If you get to choose how to define your market, you can claim to be number 2. If you look at the market the way most analysts and business people do, Zune was a distant 4th with 2.8% of all mp3 player sales in the holiday sales period.

http://microsoft.blognewschannel.com/archives/2007/01/05/final-holiday-sales-zune-comes-in-fourth/

Can you help us understand where Mr. Ballmer comes up with a 20-25% market share of hard drive sales when most every report I have read says it was 10%?  It sounds like someone is pulling numbers out of his @#* to make things sound better than they really are. Just because he says it doesn't make it so; I would assume somebody has data to back up that statement?

Sounds like you need to sell about 3200/day for the remainder of the fiscal year.

Best Buy        742 Stores

Circuit City    640 Stores

CompUSA         225 Stores

===========================

               1607 Stores

That translates to about 2 sales/store/day and if count other retailers & internet sales its probably closer to 1.5.  Sounds very doable.

According to a recent USA Today article, Universal Music "threatened not to license Universal music to Microsoft just days before Microsoft was scheduled to launch its own online music store and its Zune digital music player. In response, the software company coughed up a royalty of slightly more than a dollar for every Zune sold and paid a licensing fee for the right to sell Universal music."

http://www.usatoday.com/money/media/2007-01-15-umg-ceo_x.htm

Everybody outside of Microsoft has to use data from sources like NPD to figure out market share. Microsoft, on the other hand, knows the real number of sales. If there is a logical reason for these to be significantly different (but for competitors' numbers to still be roughly accurate), SteveB can estimate a more accurate market share.

For example, if most stores carrying iPods are counted in the survey, while a significant fraction of Zune sales happen in stores that aren't counted, Zune will be underreported. I've seen Zune displays all over the place in stores that don't carry any other mp3 players (book stores, airport newsstands, gaming stores, etc), so this might be possible.

As for defining your market, you do it in a way that is meaningful. You could do it as broadly as the market share for all consumer electronics, but this is hardly a meaningful statistic. Similarly, considering the iPod Shuffle vs. the Zune seems pretty pointless. Relatively few people are choosing between those two products. Chances are, most people choose a price range or capacity and select among the players available that meet those criteria. For the time being, Zune is only directly competing with products that are ~$250 with 30 GB capacity. To be fair, you would probably also be interested to know how this segment fits into the broader market.

HI FIVE!!!

Steve Ballmer went on to say that Zune owned 100% of the Zune market and that Microsoft would continue to have a firm grip on the Zune market even after the introduction of Apple's iPhone.

“We came into the market, a market in which they are very strong, and we took, I don’t know, but I think most estimates would say we took about 20-25% of the high end of the market,” Ballmer said in a CNBC interview. “We weren’t down at some of the lower price points, but for devices $249 and over we took, you know, let’s say about 20% of the market. So, I feel like we’re in the game, we’re driving our innovation hard and, uh, okay, we’re not the incumbent, he’s the incumbent in this game, but at the end of the day, he’s going to have to keep up an agenda that we’re gonna drive as well.”

Can you really take his words as the truth over NPD? SOunds like he is guessing!

"....and we took, I don’t know, but I think most estimates would say we took about 20-25%"

"you know, let’s say about 20% of the market"

Yeah, and don't forget that you've conquered 100% of the brown MP3 player market.

MSFT is really getting pathetic.

I know more people with Zunes than iPods so I know you guys are making progress!

But then maybe I just prefer to associate myself with Zune owners.  In any event, in my small circle there are 7-8 Zune owners!

"However, Zune is sold in more outlets than NPD reports on, so actual market share might be higher."

And it could be lower. In fact, most certainly lower.

"For a bit of context, no other device has been able to get to 1% after its introduction. "

Yeah, Apple achieved a lot more than 1%.

Funny how you go, in one breath, from suggesting that Ballmer's idiotic numbers are  close to accurate to mentioning a more realistic benchmark of 1%, isn't it?

"Microsoft, on the other hand, knows the real number of sales. If there is a logical reason for these to be significantly different (but for competitors' numbers to still be roughly accurate), SteveB can estimate a more accurate market share."

No there isn't. Ballmer didn't have Apple's numbers or anyone else's numbers before this comment. That's why we allow NPD and others to estimate the market.

"For example, if most stores carrying iPods are counted in the survey, while a significant fraction of Zune sales happen in stores that aren't counted, Zune will be underreported."

Umm, no. Both are sold at all of the stores tracked in this survey data. Zune might be sold at OfficeDepot, but the iPod is sold in many, many more retail outlets than Zune. Simple fact. Look it up.

I don't understand the 1% comment?  

What mkt share did the Zen Micro reach when it was introduced?  It was pretty high, even though the device sucked and didn't work with the subscription service.  The marketing was great tho, I got one and returned it.  The point is, I'm pretty sure it achieved a giant market share in early 2005 or 06 or whenever it was.  I think Creative had about 15% total mkt share of mp3 players when the Zen Micro was first intro'd.  In fact, I think Creative is still #2 in mkt share even tho there devices suck and have all that touchy-feely controls crap that Apple likes too.

The BlackJack is the best music player I've seen on the market ever, but it doesn't have any memory.  It's the first to use the QWERTY keyboard as an asset in navigating music.  Some day, some one will realize that a QWERTY is the best way to navigate everything.  Touchy feely stuff is for fairies and Peter Pan.

I think Zune will continue to have problems breaking through in a big way until many of the little things are fixed. Here's one more to add to the list.

Cesar, any comment on this?

Zune 58% Welcomes You To The Social:

http://gizmodo.com/gadgets/portable-media/zune-58-welcomes-you-to-the-social-229916.php

So does everyone just hate Microsoft, or does it go one step further and they're brainwashed by Apple?

Or maybe we just hate marketing fudging numbers.

tim, you raise some excellent points, but we're really gonna need for you to provide some evidence/data/a link to back some of them up. I really want to keep the conversations in this thread informed and intelligent.

"in fact, most certainly lower."  - please provide some data. ". . . but the iPod is sold in many, many more retail outlets than Zune. Simple fact. Look it up."  - link?

thanks man!

Dan H - as far as defining the segments, would you say that there are different segments in the category? If it's all the same, then yes, definitely, we're at 2%. My own opinion on it, though: I own an iPod Nano, I just bought an iPod shuffle, and I of course own a Zune device. I think each one serves a diff. need. so it all depends on how you look at it. did the url "zuneinsider" not tip you off on how i'd see it? ;)  I keed, i keed!

I also agree that not being able to share every song in the catalog is a problem. but it's a new technology, and it'll take the labels a while to come around.

the discrepancy comes, again, from the fact that NPD doesn't report on everything. We're actually working to rectify that. We've worked with NPD for a long time, (way before Zune), so we have a good relationship.

Dan, I appreciate your informed, balanced, yet critical comments. Awesome.

Ceasr, On this sharing issue, what really can be the problem? I'm serious here. Let's just take Universal. They are getting paid money for their Zune content three ways:

1 - they get a portion of each subscription to ZunePass

2 - They get paid anytime someone purchases a permanent download

3 - The get paid a portion of the purchase price of every Zune

OK, now they've wrapped each song in DRM and they limit a shared file to the 3 plays/3 days rule so you either have to buy it or lose it. What in the world could be the concern here?

I just don't get it.

you're right actually. I really don't know, but I'm asking around to find out.  

"tim, you raise some excellent points, but we're really gonna need for you to provide some evidence/data/a link to back some of them up. I really want to keep the conversations in this thread informed and intelligent."

I'd like you to do likewise, Cesar.

"in fact, most certainly lower."  - please provide some data.

Easy, NPD numbers do not include Apple's Online and Retail stores which account for, easily, 30% of their sales. It doesn't account for Amazon which showed the iPod and several other devices blowing away the Zune.

". . . but the iPod is sold in many, many more retail outlets than Zune. Simple fact. Look it up."  - link?

Apple has 40,000 worldwide iPod distribution points via their financial results data/conference call. You can provide your own number for the Zune, I'd imagine.

If you want links do your own searches, my points are always based on fact, if they are not more simplY OBVIOUS. The data is easy enough for someone to find; even those who want to pretend it doesn't exist.

excellent! thanks tim!

"the discrepancy comes, again, from the fact that NPD doesn't report on everything. We're actually working to rectify that."

Are you saying that NPD's lack of some data accounts for the difference between Ballmer's absurd 20-25% and the REAL 2% number?

Get real! The fact is NPD has, currently, the best method of judging market performance and they put you at about 2% significantly behind Apple and Samsung and trailing Creative.

Tim,

I believe the NPD data showed that Zune had 10% of of the HARD DRIVE mp3 player market and I think THAT's the number Steve Ballmer has "magically" inflated to 20-25%. It's the percentage of the hard drive market that Microsoft is touting so that they can claim to be #2.

I think you question is still valid, but I think you're comparing two different numbers.

1.) Sandisk is the second largest seller of MP3 players in the United States.

2.) On Amazon.com a 30MB Creative player is currently #11, and the most popular Zune is #17.

Yes, Amazon.com is only one retailer, but their sales results aren't statistically manipulated.

http://www.amazon.com/gp/bestsellers/electronics/172630/ref=pd_ts_e_nav/103-8813283-8969460

3.) Sandisk announced the Sansa Connect Wireless Internet MP3 Player, so Zune will have more competition in that area.

4.) For me, the lack of a major Zune announcement at CES left the impression that product development is stuck in neutral.  

Tim, you talking global or US sales, the global ones are kind of moot at the moment as the markey Zune has entered is purely a US one.  I think its a bit stupid comparing all mp3 sales as there are clearly defined brackets.   It's also stupid allowing Steve balmer to speak, so there are mistakes on both sides.

Realistically the truth is probably somewhere between NPD and Balmer.  Until Zune gets it's own mini player, micro player and high capacity player it only makes sense to compare it against other similar products.  The shuffle, zen micro, iriver h10, nano etc are not comparable devices.  They have  a much smaller capacity, a smaller price tag and dont play video.

look at it this way - Jaguar have a very small share of the total car market but a far more useful gauge is the market that the jaguar actually competes in - the luxury car market, which it has a relatively healthy presence in.

I don't think it's unreasonable for people to ask you to link to your 'facts' - you are the one spouting them off so the responsibility is with you to back yourself up, not for readers to check your facts, so there really is no need to get so pissy when asked, I'm sure you'd do the same if i plucked a figure out of the air to back up my argument.  I'm not syaing you did merely that it could easily look that way without any actual official stats being present.

tomt, I'm actually excited to see other mp3 players get into wireless space. Zune wasn't the first one, but it's cool to see the trend growing.

I can tell you that the lack of announcements does not equal the lack of development. as far as new stuff goes, though, all I can say is stay tuned.

Matt, I've been talking about US all along (Except the retail points for Apple which are worldwide... we are in a fully developed market. Just because Microsoft is 5 years behind everyone doesn't mean we can expect everyone else to cater their data in MS's needs...). NPD says Microsoft had around 2% total marketshare in the US. (Yes, Dan, I know that if we break it down to HD-based players they are at 10%. And I see this as valid: we can look at total market, Flash market, HD market by region. But, no, I'm not sure that gets them to #2... He has consistently used that number when he "magically" qualifies it as either the $250+ market or the 30+GB market. Samsung does focus on the Flash market but has some HD products, and the HD markt is still key to Creative... So, no, I don't think just focusing on HD necessarily gets them to #2... Ballmer wouldn't have to qualify his absurd figures with $250+ and 30+GB if it were the case.)

Got to agree with tim, Steve B really needs to not pluck random figures out of the air then use bizarre qualifications to justify them.  I think MS need to move quickly to get a micro product and maybe a larger capacity product out there - Cesar has a shuffle and a nano, they need to be replaced with baby zunes! lol.  

actually the shuffle was for my girlfriend, but I'm loving this conversation! I want to remind everybody of the rules: http://zuneinsider.com/archive/2006/11/27/if-your-comment-got-deleted-here-s-why.aspx

and since I have your attention - go here:  http://zuneinsider.com/archive/2007/01/19/allow-yourself-to-introduce-yourself.aspx

Does that mean you deleted my perfectly valid comment? I'll guess so after a couple of refreshes. I responded to this comment by Matt:

"Realistically the truth is probably somewhere between NPD and Balmer.  Until Zune gets it's own mini player, micro player and high capacity player it only makes sense to compare it against other similar products.  The shuffle, zen micro, iriver h10, nano etc are not comparable devices.  They have  a much smaller capacity, a smaller price tag and dont play video.

look at it this way - Jaguar have a very small share of the total car market but a far more useful gauge is the market that the jaguar actually competes in - the luxury car market, which it has a relatively healthy presence in."

It's funny how the old Mac metphors can be whipped out for the Zune after much derision.

This is Microsoft's own fault: nothing prevented them from going small form factor first or simultaneously (except the inclusion of wi-fi which they are probably struggling to get in a desirable form factor... again, their fault: they've crippled the feature and are starting from ZERO marketshare). Nothing prevents them from having different capacity HDs. Nothing prevents them from entering other markets (except they apparently didn't bother setting up contracts/stores over the year they were developing... I can't believe they still haven't explained why they were negotiating with UMG a week before launch.) Nothing prevents them from selling other media content in the store.

One can say it's their strategy to go slow. Likewise, we can say it's a bad strategy. Macs still get compared to the whole PC market. Initially, people claimed the iPod had lower share because it didn't have a flash model, etc... The same complaints STILL apply to Microsoft only they want to be treated as successful for entering a much more mature market 5 years after anyone else with a strategy that makes them look 5 years behind.

Guess we should start reporting Mac marketshare numbers by only comparing them to higher-end machines that cost $999 USD or more and that include wi-fi, bluetooth, a webcam,and a comprehensive set of consumer apps (e.g. iLife) as standard features.

But we don't. We compare them to the whole market.  ;-)

Get into the "over 30GB" market and I'll help the cause by making a purchase. 100GB would be a nice goal. I'm holding out until it happens.

I thought Steve jobs said 2%? Is that over all?

Thing is Dan, those are all additional products and peripherals that are attatched to the base mac.  My point was that a base 30GB 250 USD Zune should be measured against the market it has entered.  People who buy nano's etc. do so because they want a miniature player.  Thats why they exist, the medium 30gb sectore serves some peoples needs, the miniature ones serve other needs.  You can't start off with a Nano then add bits to it to make it a 30gb Video iPod.

You can't start off with a Civic and turn it into a Jag.

You can start off with a cheaper mac and add all the other bits on.  You can start off with a cheap PC/Mac and continuously add bits to suit it for your needs.

Matt, Those things I mentioned are, in fact, standard and included with every mac (excepting the mac mini, which doesn't include a webcam because it doesn't have a display).

They are not add-ons.

So my point was we don't measure Mac market share the same way Microsoft is trying to measure Zune marketshare

hardware marketshare is mumbo jumbo to me.  What I will find interesting is digital store market share.  iTunes Store sales vs Zune MarketPlace sales.   This is what is more important to content owners.

" 30gb devices. However, Zune is sold in more outlets than NPD reports on, so actual market share might be higher."

But, once again, you neglect to mention that NPD does not include Apple store figures, Apple Store Online, WalMart or Amazon. The first two wouldn't include many Zune sales. :)

So, acutally, market share is probably a lot smaller than what you're saying.

Steve Ballmer obviously doesn't know what he's talking about. Take in to account the other figures, such as the Apple Retail and Online stores and the number would be a lot less than your 10%.

I see the problem resting squarely with Ballmer. He tried to laugh off the iPhone, comparing it to the total phone market, and neglecting it's targeted premium/luxury market.

Then, without visibly changing gears, he narrows the market for the Zune as much as possible, and then inflates the numbers on top of that.

There are two possibilities. Either Ballmer is lying (which in this case makes him look petty and pathetic), or Ballmer is incompetent when it comes to public relations. Ballmer has some excellent qualities for a CEO; talking to the media is *not* one of them.

I still applaud the Microsoft team for their open blogging, and the fact that they are even participating in this conversation says volumes about their commitment to this product on a personal level. But I don't feel that commitment from the rest of the company. The big Zune announcement from CES was the fact that games were coming -- in 18 months. Is this what everyone was talking about when they described the "upgradable firmware"? What about integrated podcast support? Or videos in the Zune Marketplace?

One more thing. While the Zune has an undetermined share of the 30 GB music player market (the 10% number sounds close), it has 0% of the flash market dominated by the Nano and the Shuffle. It also has 0% of the high-capacity market (60 GB+).

The Zune team could release an 80 GB player tomorrow. That would be easy; just swap in a bigger hard drive.

But how does a flash Zune compete with the iPod Nano? Adding WiFi capabilities will increase the size and the cost. And since it sounds like Microsoft is labeling this market as secondary music players (implying that a 30 GB player would be primary, and a flash player would be secondary for an individual), do even the hard-core Zune fans care if their "secondary" player has Zune-to-Zune sharing?

If Microsoft were to release a non-WiFi Zune, everyone would openly trash them for not supporting their own most highly-touted feature. It would be a fresh batch of anti-Zune articles in the media (bloggers and mainstream) focusing on the painful 3-by-3 rule and the fact that many of the most popular songs on the Zune Marketplace are flagged as "unshareable." (If you find anyone else with a Zune, that is.)

Finally, the Zune's entire existence seems to be as a piece of some larger "connected media" puzzle. If they start selling non-WiFi Zunes (in the Nano class), the assumption is that they would sell more of them than the more expensive 30 GB Zunes. And, over time, that would mean more than half of their Zune users wouldn't be able to take advantage of Microsoft's "connected media" strategy.

I can't envision any future for the Zune right now. I don't see how it can compete with the Nano and the Shuffle and retain it's "Zuneness" (WiFi). And while Microsoft is struggling to add integrated podcast support to it's "high-end" player, Apple publicly unveiled one of the sexiest electronic devices ever (iPhone), which has a bigger screen and *useful* WiFi capabilities. (Surf the web, or share a song for 3 plays over 3 days? Hmmm ...) Take out the phone capabilities, and you're looking at the 6th generation iPod.

Put a Zune next to an iPhone-style iPod. Let's say the Zune is cheaper by $100-$200. (Of course, Creative and others will still have cheaper 30 GB players than the Zune.) Do you think the Zune can sustain 10% of *that* market?

If the Zune team doesn't release a radically new product (not just a bigger hard drive) before the 6th generation iPod appears, I'm afraid the 2nd generation Zune will be dead on arrival.

From the Washington Post:

"Reindorp said Microsoft was not yet ready to officially announce when it would launch the service in Europe but it could possibly be out before the end of the year.

"The industry moves in this sort of Christmas to Christmas cycle. So you can expect that there will be more devices, more features in the market at that point," he said.

"Our next round of introductions will probably be in time for the holiday of this year."

http://www.washingtonpost.com/wp-dyn/content/article/2007/01/20/AR2007012000491_pf.html

Oh well. Microsoft _should_ take their time, so the next round of releases are highly polished.

A line of Zune-BlackBerry (e.g. Pearl) phones would be way more cool than Apple's iNewton, I mean iPhone.(grin) The more details I read about the iPhone, the less impressive it sounds. In addition, a touch screen interface, with no tactile feedback, sounds like a turn off.

The one million sales forecast everyone knows is just very conservative. An easier to hit target will make you at least look OK if you do manage to reach it. Nothing grand in such a gesture as saying you're gonna reach some small amount. It's just to cover your ass because you know you can't reach too many more (if you did reach those numbers). So there's nothing special when you say you are on target to reach a measly 1 million sales.

Not only are songs crippled with added on DRM when "squirted" to someone, a large number of them can't even be shared.

http://www.zunerama.com/articles_011.php#070119_zune_story

Not only are the songs crippled with DRM when sharing them, some I can't even share with the world famous Zune wifi because Microsoft again being too weak against the music industry?

Ballmer has no idea what he's talking about.

http://www.engadget.com/2007/01/18/steve-ballmer-laughs-off-the-iphone-deems-it-most-expensive-i/

Seems like he's out of touch with what's going on out there.

BTW, the guy in that photo is your leader?

This market share parsing is amusing but really no more than a brave face. At this stage it would be far more of an indication of success if people were buying them as presents for others rather than themselves - a true sign of brand acceptance. Incidentally, there are several categories where in the past where Microsoft has said they have the determination to dominate only to eventually retrench and leave customers hanging - webTV anyone? Unfortunately when you have lost your shine with customers it can be hard to get it back again - just ask the IBM hardware folks. The real problem with the Zune is that it looks and feels rushed, the installation problems didn't help and neither does the bizzare simoleon-pricing scheme for downloads. I personally wouldn't buy one because there is no price advantage, the industrial design is weak and the differentiating features seem artificially crippled. I also harbor some mistrust about the company's OS firmware as every time my Magellan freezes I blame WinCE. I fact, come to think of it, the only truly successful product extension for the company for some time has been the X-Box line. Then again, if Microsoft had found itself unable to sell-in to a geek-tech user base of 14-34 year old males then that really would have been a disaster. In short, they need new and more Zune models and they need them quickly - this one is the Windows ME of music players.

you are aware that NPD doesnt report statistics from a few places that might change these numbers namely amazon.com, apple online and apple stores.

how in gods name can you get "facts" from such a small sampling of store, and not include store which sell alot of products from your biggest competitor?

i say with those factored in zune "share" is at leats half of that number

I love how when numbers come in that shows the Zune doing better than what the Ipod users hoped it would do, they rush in to try to fudge numbers to make it look worse. Look how they have to spin numbers and make silly assumptions in order to back up their weak points.

If you want to lump the Zune in with Every MP3 player on the market, then it will be at 2%. If you want to put it in it's category, which the ipod users DO NOT WANT, then it is much higher.

If you want to lump it in with everything, so you can wave around the lower number, then you will have to accept the fact that Macs share of the computer market is in the low single digits using that same standard.

Either they are really scared of the Zune or really hate Microsoft.

Here is NPD-December's overall numbers:

Jan. 25 (Bloomberg) -- The following tables list the top retail computer hardware sales for the month of Dec. 2006. The tables are ranked by total dollar volume and unit share in descending order.

Category: MP3

Rank  Brand                   Unit Share

 1   Apple                      69.5%

 2   Sandisk                    11.0%

 3   Microsoft                   2.6%

 4   Creative Labs               2.5%

 5   Samsung                     1.8%

Total Dollar Volume:         $964,860,600

Note: figures are for retail channel sales only and do not include

     direct sales, sales from Wal-Mart or warehouse clubs.

Source: The NPD Group

http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=AAPL:US&sid=a7hz3mCGq6nE#