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We all know the Zune80 is in short supply and backordered nearly everywhere.  Some reports have said that is because of its high sales – more than Microsoft predicted.  But according to iSupply the high sales spike is for the older, deeply discounted Zune30.

Did Microsoft misjudge how many Zunes would be sold?  “Given the widespread criticism of the first Zune model, it is likely Microsoft erred on the side of caution when placing initial orders for the new Zunes, which include the hard-disk-drive-based Zune 80 as well as the flash memory-based Zune 4 and 8,” iSuppli analyst Chris Crotty said in a statement.

If Microsoft is going after Apple’s iPod market share, they have been lax in doing so.  It took them one year to produce a follow-up to the original Zune, and that product mostly matched the offerings by Apple both in features and price.  Given the proven track history of the iPod, Microsoft didn’t offer compelling reasons for an end user to make the switch. 

The Zune80’s larger screen, perhaps, is a good reason to switch, but Microsoft has been slow in adding video content to the Zune Store.

“They seem to be feeling a little gun shy about the market, which they’ve approached in a very tentative way,” Crotty told InformationWeek.

The Personal Music Player (pmp) market is expected to reach $19.5 B worldwide this year, according to iSupply.  Microsoft has not been aggressive in pursuing that market.  They’ve produced a product that is not so much an iPod killer as a heavily discounted alternative.  To be sure, Apple rarely discounts its products, but Microsoft gained market share on the back of the hugely discounted Zune30.  On the other hand, Sandisk is becoming a powerful rival with a strong product line with a solid supply of flash memory, proven retail distribution and partnerships with content providers, according to iSupply.

Read more at Information Week

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