Microsoft Zune to take a bite out of Apple iPod

Almost two-thirds of iPod owners who are planning to purchase a new MP3 player will actively consider defecting to Microsoft's Zune, market watchers have claimed.

According to a recent ABI Research report, many prospective MP3 player buyers, including owners of iPods, have indicated that they would be likely to choose Microsoft's Zune.

The claim is based on a poll of 1,725 teenaged and adult US residents who were asked whether they planned to buy an MP3 player in the next 12 months.

Of those responding that they were likely to do so, 58 percent of those identifying themselves as existing iPod owners and 59 percent of those who owned other brands said they would be 'somewhat likely' or 'extremely likely' to choose a Zune over an iPod or other brand of MP3 player.

Only 15 percent of iPod owners said they were 'not very likely' or 'not at all likely' to choose a Zune.

ABI principal analyst Steve Wilson said that the research indicated that iPod owners do not display the same "passionate loyalty" to iPods that Macintosh users have historically shown for Apple products.

But Wilson questioned whether the Zune is attractive enough to rival iPod's huge sales, asserting that a critical factor will be whether Microsoft can differentiate the Zune from competing products in a meaningful way.

Zune's Wi-Fi peer-to-peer sharing is one differentiator which Microsoft is playing up heavily, but the analyst is not convinced that this will be enough to persuade iPod users.

"The Wi-Fi sharing is not all that compelling, at least not now," said Wilson. "There is a lot more that Microsoft could do with that capability."

But ABI said that the research should be a wake-up call to Apple, which will need to make some "big announcements" in 2007 if it is to maintain its edge in the industry.

"Apple needs a new high-end device that works really well and looks really cool, because other brands are catching up," said Wilson.

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