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Zune Not Threat to iPod — Yet

30 Nov, 2006 By: Jessica Wolf

The launch of the Zune, Microsoft's answer to Apple's trendy iPod, has been rather ho-hum so far, but it could have staying power, according to analyst reports.

Piper Jaffray analyst Gene Munster sent a note to participating investors revealing results from a survey the firm conducted with clerks at 40 electronics retailer locations. Only 8% said they recommend the Zune to MP3 player shoppers, while 75% said they recommend the iPod.

The stylish iPod is way ahead of the Zune, which comes frontloaded with a selection of music videos, but as yet has no other video offerings. Meanwhile, the iPod is on its fifth generation of players, with several different players/price options. And nearly 70 million digital music and video consumers are plugged in to Apple's closed iTunes universe.

Munster also noted to investors that Microsoft lags behind Apple in marketing efforts for the Zune.

Still, for the new kid on the block, the Zune did make something of a dent. According to The NPD group, in the weeks since the player's Nov. 21 launch, the Zune grabbed 9% of MP3 player sales. Apple claimed 63%, and Sandisk, which has several music-only players on the market, garnered 8%.

Indeed, analysts following the launch of the new gadget speaking to CNNMoney.com last week said that even if the Zune never catches up with the iPod, it does have a chance to overtake smaller players who've been in the market longer, such as Sandisk and Creative Labs.

The MP3 landscape stands to change drastically in the coming years as Apple is expected to launch an iPod-cellphone combo. And a Sony executive last month let slip that the electronics giant is working on a video-capable Walkman.

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