Rivals line up to battle iPod’s dominance including Microsoft Zune

Saturday, September 23rd, 2006

DIGITAL I Microsoft’s new Zune is a Christmas no-show

Peter Wilson

The top-selling Apple iPod (left) with Microsoft’s Zune, which won’t be available in Canada until 2007.

Microsoft’s highly hyped new Zune music and video player — complete with its own music download system — will soon be on the attack.

Also on the offensive are SanDisk’s just-announced Sansa e200, with yet another music download offering. Oh, and Samsung should soon be launching its own service for its own players.

And then there is the powerful Creative Zen W and even Disney’s new kiddie-oriented Mix Max.

Yes, it’s the annual — and so-far ineffective — attack on the hugely dominant Apple iPod. The player in its various forms had 64.2 per cent of the Canadian market in sales in the first six months of 2006 and also led in units sold at 44.5 per cent, according to NPD Group Canada. And, in case there was any doubt about the overall popularity of the digital player, the amount spent on them rose 40 per cent and the number of units were up 49 per cent.

Leading the latest digital charge in the MP3-video player wars is the Zune, which Microsoft hopes will reduce Apple’s sway over the lucrative market.

The Zune, made for Microsoft by Toshiba, will have 30 gigabytes of memory and a three-inch screen — which puts it ahead of the latest iPod’s 2.5-inch screen — and the ability to transfer songs wirelessly from one Zune to another.

Sounds interesting, except for one little niggling thing.

In Canada — where retailers are already getting inquiries from tune and video-hungry consumers — the Zune will be a no-show under the Christmas tree.

“The Zune will not be available in Canada for the holidays,” said Jason Osborne, Vancouver-based Best Buy Canada’s merchandising manager. “I can’t imagine us seeing anything before the second quarter of next year.”

The reason, said Osborne, who has had e-mail confirmation of this from Microsoft, is that the Zune is tied to its strategy of having its own download system, similar to Apple’s iTunes.

“There’s no Microsoft service provider in Canada for digital audio and video. And, honestly, we’ve been pushing them.”

Microsoft Canada representative Jason Anderson said in a statement issued to The Vancouver Sun: “The U.S. launch of Zune is scheduled for this holiday season. Microsoft is planning to introduce Zune to additional markets however we have no specific details around a Canadian launch to share at this time.”

And Samsung’s music service, through media provider MusicNet, will launch before Christmas, but only in the United Kingdom, Germany and France and then Asia.

But that doesn’t mean, said Osborne, that there’s not going to be a lot of excitement at Christmas with the arrival of other players, like the SanDisk Sansa

e200 — even if it can’t offer Canadians the planned pre-loading of 30 hours of music from the likes of Coldplay, Jay-Z and the Rolling Stones. (You only get those tunes for 30 days if you sign up with the Rhapsody music service from RealNetworks, which isn’t yet available in Canada.)

“Whether [the Sansa e200] comes with loaded content, it remains to be seen,” said Osborne, who said he didn’t expect the SanDisk player to arrive in Best Buy stores before late October or early November.

“And the price point they’re targeting in Canada, $329, is quite high for an eight-gigabyte video player, actually more than the new iPod 30 gig.”

SanDisk was fourth in the Canadian market with 4.9 per cent of dollar sales and 8.9 per cent of units sold.

But Apple’s iPod — that comes in several models including the Shuffle and the Nano — has stayed the dominant player here, even if it has a lower percentage of the market than in the U.S., where it took in a whopping 75.6 per cent of sales in the first three months of 2006.

And it intends to keep that place with its latest models, the flagship of which is the $399 80-gigabyte model capable of holding up to 20,000 songs, 25,000 photos or 100 hours of video, but not all at once. You’ll have to make your own selection.

As well, there’s a 30-gigabyte model for $299. The nano comes in two-, four- and eight-gigabyte models, starting at $169. Finally, there is the one-gigabyte shuffle at $89.

While some analysts have warned that the iPod might be slipping in terms of cachet, this has yet to show up in sales figures, as Apple always seems to have a new must-have model, just as the glamour of the old one wears out.

One of the advantages in the Canadian market for companies like Creative — which was in second place with 7.5 per cent of the dollars spent and 8.8 per cent of units sold — and its 30-gigabyte audio and video player the Zen W, is that there is a lot of downloading unconnected to services such as Canada’s own PureTracks and the iTunes Store.

“People get their music in other ways, whether it’s peer-to-peer or other non-traditional download sites,” said Osborne. “So the content is readily available for Canadian consumers without being forced to pay for it.”

The smaller digital player brands — among which are companies that are otherwise electronics giants like Sony, with six per cent of sales, and RCA, with 3.8 per cent of sales — always seem to struggle for market share.

“The challenge those companies have had, and I’ll be quite frank, is that they’re always reacting and not leading,” said Osborne. “And they’re spread so thin in terms of their product assortment that they’re often gun shy to put their focus on this category, because Apple has such a strong share.”

Osborne said that Canadian consumers have not yet been swept up in any kind of video mania when it comes to digital players.

“I think right now consumers are looking at video as a nice-to-have feature, as opposed to a necessity. Again, it comes back to the content and how readily available it is.

“If you’re going to do video, what type of video can you put on these players that’s viewable?”

Osborne said that based on his conversations with Best Buy workers, buyers are generally loading them with music videos and small clips rather than full-length movies. Still, there is a definite trend towards adding video capabilities, even on one-gigabyte flash players with screens that have one to 1.8-inch screens.

“By Christmas over half, if not 65 per cent, of the players will have video.”

Osborne said what Canadians look for in a digital player are style, capacity and then content.

And, he adds, there are two types of customers. Those who value the style of the player and only want to carry a small music collection with them. They buy flash memory based players. “And then you get into the audiophile who has this mass storage device that’s an ultimate media player that carries audio and video and photos with a 30 to 80 gigabyte capacity.”

Oh, and that Disney Mix Max we mentioned at the beginning. Well, it’s priced at $99 US, has a 2.2-inch colour screen and has the capacity of six hours of video or about 240 songs.

While you could download movies to it, Disney is hoping that, instead, you’ll use memory cards, at $19.99 each that will contain popular movies like High School Musical, Confessions of a Teenage Drama Queen and Lizzie McGuire.

© The Vancouver Sun 2006

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