Zune's Web traffic triples

Computerworld - The Web site devoted to Microsoft Corp.'s Zune music player nearly tripled its share of Christmas Day's overall Internet traffic in comparison with last year, but it still fell far short of Apple Inc.'s iTunes site, an analytic vendor said today.

Zune's site bagged a 299% boost in Web-visit market share on Christmas Day compared with Dec. 25, 2006, New York-based Hitwise Ltd. said Thursday. Buyers of the Zune head to the site to download software that is needed to access the device's online song store.

Before Christmas, other reports hinted that the Zune, which Microsoft revamped in November, was selling like hotcakes. According to some news stories, the Zune was in short supply, with some online retailers selling out their inventory of the 80GB model. Some online retailers previously said to be short of Zunes, such as Amazon.com Inc., now show the player in stock.

Research firm iSuppli Corp., however, pinned the shortage on Microsoft, not on overwhelming demand. "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," said Chris Crotty, iSuppli's senior analyst for consumer electronics, in a statement before Christmas.

A rival research company, The NPD Group Inc., also downplayed the idea that Zune shortages meant something. Although the Zune's share of sales increased to around 6% in November from less then 2% in the same month during 2006, NPD analyst Stephen Baker said not to read anything into out-of-stock talk. "That could be anything," he said, "including behind out for a day or two. And [online] retailers typically keep smaller inventories anyway, because that's their business model."

Even with the rise in Zune.net's market share in the past year, it remained far behind Apple's iTunes. According to Hitwise, Zune's total share of 0.09% was less than one-seventh of Apple's iTunes, which accounted for 0.68% of all Internet visits on Dec. 25.

"The Zune was up a lot in November in comparison to last year," noted Baker, citing data that NPD pulls primarily from brick-and-mortar retailers but also from a smattering of online sellers. "iPod sales were down a little bit, but not enough to be disconcerting [to Apple].

"The fact is that the [MP3 player] market is considerably slower this year than in the last couple of years," Baker continued. "The market is slowing, since most people who want one have one. A lot of sales now are upgrades."

And though the relative success of Zune is welcome news to Microsoft, it is much too little to be crowing about when considering the big picture. Zune has a long way to go just to take second place, Baker noted. "Their midterm goal is to be No. 2," he said. "Then they have to find some way to attack Apple and the iPod."

Apple's music-player line accounted for approximately 58% of all units sold during November, Baker said. SanDisk Corp., the current second-place seller, accounted for about 16% of unit sales.

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