Sunday, May 25, 2008

A leading retailer drops Microsoft's Zune

Microsoft a few years decided to step into the field of consumer electronics in a limited way, with efforts for both gaming consoles and MP3 / Media players. Both of these are fast moving items, with fierce competition, an extreme focus on features, and ability to turn users into die-hard fans. In both these areas, there were entrenched players in the field when Microsoft made its entry - in gaming consoles, Sony's Playstation and Playstation 2 (and Nintendo in a smaller way), as well as Apple's iPod in the field of MP3/ Media player were both established players with very strong market shares.
Microsoft on the other hand has a very strong marketing strength, as well as presence in the customer software segment; however, Microsoft had to build up a mind and market presence in the actual consumer devices retail positions. This takes time and effort, and you need to show increasing market share. This has now suffered a setback, with one of the leading retailers, GameStop deciding to stop stocking the Zune (Microsoft's personal media player) due to inadequate sales:

Microsoft's entry into the consumer electronics space came with a thorny channel problem. To succeed in capturing a broader audience, Microsoft had to broaden its retail channel. The Xbox business helped take care of that problem: once Microsoft proved that it was serious about developing and promoting the first Xbox, and once it began to show reasonable sales figures, a new class of retailers--including game-specialty stores like GameStop--were happy to make shelf space for Microsoft's consoles and games, right alongside Sony and Nintendo.
Apparently, after giving it a year and a half, GameStop has found that's not the case. Looking at recent NPD figures, it's easy to see why--compared with the first Xbox, the product just isn't moving nearly as many units (2 million in 18 months) or capturing enough market share.

Still a bit early to write off the Zune, but it just is not capturing any imagination, and in the meantime Apple has moved ahead with the iPod Touch / iPhone, capturing the wow effect.

Nintendo Wii Fit going to increase Wii sales

The Nintendo Wii has been the leader in the field of video game consoles, leaving the much more powerful Sony PlayStation 3 and the Microsoft Xbox 360 way behind. Consumers have been attracted by the power of the simplicity of the console and its usability, specially the motion sensing capability of the Wii remote that allows users to be more interactive with the game and brings a much better handling of the games. This has continued, with the Wii steadily out-selling the other gaming consoles, and more games being written for the Wii over a period of time (inspite of the much more powerful marketing power of Sony and Microsoft).
Now, Nintendo is coming out with a game that is very eagerly awaited, and promises to let people overcome the couch potato effect of a video game console, instead they get a way to become fit:

Nintendo will be releasing the newest of its exercise games, the Wii Fit on May 19th and you can expect it to fly off of the retailer shelves. But just who will be buying it? Many expect that our mom's will be buying them, at least according to some analysts and some research. The Nintendo Wii has been more popular among women than the Microsoft Xbox 360 and the Sony PlayStation 3, but some analysts believe that this game that combines exercise and entertainment will help put Wii sales over the top again.
Wii Fit will retail for $89.99 and will include a balance board to facilitate the more than 40 yoga, aerobics, and strength training exercises. The user sets their own fitness goals and keeps track of their progress over time.

If this truly turns out to be well designed, then this well and truly ensure that Nintendo keeps its lead over the other game consoles; further, there are not many analysts now who actually believe that Sony and Microsoft will be able to challenge this dominance in the near future.

Saturday, May 3, 2008

iTunes to allow movie download same day as DVD release

Apple's iTunes had always been seen as somewhat of a threat / opportunity for the industry. The opportunity was always there since it was the legal way for the recording industry to make money from the downloading of music, while the way in which Apple behaves (driven by Steve Jobs) scares the recording industry. Apple is the one which always seeks more control over the entire process and does not seem to care as much for the dictates of the recording industry as other channels do. In a step forward, and scaring the conventional sales channels of the movie DVD industry, Apple has now declared that it will make downloads of movie available on the same day as DVD releases:

Although the vast majority of all sales of movies are done on DVD, likely at mass market locations such as Wal-Mart, there is a slowly growing population of those who are playing for digital downloads. Such a phenomenon is becoming well established in the realm of music, where users of iTunes will pay 99 cents to download a song. Apple is now hoping to bring the same level of success it did to music over to movies.
Movies purchased from iTunes can be viewed on an iPod with video, iPhone, Mac or PC or on a widescreen TV with Apple TV. New release movies will be priced at $14.99 and older catalog titles at $9.99. The iTunes Store current carries over 1,500 films at present.

This is likely to covert into an increased share of the market. So even though there will be people who will be wanting a physical DVD, there will be a large number of people who will settle for the convenience of being able to download a movie onto their device of convenience and jump onto the iTunes bandwagon. This is bound to have an effect on the regular store sales of DVD's and will make them more unhappy.. tough luck, this will not go away.

Impending News: Microsoft to increase offer for Yahoo

There is a lot of buzz in the press that Microsoft may increase its offer for Yahoo so that a deal becomes much closer. The press reports claim that Microsoft is very close to increasing its bid so that the impasse can get over and Yahoo becomes amenable to a negotiated deal rather than a hostile offer. From

May 3 (Bloomberg) -- Microsoft Corp., closing in on the biggest acquisition in its 33-year history, may seek to end an impasse with Yahoo! Inc.'s board by raising its takeover offer, a person familiar with the matter said. Talks intensified this week after Yahoo spent three months hunting for alternatives to the deal.
A higher offer may win over Yahoo's board, eliminating the need for Microsoft Chief Executive Officer Steve Ballmer to go to shareholders with a hostile offer, which might have spurred an employee exodus. A deal also may halt Yahoo's efforts to forge an online advertising partnership with rival Google Inc.

The deal remains important for both Microsoft and Yahoo. The more that the deal remains out of touch, the more likely is that Yahoo and Google will come to sort of agreement that will pass regulatory approval, and leave Microsoft way behind Google. For Yahoo, it is a now a diminishing third player and no longer seems to have the ability to move to second position.
Ultimately, from all the discussion, it would seem that the entire issue now resolves around the price to be paid. Yahoo claims that the offer under-values the value of Yahoo, and many of the prime shareholders seem to agree. So if Microsoft increased the offer, it may break the impasse and convince the board.