Menu
Analyst: Microsoft Zune plans may be a challenge

Analyst: Microsoft Zune plans may be a challenge

Analyst: Microsoft Zune plans may be a challenge

Microsoft's move to create its own-brand digital music player and services may hurt its existing partners more than it impacts against Apple's iPod, an analyst warns.

American Technology Research analyst Shaw Wu says that Microsoft's debut in the market will put it into direct competition with its partners.

"We believe Microsoft's action could also make partners think twice before deciding to work with the company on future projects. We view its entrance into portable media hardware as akin to a civil war, much like if it entered the PC hardware market to compete with partners Dell and HP."

He also warns that matching the iPod/iTunes user experience will be a challenge. Additionally, Wu points out that Microsoft may feel a financial impact as it tries to create a market for its Zune products.

"While most view the Xbox as a success, we believe it has been a failure financially with its billions in losses, with profitability likely a few years away, if at all. If it were any company other than Microsoft, we believe the Xbox would have been shuttered due to its being highly unprofitable [Microsoft lost US$437 million in its recent June quarter]. We believe its effort in portable media will likely see similar economics."

The analyst stresses his belief that Apple's music products and services are set for a Walkman-like period of market dominance. "Walkman maintained its dominance over a 15–20-year period despite countless competitors trying to create a 'Walkman killer’,” he notes.

Even if Microsoft manages to salvage relationships with its existing partners, create a compelling user experience and is prepared to exercise its financial muscle to penetrate the digital music market, challenges still remain.

Apple already has a strong selection of third-party accessory makers for iPods. It also holds a 58 million-strong iPod user base and 300 million iTunes users. Consumers have already made an investment in Apple's products, with over one billion songs and 30 million videos already sold.

Wu continues to recommend clients buy Apple stock.


Follow Us

Join the newsletter!

Error: Please check your email address.

Featured

Slideshows

Kiwi channel closes 2017 with After Hours

Kiwi channel closes 2017 with After Hours

The channel in New Zealand came together to celebrate the close of 2017, as the final After Hours played out in front of a bumper Auckland crowd.

Kiwi channel closes 2017 with After Hours
Meet the top performing HP partners in NZ

Meet the top performing HP partners in NZ

HP honoured leading partners across the channel at the Partner Awards 2017 in New Zealand, recognising excellence across the entire print and personal systems portfolio.

Meet the top performing HP partners in NZ
Tech industry comes together as Lexel celebrates turning 30

Tech industry comes together as Lexel celebrates turning 30

Leading figures within the technology industry across New Zealand came together to celebrate 30 years of success for Lexel Systems, at a milestone birthday occasion at St Matthews in the City.​

Tech industry comes together as Lexel celebrates turning 30
Show Comments