And Zune isn't really taking a bite out of Apple's share: Most of Microsoft's success has been at the expense of smaller players in the industry.
Microsoft's Zune is at risk of becoming the Rodney Dangerfield of digital music players: It doesn't get any respect.
When you search for "zune," Google News suspects a typo. "Did you mean: zone?" Google News suggests.
This isn't the result of any animus against Microsoft on Google's part. "A query refinement is triggered automatically through our search algorithms," explains a Google spokesperson. "It's based on aggregate search data."
Microsoft's Windows Live Search does not offer any such correction when searching under the News tab. (However, when searching the Web, Live Search does present an unsolicited Live Search box on its search results page, below the one initially used, for those that enter "google" or "yahoo" by mistake.)
Microsoft may want to start suggesting Zune as the answer to every query, because it needs to do something drastic to counter Apple's monopoly on mentions in the media.
On March 22, Google News listed 410 stories that contained the keyword "zune." A search for "ipod" on Google News the same day returned 10,613 results. Google.com returned 32,500,000 search results for "zune," and 248,000,000 for "ipod."
The same day, a Windows Live News search found 973 articles for "zune" and 1,810,007 articles for "ipod." Searching the Web using Windows Live returned 197,430 items for "zune" and 4,784,975 items related to "ipod."
And if the price on search keywords can be said to reflect popularity, "zune" can be had for a song.
Try buying the keywords "microsoft zune" using Google's AdWords service. The average cost per click comes to $0.05 for top page placement. If you want to buy the keywords "apple ipod," the average cost per click will set you back $2.12.
Zune, it turns out, was the number two hard drive music player in the U.S. based on the number of units sold in December 2006 and January 2007, according to the NPD Group, a market research firm.
The only problem for Microsoft is that being number two doesn't mean it's anywhere close to the market leader, Apple. Zune held a 10.2% unit share of the hard drive music player market in the U.S. in December and a 9.9% unit share in January.
(NPD isn't sure at the moment whether Microsoft — the source of the December and January figures — will release February figures next week. But if so, NPD will confirm them.)
It's worth noting that hard drive music players accounted for only 29% of January unit sales (45% of the revenue share) in the digital music play market, the majority of which consists of flash-memory players like the iPod Nano. Microsoft as yet has no flash-memory music player, but Ross Rubin, director of industry analysis at the NPD Group says, "Microsoft recognizes it's a high priority."
The downward trend in market share doesn't bode well. Though Zune has only been available for a few months, the pattern mirrors Microsoft's slipping search market share, which similarly showed a 0.1 percentage point decline in February, compared to January, according to Internet metrics company comScore Networks.
Perhaps not coincidentally, top executives for both Zune and Live Search — Bryan Lee, corporate VP of Microsoft's entertainment group, and Christopher Payne, corporate VP of Windows Live Search, —were recently reported to be planning to leave Microsoft.
Rubin says that Microsoft maintains it is on track to sell one million Zunes in the first year. "If Microsoft's long-term aspiration is to steal market share away from Apple, they have not been successful in doing that," he says. "Most of their market share has been at the expense of smaller players in the industry."
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