Pushing Zune: Is Microsoft fighting an uphill battle?

Solving the Zune HD marketing conundrum isn’t easy. According to Fader, the Zune moniker has been tainted by Microsoft’s consistent failure to gain traction with the device.

Microsoft originally launched the Zune with a series of taglines such as “Music the way it wants to be” and “Welcome to the social.”

That initial Microsoft marketing effort was “muddled” and never really resonated with its target audience, Fader points out.

Market share for the Zune topped 10 per cent in late 2006, when it was introduced, according to NPD, but it has gone downhill since.

In May 2008, Microsoft said that it had sold two million Zune players, but then retailer GameStop announced it was going to stop carrying the device due to insufficient demand.

In contrast, Apple on September 9 (when it announced its video-enhanced iPod Nano) said that it has sold 220 million iPods to date.

Given Apple’s lead, Fader says that Microsoft’s best move with the Zune would be to scrap the name and start over, much like it did with Bing, its rebranded search engine.

“First, don’t call it a Zune. A ‘Zune’ is just a misconceived mess.... Start with a clean slate.”

According to Wharton marketing professor Jerry Wind, Microsoft has to “design a strategy that centers around the Zune HD’s key benefits over the iPod.”

Those benefits appear to be the ability to play high-definition video and capture HD Radio signals, the next-generation technology for broadcasting.

The problem? Microsoft isn’t competing against just the iPod as much as it is against an entire ecosystem of applications and developers that go along with Apple’s device.

The number of applications available for the Zune HD pales by comparison with those available for the iPod through Apple’s App Store: The Zune HD currently has nine free applications available, while Apple has 85,000 applications available on its App Store for the iPod and iPhone.

“Apple’s success is a combination of multiple factors,” says Wind. “Microsoft could go after a niche, but it has to answer the key question: Why should anyone use a Zune HD?”

Wharton marketing professor Eric Bradlow agrees that Microsoft will likely have to adopt a niche approach, given its lack of market share.

It will need to position the Zune as strong in one area—say, as a player focused on music and video — and then make consumers advocates for the product.