Competitive Strategies Case Study

Microsoft’s Zune: Competitive Challenges for Apple’s iPod

OR

Abstract:

Global entertainment industry was heating up at the end of 2006. In the time of global music revolution when Apple’s iPod was ruling the roost in the portable digital music player segment, as it was almost unchallenged and holding 76% market share in the US market since 2001. But at the end of 2006 Microsoft decided to launch Zune in the iPod segment to take on Apple’s iPod. It created a lot of interest among US nationals and immediately Zune had made its mark by pricing aggressively forcing Apple to reduce the iPod base model price by US $50.

This case deals with the new product launch by Microsoft and how they positioned their new product to challenge Apple and problem associated with it. It also enlightens what reactive measure Apple might take to counter the onslaught. The case also talks about the mixed reactions it got from the experts and users and discusses the probable outcome of Microsoft’s new initiatives to launch an iPod killer.

Pedagogical Objectives:

• To understand the portable music player industry
• To discuss the evolution of Apple’s iPod
• To analyse the challenge from Microsoft’s Zune
• To debate on Microsoft’s new initiative.

Keywords : Microsoft; Apple; Zune; iPod; Entertainment industry; Portable digital music player; Competitive Strategies Case Study; Business model; Positioning of new product; Product management; Competitive challenges; Pricing strategy; Zune Marketplace; iTunes; ZuneZone; Downloaded music

Contents : 
Company Backgrounds
Sleek Music Player: An Overview
Evolution of Apple’s iPod
Microsoft’s Initiative: The ‘Zune’
The ‘Zune’ Vis-à-vis iPod
Does ‘Zune’ Sound Good?
Discounting Microsoft: Is it Easy?
Limitations of Microsoft’s Zune