updated 12:05 pm EST, Tue November 14, 2006
While Microsoft is today officially launching its Zune media player with an extreme level of publicity, the company is simultaneously facing an uncertain future, according to sources speaking to Bloomberg. Discussing the prospects of the Zune with the media outlet, Microsoft executives recognized that the jukebox will likely have a difficult path ahead even in ideal circumstances.
"We can beat them, but it's not going to be easy," says company CEO Steve Ballmer. "Obviously we're the David in this one. Apple's the Goliath." Zune marketing head Chris Stephenson similarly downplayed the company's ambitions, emphasizing that relevance, not dominance, is the crucial factor. "We would like people to say there's a clear No. 2 in the marketplace," he says.
Comments from analysts follow after the jump.
Analysts have expressed similar doubts about Microsoft's ambitions, Bloomberg reports. "If they get double-digit market share overall in a year they'll be very pleased," writes Directions on Microsoft analyst Matt Rostoff. In turn, Piper Jaffray analyst Gene Munster echoed earlier apprehensions about the Zune's near-term success and predicts no more than 5-10% of the market in the first year, noting that more than three quarters of high-school students participating in a recent survey were still intent on getting an iPod despite public awareness of its Microsoft-made challenger.