A good or bad first impression can make or break you. Microsoft has learned this the hard way through Vista and its "iPod killer" Zune. It appears their MP3 player may be ready to play it's final swan song. A study by marketing research firm Piper Jaffray surveyed 600 teenagers in high schools across the US found that 86% already own an iPod while only 4% own a Microsoft player. 19% of those surveyed planned to buy a new player in 2009 with 100% of them saying it would be an iPod. That has to sting for Microsoft who has been pushing the Zune as an iPod alternative. In all fairness, Sony is worse off with only 2% but I wonder if this includes the PSP or just stand alone MP3 players. Piper Jaffray clearly shows that the iPod is rapidly reaching market saturation despite the recession.

The Zune has been more of an embarrassment for Microsoft than an iPod killer. It stumbled out of the gate in 2006 when it's strict DRM scheme prevented even Microsoft's PlaysforSure certified WMA tracks wouldn't play on it. Of course the vast majority of WMA music being sold was PlaysforSure protected. This soured a lot of people off buying it. While being an overall decent player, complete with handy features such as wifi streaming, it just lacked the appeal that iPod had. Poor marketing campaigns didn't help. Zune ads are rarely if ever seen and I personally don't know anybody who owns one. World wide sales are pegged at 3 million according to Wikipedia, contrasted with the 150 million iPods that have been sold. In other words, the iPod has sold at a rate of eighteen times faster over its lifetime. The Zune only made it to Canada less than a year ago and is still not available in Europe, with no plans to introduce it to that continent in the near future. Furthermore, the software does not support non-romanized text meaning it cannot break into the vital Asian markets as an import. Microsoft is planning to upgrade the Zune's hardware but many tech pundits are predicting that this may be the last Zune to hit stores. The Register is reporting that Microsoft has disbanded the Zune unit and will instead focus on providing online media services for PC, TV, and and cell phones. The hardware unit has been absorbed under the Windows Mobile division. It is possible that the much rumored Zune Phone could be part of this move but it's more likely Micorosft is trying to incorporate Zune features into smart phones running Windows Mobile and will discontinue it as a stand-alone player.

This all begs the perennial question that has been cropping up once again. Should Microsoft even be in the hardware market? They are a software company and other than simple peripherals such as keyboards and mice, their consumer electronics division was only created recently. Recent controversies regarding hardware and software issues the Xbox 360 and Zune haven't helped their cause. It would be best for MS to drop their consumer electronics lines and begin focusing soley on software once again. They have no business in the hardware market.

Source: Apple Insider, The Register