“I’ve never heard of the Zune”

How is Msoft's latest addition doing? If you've been following this blog, you will be shocked, Casablanca-shocked to read the following news item from Businessweek - it should be noted, a huge fan of product innovation.

"I have never heard of the Zune," one retail clerk was quoted as saying in an analyst's note comparing Microsoft Corp.'s new music player to its much more popular rival, Apple Computer Inc.'s iPod.

Piper Jaffray analyst Gene Munster said in a note to investors Tuesday that a survey of clerks at 40 big box retailers found that only 8 percent recommend buying the Zune, while 75 percent recommend the iPod.

"In fact, some MP3 player salespeople had not even heard of the Zune, despite the fact that they sold it in their store," the analyst wrote.

Due to what he called a less than favorable reception, Munster doesn't expect the Zune to materially affect iPod sales in the current quarter.

Microsoft released the Zune less than two weeks ago. Munster noted the Zune held the 7th spot on Amazon's best-selling MP3 players list on Nov. 16, the Thursday of the week it launched. By the following Monday, it has already fallen down the list.

As of midday Tuesday, the black 30-gigabyte Zune held the No. 22 spot on the list, while Apple's black 30-gigabyte iPod took the top spot followed by four other iPod versions -- including the pink 4-gigabyte Nano at No. 5 and the tiny 1-gig Shuffle at No. 3. Both Apple's and Microsoft's 30-gig music players retail for about $249. Unlike the iPod, the Zune features a built-in FM tuner.

The Zune is not generally seen as a threat to the iPod, which dominates the portable music player market. Shaw Wu, an analyst for American Technology Research, has predicted that Zune's success may instead come at the expense of other makers of portable music players, such as Sony, Samsung and Creative Technology Ltd.

As for reviews, Munster noted that they have been neutral to negative. When the Zune made its debut, "the player drew many comparisons to the iPod, but failed to match up in the eyes of most reviewers," the analyst wrote.

When it comes to marketing, "our checks show that Zune ads are being placed more selectively than iPod ads," Munster said, adding that the Zune "is off to a slow start; from sales perspective as well as the marketing perspective."

Apple's shares were up $2.12, or 2.4 percent, to $91.66 on the Nasdaq, not far from their 52-week high of $93.16. Microsoft's shares were down 18 cents at $29.30 in midday trading on the Nasdaq. Which just about says it all.

http://www.businessweek.com/ap/financialnews/D8LM782O0.htm