Hey Cesar,

I'm going to CES, but that's not really fair since we'll be having our accessory product in your booth.  None the less I'll be there.

Jonatan

And in that same time period, Apple will likely have sold another 30-35 million ipods, with a cumulative total of 90-100 million devices sold by then. That is that challenge for Microsoft, right now.

I have no doubt that the Zune will eventually have a meaningful share of the total devices in the market, but until the iPod juggernaut slows down, it will be a real challenge for Microsoft to significantly erode Apples marketshare.

I'm interested to see where Microsoft takes the Zune, and equally interested to see Apple's next steps.

Dan....I agree but that does not mean that 1 million is nothing. Every new product has to start some where and a million by end of financial year is not bad.

I really don't think there is any killer product which will propel Zune or any other media player beyond iPod in near term. Killer product/features and not made but stumbled upon accidentally. I bet Apple never though that iPod will be as big a success as it right now.

It’s a good start.

Also its hard to define success. If MS has 30 % market share and Zune is profitable, according to me that’s a good success for Zune. Its gives a good alternative to iPod and keeps everyone honest.

A long way to go but nice baby steps have been taken.

But let’s not let MS off the hook. Being critical is good for MS and Zune.

Rohit

I'll be at CES for the first time this year. We're having a meeting with a few CE manufactures and members of the APA (Audio Publishers Association). It's all about the implementation of the new Audiobook standards and getting the ce device makers on board. It adds a lot nice features for people who listen to audiobooks, podcasts, etc.

Find more info here - http://en.wikipedia.org/wiki/Audiobook_playlist

I'll be at CES w/ brown Zune in hand!

Numbers looking good so far.  Glad to see this discussion.

1M Zunes in 7 months...not bad at all.

Rohit -- If MS has 30% market share and Zune is LOSING money, is that a success? Because that sounds an awful lot like the Xbox situation, which a lot of Microsoft fans point to as a "success."

And from everything I've read, Microsoft expects to take a loss from the Zune division for a few years ...

Rohit - I never said that 1 million is nothing, I simply used some stats to point out the challenge that Microsoft faces.

The most interesting part of this whole thing will not be the numbers, but the interesting innovations both Microsoft and Apple bring to the table as a result of the increased competition.

Everyone benefits.

Wow...only a million Zunes by the end of June? I would have expected a goal closer to 5 million.

Anyway, I'll definitely be at CES like I always am.

BJ Nemeth - There is a difference in the business model of the two devices. It is my understanding the most of the profit from Xbox will come from sales of the games.

With the iPod, most of the profit comes from the sales of the device itself. Apple barely makes a profit from the iTunes Store. I'm sure Microsoft will be in a similar position with Zune Marketplace and the will have to turn a profit on the device eventually

BJ - fanboyism aside, the claim that Xbox is successful is pretty widespread: Check out this article on a site with which you might be familiar :) http://www.macobserver.com/article/2006/12/01.9.shtml.

I think losing money in the short term isn't really an indicator of failure.

In the Bloomberg article we can read again:

"Microsoft is investing hundreds of millions over the next three to five years in Zune, which will lose money through 2008 at least, Robbie Bach, president of the Entertainment and Devices division, said in July."

Next June, we will have an idea if the Zune can be a "sales success" but we will have to wait a few years before we know if the Zune is a success for Microsoft shareholders. If we ever know...

Dan H...Agreed

BJ….xBox is a success and an amazing one at that. Yes MS took loss and will take so till 2008 but by every estimate 2008 is the year xBox will make profit. So lets see what xBox did in past 5 years:

1. Came into market dominated by Sony.

2. Went up against the ‘MS will fail’ perception.

3. Re defined the market with Xbox Live service.

4. Introduced next generation console one year before Sony.

5. Made Sony play catch up and follow MS. Now they are offering online gaming. Says a lot about who is redefining this area now.

Now ask any company in the world be it Google, Apple or Sony would they do the same given the choice and all will say yes. Whoever comes out the winner in the next generation consol the fact is that PS’s monopoly will be broken.

So yes xBox is a success and MS has created a viable business for itself in gaming world. That’s what I want to see with Zune. A viable business. It will bring about innovation and choices in the market.

Rohit

Another reminder to me that I shouldn't post comments in haste.  :)

My earlier comment was written too quickly, and my point was lost because I rushed it. The Xbox is definitely considered a success by a LOT of people/analysts (including myself), and it has nothing to do with whether or not someone is a "Microsoft fan." If I offended anyone with my earlier comment, I apologize.

In refuting my dumb comment, Dan H. made the point that I was trying to (but failed). "There is a difference in the business model of the two devices." The Xbox *is* different than the Zune. Therefore, the claim that the Xbox's success (even at a loss) proves the Zune's future success is based on faulty logic. They are competing in different markets.

Ultimately, I was expecting Microsoft to challenge the iPod by counterprogramming with something different. The Zune is TOO similar to the iPod, without improving any of the key factors: size, weight, capacity, or price. The only real distinguishing feature is the wireless, which is crippled in the version 1 product.

Ironically, I expected Microsoft to enter the MP3 player market the way Nintendo is competing in the game system market. This link explains: http://www.newyorker.com/talk/content/articles/061204ta_talk_surowiecki

BJ…I agree xBox and Zune are two different stories.

With Zune I think MS did make a few mistakes. However I think it’s too soon to say how well Zune will do in long term.

The Wii analogy is also a bit faulty. Nintendo was already in the gaming world when it came out with Wii. They had some good knowledge about the gaming market to build upon. However also do remember the long term verdict on Wii is still out.

However in case of MS, they did not have any presence or experience in MP3 player market(with hardware and software integration). So first step was to get the basic device right. You also have to take into account that their decision to jump into this market was taken in January of 2006. If you take that into account the Zune is decent start.

Having said that I also realize that does not guarantee anything for future. They will now have to move fast and turn Zune into an innovative product (as you mentioned with Wii). In ideal work they would have had years to perfect Zune and make a big splash but MS has to work with real world.

That’s why I think their biggest mistake was not entering this marker two years ago.

SURE! Ya like that is ever going to happen! That will be in maybe 10 years! Oh wait the ZUNE won't be around in 10 years...And if you do sell 1 million ZUNES they will all be in the Landfill in 5 months! DISS!!!!!!!!!!

I like what I hear. Here is what MS has to say as reported at windowsitpro:

"Over the next year, I was told, Microsoft will ship numerous functional updates to the existing Zune player and launch new Zune devices with new form factors and unique features."

The full article is here:

http://www.windowsitpro.com/Articles/Index.cfm?ArticleID=94475&DisplayTab=WinInfo&ID=13

Hey Zune....when are ya'll gonna put up early Janet Jackson music on marketplace...(or are ya'll still mad at her for the SuperBowl thing)...

I take it you guys dont want my money, I thought we're supposed to be promoting legal downloading here?

I was just thinking...you guys should really introduce a feature that allows bands to beam  tracks to Zunes at concerts,etc...that would be a really nice feature. I don't know how you'd do it....but it just sounds really cool. :-)

Lol i think everyone needs to calm down!  Microsoft is merely entering the market this round....noone is expecting them to beat Apple.  Not even them.  At least not this round.  

Contrary to popular belief, Microsoft is not stupid.  Just watch.  I think you'll be pleased with the show.

As for CES...dude Cesar.  That should have been the prize for the sir mix-a-lot contest.

vini vidi vicci  

Heh... that's pathetic for a consumer electronics device. Let's do the math here...

1M by Q2/07 is probably 400k by December, 300k in Q1/07 and 300 in Q2/07.

Let's see where Apple's going to be by then....

20 M in Q4/07, 14 M in Q1/07 and 11 M in Q2/07..., or 45 M in the same time...  That put the total iPods sold at 65+45 = 110 M.  I suspect the numbers will increase... Zune's advertising will increase awareness of the category and lead to more sales for all, including the iPod.

Again, this is barring no new surprises from the market leader. Given that Apple has been anticipating MS's direct entry into the space for at least 2 years, they will have prepared hard to increase their momentum... Macworld 07 will be interesting to watch.

What about this: less than 500K until June, and subsequently the project is cancelled after toplevel management reshuffle at MSFT.

They will be laughing superhard at Cupertino.

I like the FM radio feature of ZUNE but beyond that, it offers nothing...why would I buy a ZUNE when I can buy an IPOD...I find it hard to believe that the bozo's at MS came up with this sub-par offering to pit up against IPOD...and yet they did....

it is a lame product with a lame message, and the wifi short-comings is the final slap....MS should stick to making keyboards.

make your site little more readable, please

I see this post was picked up on TUAW: http://www.tuaw.com/2006/12/07/a-million-zunes/

Which means we might get a few silly troll-boys commenting in this thread, as well as a few insightful, intelligent commenters! Awesome! You are all welcome here! :)

Thanks for leaving a comment, but before you do, please note a few basic rules: http://zuneinsider.com/archive/2006/11/28/if-your-comment-got-deleted-here-s-why.aspx

- Cesar

brown - what do you mean, make the site a little more readable? let me know and I'll see what I can do.

Thanks :)

I will be at CES

Dont worr about the iFanboys admin. Thye think that by posting some negative comments hat will cause MS to give up on the project. Sorry guys, Zune is here and is steadily racking up sales and word of mouth.

My 12 year old daughter has an apple nano, but keeps wanting to play with my brown Zune(yes, a brown Zune -- it goes with my Khaki pants and camping gear). I haven't been trying to sell it her, but she likes the large screen and the simplified click control. This morning on the way to school, she told me that the Zune was cool. If she continues to play with it, I might buy her a white one at a later date. At this time, a black Zune is under the tree for the oldest who likes its integration with Xbox 360. I agree with Franco, the "Zune is here and is steadily racking up sales and word of mouth." As an aside, does anyone remember how Windows 1.0 was looked on as a joke when it first came out?

Yes I will be at CES...looking forward to seeing all my MSFT buds...

It's funny. This article reiterates everything I've said in my earlier comments.

1) This version of Zune is Softy's beta launch

2) They wanted to establish a name and awareness in the market

3) Next gen will be release before x-mas of next year and will incorporate some of the feedback they gathered from this version's launch.

I fully expect Zune2 to get the critics' attention. They will start spewing crap about how they now see the potential of the Zune.

Then Zune3 comes out in 08 and these morons will be converts.

Is this the microsoft way?

The thing that most critics are not realizing is that the xbox 360 is going to slingshot the zune into a big player in the mp3 market.

xbox 360 will have 10 mill shipped by end of 2007 compared to ps3's 1-2 mill.  It will dominate the ps3 next year as well.

imagine if Softy starts bundling the Zune2 into the xbox 360.  For instance, buy the stand alone 360 for $199 or a xbox/flash zune bundle for $299.  Yeah, there will be some financial pain in the short run but in the long run,  microsoft will make the zune a big player.

from the flash zune, kids will get hooked to the marketplace and buy the larger version. etc. etc.

seemless intergration with the xbox live and the marketplace will be critical.

I am sorry, but this just doesn't do anything for me. I am in Canada, a place where you do not sell either the player or the music.

You had a real opportunity - to be the first entry into the music player market not to treat Canadians as a second class North American afterthought.

You blew it, and, frankly, I've lost interest.

The zune will not be taken seriously until it supports Lossless audio. Right now it has no use for an audiophile.

Okay, here's the plan. We will build the Zune and then sell... one million of them.

[clears throat] Sir, strictly speaking, a million Zune is not very many these days. Apple sells 1 million iPod a week.

I find it hard to believe that the only thing Zune might have to do to be taken seriously is add lossless audio.

As noted by Wikipedia, Satallite radio's sound quality of both providers "may not always be comparable to FM radio. This is because XM and Sirius must add many channels in the tight bandwidth limits the FCC has placed on both companies."

Yet at the beginning of this year xm had announced they had passed 6 million subscribers. As far as I know they are still signing people up...So am I still to assume that CD or better quality audio is the biggest factor?

Audiophiles don't listen to satellite radio for lossless quality.

Dr. Evil, Number 2: hilarious!

Don't think they will even sell 1 Million. After all the hype and the holiday shopping, expect sales to take a dive.

doom and glum

Today on the earnings call, Microsoft announced that Zune has achieved our goal of one million units