Zune Flops on Cyber Monday

By most accounts, this holiday sales season is off to a good start for electronics retailers. Microsoft's Zune, however, was conspicuously absent from Amazon's top ten electronics list on Cyber Monday.

Today's Wall Street Journal notes that the MP3 player bounced around the top ten for a few days after its Nov. 14 release, then promptly dropped off. Yesterday's online shopping frenzy only took it as high as number 72, and this afternoon the 30GB Zune had fallen to the 92 spot. By contrast, six versions of the iPod were in Amazon's top ten, and even the iPod travel charger was selling better than Zune.

Still, the WSJ reported that a Microsoft spokeswoman said sales of Zune have been exactly within expectations. If two weeks after its launch, "expectations" mean being ranked behind virtually all of Apple's media players, it seems that Microsoft has a curiously dismal outlook for the product meant to compete with the iPod.

If Microsoft sells half of a million Zunes at $250 a pop -- the high end of analyst estimates -- the resulting $125 million will be a mere 0.3 percent of its annual revenue, which last year was just shy of $45 billion.

By contrast, Steve Jobs announced last January that Apple has sold a total of 42 million iPods, never mind the hundreds of millions songs sold on iTunes. Granted, all 42 million were sold over 5 years, not two weeks, but 14 million of them were sold in the 4th quarter of 2005. Furthermore, given the size of the companies -- Apple's total revenue over the last 5 years is about comparable to Microsoft's revenue from this year alone -- shouldn't Microsoft be putting a little more muscle behind Zune?

Will holiday season sales reveal Zune to be a half-hearted, not to mention belated attempt at hopping on the MP3 player wagon? Or is it too early to be calling Zune a flop?

Either way, as one of the few, if not the only company that has the resources to compete with Apple in the world of MP3 players, couldn't Microsoft be doing more?

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