Looking for Zune

The shortage of Microsoft's new 80GB Zune player this holiday season is not the result of overwhelming demand for the product. A report recently published by the market intelligence firm iSuppli indicates that popular retailers such as Amazon.com are either in short supply of the product or backordered. However, iSuppli is quick to dispel speculation that this shortage is a result of overwhelming demand for the Zune, which has been falsely accredited with outselling the various Apple iPod variants. (Source: isuppli.com)

Microsoft's MP3 player has been positively reviewed by a number of consumer product analysts, with some touting it as a potential 'iPod-killer'. Surprisingly, such conjectures have been downplayed by the company which is predictably cautious in light of the poor performance of its first Zune device late last year. (Source: appleinsider.com)

In reality any sales spike can be attributed to the significantly discounted 30GB Zune, which has received poor product reviews.

The inventory shortage is a demonstration of Microsoft's tentativeness when it comes to the portable media player (PMP) market. Although the Zune introduced Wi-Fi support when it was first sold last year, many critics consider it a rather conservative product, not what we've come to expect from Microsoft. (Source: informationweek.com)

Despite its non-aggressive approach, Microsoft is making inroads into the nearly $20 billion PMP/MP3 market, forecasted to steadily grow in the immediate and distant future. Indeed, the closed Zune system is Microsoft's attempt to replicate the model used by Apple which attempts to maximize the cost of switching to a different product for its existing consumer base, providing the incentive to the consumer to remain loyal to the brand. (Source: appleinsider.com)

Microsoft will also attempt to take advantage of a temporary deceleration in the price reduction of flash memory prices, which may delay the launch of higher capacity HDD-based iPod touch. (Source: isuppli.com)