Microsoft kill their Zune MP3 player

Screen shot 2011-10-04 at 16.24.00 The plight of Microsoft's Zune MP3 player illustrates the problems facing "follower brands". After years of disappointing sales, news emerged this week that Microsoft has finally killed off the Zune range, though the music software will hobble on as part of the Windows Phone.

Microsoft was late to the MP3 player party, launching the Zune in 2006, a full five years after the launch of the iPod by Apple.

Apple is often portrayed as a "challenger brand". In fact, Apple is a leader brand in most of the markets it operates in including premium PCs over $1,000, tablet computers and portable music players. Estimates put Apple's share in 2010 at 77% and Microsoft's Zune at less than 1%. These figures are similar to the shares back in 2007, with Apple slightly stronger and Zune even worse.

Screen shot 2011-10-04 at 16.11.32
A Leader Brand like Apple has many advantages that make it incredibly hard for challengers to catch up:

1. Economies of scale: allowing competitive pricing AND high profit margins

2. Owning "the high ground": being the reference point in the market, the brand seen as having the best bundle of attributes and benefits. The problem for challengers is that tend to be compared to the Leader Brand, as GaGaGadget explains:

"If you ask somebody who owns a Zune to describe it, nine times out of ten, their answer will be 'It’s like an iPod, but, you know, different.' ” 

3. Relentless renovation: the best Leader Brands like Apple relentlessy upgrade their product range, so the challengers are constantly trying, and failing, to catch up

4. Social proof: the idea that people want to be different and "stand out from the crowd" is largely a myth. Most of us want to do what other people do, and we buy what most other people do. This is called "social proof". And as most people buy iPods not Zunes, most other people looking for an MP3 player do the same.

In conclusion, the fate of the Zune shows why companies should think carefully before taking on a Leader Brand like Apple, especially if like Microsoft you are: i) late to market, ii) have nothing new to add.

To be successful in taking on a leader you need a truly distinctive value proposition, ideally linked to a different and better business model. This is the case in smartphones, where Google has become the leading operating system by giving away its operating system for free to a range of phone makers, verus Apple's "closed" system of software and hardware. 

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