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Douglas McIntyre at BloggingStocks notes the recent rapid run up in the short interest on Microsoft’s stock and wonders if, among other things, it might be due to Wall Street disenchantment with the Zune. I’d be more worried about the PC sales numbers for October, but a report from Gene Munster at Piper Jaffray makes it clear that analysts have their eye on the Zune and its prospects and don’t like what they see:
According to a research note published Tuesday by PiperJaffray senior research analyst Gene Munster, only 8 percent of 40 retailers surveyed by the firm recommend the Zune to customers, while 75 percent recommend Apple’s iPod.
Moreover, some MP3 salespeople hadn’t even heard of Zune, even though the players are being sold at their stores, he wrote in his report.
Quotes from retail clerks cited in Munster’s report range from them claiming they don’t know what the Zune is, to comments that Zune is a good option if a customer does not use Apple’s iTunes software.
“To be honest, I don’t really know much about the Zune,” one clerk is quoted as saying in Munster’s report. Another said, “I don’t suggest the Zune because it is really heavy,” according to the report.
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“The buzz that Microsoft was able to generate for the Zune’s launch clearly helped the player in its first week, but much of the publicity took the form of Zune/iPod comparisons,” Munster wrote. He added that these comparisons show that Zune “failed to match up in the eyes of most reviewers” to the iPod, a fact that negatively affected sales of the device.
There’s more in the article from Deutsche Bank analyst Chris Whitmore and UBS IT hardware analyst Ben Reitzes to the effect that Apple isn’t even breaking a sweat fending off the Zune. As for the word from Microsoft:
Initial sales “indicate we are on track to meet our internal business projections,” Zune Director Jason Reindorp said in an e-mailed statement. Microsoft has refused to disclose sales or projections.
What else could they say? More from Ed Oswald at BetaNews:
Whereas the iPod is expected to sell as many as 15 million players this holiday season, analysts only project Zune sales of about 300,000 to 500,000 units at most.
Part of the problem may be the beating the Zune has taken in the hands of the media. Reviews of the product have been nearly all negative, with one going as far as calling the experience “about as pleasant as having an airbag deploy in your face.”
We mentioned that review yesterday.
The US durable goods report for October was released today and new orders were down 8.3% from September driven by a big decrease in civilian aircraft, but buried in the numbers we find:
“This is how a slowdown starts,” said Ken Mayland of Clear View Economics. However, he cautioned that “by no means are we in any dire straights, as order books remain relatively strong.” He added that “some of the weakness may simply be a timing issue related to the release of new software.”
Indeed, orders for computers and related products dropped 25.6% for October, while shipments fell 24.9%. That, however, may simply highlight a dip in demand as consumers await the release of Microsoft’s Vista operating system in January.
The full set of numbers are here, but whether it’s caused by customers waiting for Vista or not, that 25% hits both Microsoft and the PC vendors where it hurts. One month in the USA does not make a global trend, but it’s worth watching.
Amazon reports good news for Apple’s iPod and bad news for Microsoft’s Zune:
Apple Computer Inc.’s line of iPod music players was the most popular electronic device sold online over the Thanksgiving shopping-intense weekend.
Cupertino-based Apple’s iPods took five of Amazon.com’s top 10 spots of most-purchased consumer electronic items, and 10 of the top 25 spots.
Redmond, Wash-based Microsoft Corp.’s rival Zune product was left far behind, with even an iPod accessory outselling the Microsoft media player.
Even worse, the blogospheric buzz of the long Thanksgiving weekend was over Andy Ihnatko’s review at the Chicago Sun Times – Avoid the loony Zune:
Yes, Microsoft’s new Zune digital music player is just plain dreadful. I’ve spent a week setting this thing up and using it, and the overall experience is about as pleasant as having an airbag deploy in your face.
“Avoid,” is my general message. The Zune is a square wheel, a product that’s so absurd and so obviously immune to success that it evokes something akin to a sense of pity.
Ouch! As I mentioned last week, the Zune can certainly survive the occasional poison pen review and the more general lukewarm reactions, but what it won’t survive is a descent into Edsel territory where it becomes the butt of jokes. It hasn’t reached that stage – yet. Related: whoever decided that “squirting” was the appropriate term for the Zune Wi-Fi sharing should immediately don an dunce cap.
Kim Tae-gyu at The Korea Times:
Microsoft, the world’s top software maker, may have to stop selling its flagship “Office” suite program in Korea temporarily due to patent infringement, according to a local technology transfer agent.
P&IB yesterday said a recent court decision on its patent disputes with Microsoft Korea will eventually force the software powerhouse to exclude the technologies in question from its office package.
Last Friday, the Supreme Court of Korea acknowledged that the patents are effective for technologies of automatically switching the input mode between Korean and English.
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“Microsoft adapted our technologies to its Office package without dealing with Prof. Lee and it claimed the patents were not effective in the court,” P&IB President Kim Kil-hae said.
“But the Supreme Court decided in favor of us on the patents issue. As a result, we will be able to win at the pending damages suit in the Seoul High Court,” Kim said.
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In response, Microsoft lawyer Chung Jae-hoon was sure that the patents would be invalidated.
The plaintiffs are asking for $75 million compensation and Office might have to pulled until the technology in question is removed or Microsoft pays them off.
