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In the early 60’s, Hertz was the rental car leader and Avis was #2.  Avis was actually losing money and had only 11% market share.  But they used Hertz’ market dominance against them with compelling ads like this one:

Within one year of launching the campaign, Avis tripled its market share and was making a profit.  Not only did they have a great advertising campaign, they also "built the brand." 

Can Microsoft do this with its Zune?  Read more after the break…

To be sure, Microsoft is not used to being 2nd in anything, so this is certainly uncomfortable territory for them.   But with the new generation of Zune players, Microsoft has brought some improvements, and if history is any judge, they won’t give up until they own the market.

Uphill Battle

Apple sells "70% of the music players sold worldwide. While Microsoft has sold 1.2 million Zune devices since releasing it last holiday season, Apple, between October 2006 and June of this year, sold 41.4 million iPods, according to figures from each company, respectively", according to Yahoo News.  But Microsoft has been there before.  You might remember a few years back when the Palm Pilot was all the rage, and it took Microsoft several tries until they unseated the reigning king.  There is no quit in Microsoft.  Apple may not be shaking in their boots, but they better keep innovating, and they better start listening to their customers.

The Chink in the Armor

Microsoft will exploit any weakness they can find in their competitors.  Does Apple have a weakness in their product line?  I happen to think their new products are beautiful; but digging deeper you’ll find that perhaps customers want just a bit more.  What do I mean?  Take the iPhone, for example.  It’s not exactly an mp3 player, I know, but bear with me.  Apple is freezing out third party software and killing the creativity of its customer base.  They also disabled some functionality of their otherwise excellent iPod Touch.  While Microsoft encourages creativity and rewards innovation of 3rd party software, Apple seems to call it "piracy."  It’s this same attitude that Microsoft might turn against Apple…

The Winner(s)

That’s you and me!  Let’s let them duke it out and innovate and turn the heat up.  We are a long way from my 2nd gen 20GB iPod.  That thing feels like a brick compared to the sleek products coming out now.  I think I paid about $400 for that monstrous brick.  Heck, you can get a flash player with nearly that amount of capacity for almost half the price now, and that player would be one quarter the size. 

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