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Microsoft Zune bombs at retail

False start in Zune's attempt to take iPod's crown

Early sales of Microsoft's Zune player should give little reason for iPod loyalists and Apple to fear this holiday season, according to analysts in the US.

Since its US retail debut on 15 November, customer interest in Zune has been lacklustre, analysts report, while early reviews of the product have also been critical.

According to PiperJaffray senior research analyst Gene Munster, only 8 percent of 40 retailers surveyed by the firm recommend the Zune to customers, while 75 percent recommend Apple's iPod.

Moreover, some salespeople hadn't even heard of Zune, even though the players are being sold at their stores, he wrote in his report.

Quotes from retail clerks cited in Munster's report range from them claiming they don't know what the Zune is, to comments that Zune is a good option if a customer does not use Apple's iTunes software.

"To be honest, I don't really know much about the Zune," one clerk is quoted as saying in Munster's report. Another said, "I don't suggest the Zune because it is really heavy," according to the report.

Zune also did not fare well against other MP3 players and Apple's iPod even during its initial week of sales, when the hype surrounding the product was at its peak.

According to Munster's report, during its launch week on 16 November, Zune held the seventh spot on online retailer Amazon.com's top 10 best-selling MP3 players list, and it fell from that spot to 13 on the list only five days after launch.

"The buzz that Microsoft was able to generate for the Zune's launch clearly helped the player in its first week, but much of the publicity took the form of Zune/iPod comparisons," Munster wrote. He added that these comparisons show that Zune "failed to match up in the eyes of most reviewers" to the iPod, a fact that negatively affected sales of the device.

Deutsche Bank analyst Chris Whitmore said that the iPod continues to be a strong seller going into the busy holiday shopping season, and the 30GB video iPods - with which Zune competes - "appear to be immune to the Zune”. He said both the 30GB video iPods and the new 4GB iPod nanos were currently popular with consumers.

A note about Apple's performance from financial firm UBS IT hardware analyst Ben Reitzes also said that Zune does not appear to be any threat to iPod at this time.

To be fair, Apple has a five-year head start in the music and video player market, and no one expected Microsoft's first entry would be comparable right away to the immensely popular iPod. Microsoft has said it plans to invest significantly in the Zune over the next several years, and the device is expected to become more competitive.


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