Too Zune for Hype

There it was, screaming at me from the luminescent computer screen, the headline that every Apple (Nasdaq: AAPL  ) shareholder fears most: "Zune has chance to take iPod market share -- survey."

That was from Reuters yesterday. So far, investors don't seem to care, and I'd say that's Foolish. After reading the story in its entirety, it turns out that, of the 450 prospective buyers of music players responding to Reuters' survey, 80% chose the iPod, while 7% chose Microsoft's (Nasdaq: MSFT  ) new Zune.

What about the headline proclaiming that Zune has a chance to steal market share from the iPod? Allow me to quote from the story: "Among those expressing a preference for the Zune, some 35% were replacing an existing player, while 18% of those who voiced an interest in the iPod were upgrading."

In other words, if you're buying a Zune, you might be replacing an iPod. But when asked about that possibility, Reuters quoted industry researcher Mike McGuire of Gartner as saying that the majority of Zune upgraders were probably already owners of players compatible with Mr. Softy's PlaysForSure initiative, which includes devices from Creative Labs (Nasdaq: CREAF  ) , SanDisk (Nasdaq: SNDK  ) , and Toshiba.

This shouldn't diminish what Zune has done. I just don't think there's a need to overhype obviously strong results. Researcher NPD Group says that Zune ranked an incredibly impressive No. 2 among portable music players during the week of its debut, winning 9% of the market.

Yet it's not even close to the most important finding from Reuters' survey. What's that, you ask? Turns out only 20% of respondents had previously purchased a music player. Think about that for a minute. Apple has sold more than 70 million iPods since 2001. How is it, then, that the vast majority of portable music player buyers are dipping into their wallets for the first time? Maybe it's because the market is only just now coming into its own?

That's a story worth reporting.

A playlist of related Foolishness awaits:

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Fool contributor Tim Beyers no longer owns Apple shares, nor shares of Microsoft or any other company mentioned in this article. That said, he digs his MacBook Pro, which he occasionally uses to run Windows. Get the skinny on all the stocks in his portfolio by checking Tim's Fool profile. The Motley Fool's disclosure policy rocks.


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