a shift in behavior. A good example of shift in behavior is the change in parking at your local Starbucks. Starbucks relies enormously on foot traffic and such changes in patterns of parking at your local Starbucks effects the sales of coffee over time.

In the MP3 player market, Apple took over market share from Sony Walkman because they were the first to create a truly integrated experience where as the Walkman stumbled badly in this respect. In fact so badly that they missed the MP3 Player boat. In the music distribution market the disruption was the flow between downloading music from an online store onto the iPod and the standard distribution which is CDs. Suddenly you didn’t have to purchase those other 10-12 songs you didn’t really care for and could purchase only the songs you did like (what ever happened to the Vinyl Single). What Sony did not realize that adding another layer between the CD (the ripping part) and the user increased resistance to the product, where as Apple reduced a layer (the CD package) between the purchased music and the listener.

The bottom line is that the Microsoft Zune Player today offers no reason for the consumer to change it’s behavior and continue to purchase iPod/iTunes combination and no amount of advertising will shift that perception with out a radical departure from the model that Apple created. There are some radical things that you can do, for example you can completely remove DRM from the Zune Market and Player and completely open it up, but with the music industry determining the product design at Microsoft this is not going to happen.

The bottom line is that Zune is and will fail to ignite the imagination of music consumers because their imaginations of what they want to see in a omnipotent music player is currently beyond what the music industry will allow them to deliver………

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