An In-depth Analysis of the Microsoft Zune's Market Failure

This essay provides a detailed analysis of the Microsoft Zune, a failed product launched by Microsoft to compete with Apple's iPod. The essay examines the Zune's introduction in 2006, its features, and the reasons behind its eventual discontinuation in 2011. It explores the Zune's target market, situation analysis, marketing mix (product, place, price, promotion), and the metrics of success. The essay highlights the marketing implications of the Zune's failure, including missed opportunities and strategic mistakes. Key factors discussed include late market entry, failure to understand market dynamics, and ineffective marketing strategies. The analysis concludes with a discussion of how Microsoft could have improved its approach to achieve greater market share and customer adoption. The essay uses references to support the analysis.

Essay on new product
success and failure

INTRODUCTION
New product development and introduction is never an easy task for any organisation. It
has to be precise and perfect then only organisation will attain all its targets in an effective way.
There are different reasons behind failure of products such as wrong strategy or error in market
promotions. The product which is chosen for this report is one of the failed market ventures from
Microsoft. The ZUNE series was a musical entertainment gadget which was launched in 2006 in
competition of I-pod.
Zune is the digital media brand product which was launched by Microsoft. It is the media
player software for Windows PCs and its music subscription services are known as Zune Music
Pass. It provides music services, media player and HD videos app that entertain customers.
Microsoft Zune was launched in November 2006 but in October 2011, its hardware players were
discontinued to sell in the market (Eggert and et. al., 2011). In 2011, Microsoft decided to
discontinue all services of Zune that included digital media, Xbox music and Xbox video. In
November 2015, Microsoft tried to download the music of mentioned media player software and
flowing services. The Microsoft channel music in different platform. The firm also discontinued
all entertainment brands in the market. The Zune software is still used in windows phone 7
desktop and it is available to download music in windows phone. It also provided music
streaming in different airlines for their customers. Zune has failed to cover all market areas
against their tough competitor, Apple iPod.
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(Source: Billboard Staff, 2015)
The reason behind failure was simple as it was very late to make entry into the market
and till the time it made its approach, Apple musical gadget had captured the market share.
Microsoft also failed in understanding the market and its dynamics which hampered its ability to
serve in a better and effective way. Moreover, there are different factors behind the failure of
product which is stated in the evaluation below. It will be analysed on different parameters:
Target market
Microsoft launched its ZUNE series against I-pod which was a well-established
Walkman player. It was competing with a product which changed whole market of media players
and made all other look like junk of previous century (Grönroos and Ravald, 2011). The overall
sales in the beginning of ZUNE series was 85 million dollar while at the same time, I-pod had a
sales of 3 million dollar per quarter. The target market for both devices was same, they targeted
“Young Adults and Teenagers” as a primary users of these Walkmans. Microsoft stated the
reason behind making Zune was that, it wanted to change the way whole market was dependent
on I-pod and Apple services for better media consumption.
Basically, Microsoft had outsold Mac systems in past with its windows version of OS. It
again hoped to do same with launching ZUNE where Apple already was established and
constantly innovating. The company as well as market analyst did not check the demand and
changes in the Smartphone market which reduced the demand of any media players (McCreanor
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Illustration 1: Microsoft ZUNE

and et. al., 2013). Also, they did conduct a proper market research which resulted in less sales
and lower profitability for company.
In 2010, Microsoft Zune had a market share of 1% in US while it was 15% in 2007. I-pod
decimated the brand and captured almost 76% of market share in the portable media segment.
Even though Microsoft had a better offering yet it was the market positioning which failed it in
attracting customers towards its product. To understand in a better way, as to what went wrong a
situation analysis is stated below:
Situation Analysis:
When Microsoft Zune launched in 2006, Apple had already sold more than 30 million of
I-pods in market. The company was already very late in entering into the market and making its
way to the top. At that point of time the market had a high demand of Walkmans which was
being fulfilled by Apple. Microsoft produced a very competitive product which could kill the I-
pod regime and for that they prepared a very effective marketing mix which is stated below:
 Product: Company focused on preparing a product which would have superior features
against the I-pod. It included Music, Video, gaming, Social, Radio and Internet ability.
Also, the company pushed some features which were very different from its competitor I-
pod (Nasution and et. al., 2011). They are as follows, Wireless syncing, Background
artistry, FM radio with increased range, Quick play services, HDMI Radio and Video.
Also they were offered in variety of colours with a feature of usage as a windows
platform.
 Place: The Company used different approaches to manage this factors. It targeted OEM
distributors, retailers and online stores to sell its products and services. Some of the
examples of the retailers are targets, best buy, Costco, Meijer Staples, Nebraska Firniture
Mart, etc. The company also understood the importance of growth in online shopping
because of which it partnered with Amazon, J&R and New Egg to sell its products in
most of the countries. In Australia, they used Woolworth which is one of the biggest
retailer as its prime seller.
 Price: The pricing of products is based on the features that will be opted by consumers.
People were paying hefty sum of money for I-pods and to compete with them the product
was launched at a price of 249 Dollar for top model.
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 Promotion: The company used different online as well as television as a mode which
enabled it in reaching masses more effectively (Patino, Pitta and Quinones, 2012). They
also partnered with united Airlines in summer 2010 as a promotional strategy.
The marketing mix was rightly made but the implementation process was not at par. The
situation in market was that the demand was falling with year and with it Microsoft Zune market
share also fell.
Metrics of Success:
There are different ways Microsoft would have measured and corrected its path in market
but they didn't acted on time which resulted in the failure of product. First of all, they were late
entrant in market and also then they did not push their product with hard bargaining approach in
the market. The biggest mistake from the side of company was their comparable approach which
made consumers to opt for more reliable brand that was Apple.
Today, the product has been discontinued and also its services has been sent off air by
Microsoft as it was getting expensive for them. While, I-pod is still selling like a Diamond in
market even though portable media player demand is shrinking. The whole sole reason is that
Apple promised quality and better services.
Marketing Implications:
There are different benefits which the company would had if they utilised the marketing
tools in more effective manner. But they failed to understand the market demand and also the
requirements of consumers. They had to release their product at cheaper rates which would have
increased their differentiation against Apple I-pod which was also priced in a similar category
(Schilke, 2014). Also, American market was already saturated and Microsoft should have
targeted Australian or European market where the product would have sold more units. There are
certain mistakes which were made by managers.
The whole sole reason behind using marketing as a tool is to increase effectiveness and
reach of a product in between various consumers. Also, it would have enabled company in
gaining higher market share with limited resources. Today, Microsoft Zune is discontinued from
market and failure of marketing team can be blamed for this. A proper analysis and method
would have boosted organisation’s ability to capture higher market share and attract global
customers towards its product.
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REFERENCES
Books and Journals
Eggert, A. and et. al., 2011. Industrial services, product innovations, and firm profitability: a
multiple-group latent growth curve analysis. Industrial Marketing Management. 40(5).
pp.661-670.
Grönroos, C. and Ravald, A., 2011. Service as business logic: implications for value creation and
marketing. Journal of Service Management. 22(1). pp.5-22.
McCreanor, T. and et. al., 2013. Youth drinking cultures, social networking and alcohol
marketing: Implications for public health. Critical public health. 23(1). pp.110-120.
Nasution, H. N. and et. al., 2011. Entrepreneurship: Its relationship with market orientation and
learning orientation and as antecedents to innovation and customer value. Industrial
marketing management. 40(3). pp.336-345.
Patino, A., Pitta, D.A. and Quinones, R., 2012. Social media's emerging importance in market
research. Journal of Consumer Marketing. 29(3). pp.233-237.
Schilke, O., 2014. On the contingent value of dynamic capabilities for competitive advantage:
The nonlinear moderating effect of environmental dynamism. Strategic Management
Journal. 35(2). pp.179-203.
Online
Billboard Staff. 2015. Microsoft Zune. [Online]. Available through:
<http://www.billboard.com/articles/business/6762566/microsoft-officially-retires-zune-
services>. [Accessed on 12th September 2017].
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